Food Prices Are Soaring Faster Than Inflation and Incomes
bloomberg.com
bloomberg.com
https://tradingeconomics.com/commodity/baltic
Also, in case anyone thinks the current environment is crazy then check out the commodities bubble period of 2008 for that index.
The US Dollar Index was at 120 in early 2002, and then proceeded to fall persistently until the middle of 2008 when it rested at around 71. An epic collapse by the dollar that triggered all sorts of nasty global effects. Fortunately this time around the dollar drop hasn't been so bad, most major currencies are debasing at the same time. The dollar is merely back to where it was in 2015 and 2018, so far.
Increase in any price can be seen as an increase in item value or a decrease in USD value. It takes a more in depth analysis of the market to determine which is the cause of price increase.
Ex: Bitcoin stocks (yes they're stocks / investment products) are only really reported on when they're at an all-time high. They may go up a little more if you're reading something fresh off the press, but it's not going to go up as much as it already has. I mean if you bought a year ago you could have had a 10x return on investment, if you invest now it'll be 10-20% return on investment at best.
CPI is absurd, it only perpetuates consumerism and punishes savers. We product 2x the food society consumes - mostly wasted away, just with some supply chain efficiency - there's a lot more room for food not to be expensive though.
If they're not giving you a one-page report on the methodology for how they arrived at each individual point-in-time price figure that they recorded, well, I'm sorry, it's true, their methods are in that sense "hidden".
Publishing the particular products looked at, or even the particular stores visited, would invite market manipulation of the CPI figure by re-pricing the included goods.
Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".
Right, but using the raw purchase price of the house isn't a good measure. Mortgage rates dropping would cause housing prices to go up even if monthly payments stay the same. What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent.
>Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".
From a finance perspective there's no difference between a house and a share in a corporation. They're both productive assets that provide returns. In the case of a house, it provides shelter as a service, which can either be consumed by the owner (by living it it), or by selling it (renting it out). The only difference is that with a house, the relation to you is more direct, as opposed to a tiny fraction of a multinational entity.
Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born.
> From a finance perspective there's no difference between a house and a share in a corporation.
From an investor's perspective, perhaps.
But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements.
Consumer finance is finance.
and that's fine, because rents are tracked directly in the CPI.
>But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements.
That's what they tell themselves, but from an analytical perspective there's no difference between buying a $1M house that provides you $5000/month return in the form of imputed rent, and buying $1M in stocks/bonds that provides you $5000/month return in cash, which you can use to pay rent.
Only for embarrassingly impoverished analytical frameworks.
Unless you know of a bank that will loan me seven figures at sub-3% interest rates based on 10% down and my income, and then let me spend that money in the stock market :)
That does indeed make a x% return in the housing market more attractive than a x% return in the stock market, but has to be considered against all the other factors as well eg. diversification, actual returns (historically stocks have higher returns), risk (10x leverage also means 10x more loss), costs (stocks require no upkeep, houses require yearly maintenance), etc. At the end of the day though, it's still an investment as opposed to something you consume.
From a finance perspective, theres no difference between food and a share in a corporation. They're both productive assets that provide returns. In the case of food, it provides sustenance as a service, which can either be consumed by the owner (by eating it), or by selling it (on the side of the road, or in a restaurant.) The only difference is that with food, the relation to you is more direct, as opposed to a tiny fraction of a multinational entity, and it depreciates much faster.
/s/
when you have a hammer, everything is a nail. When you see the world through finance, everything is a series of cashflows. The ability of a worldview to be applied to many things does not mean it is applied well to those things.
The primary purpose of a house is to, well, house people. Shelter is a necessity. People who are most vulnerable to inflation are the poor, who mostly rent, and thus pay current market prices. They also pay the most for healthcare on a per care instance basis, and often pay for college with expensive debt (5%) if they go to college.
If CPI, etc, are not measuring these price changes, perhaps we should use another measure that does.
Clearly not. After you eat a bread, it's gone. After you live in a house it's still there. A better analogy would be something like a farm, which continuously provides sustenance as a service.
>The primary purpose of a house is to, well, house people. Shelter is a necessity. People who are most vulnerable to inflation are the poor, who mostly rent, and thus pay current market prices. They also pay the most for healthcare on a per care instance basis, and often pay for college with expensive debt (5%) if they go to college.
Should farm (or food producing corporation shares) prices be factored into the CPI as well? Like housing, food is also a necessity, and buying a farm would ensure you're protected against inflation in food.
Also, your point about buying housing as some sort of protection against inflation doesn't tell the whole story. Yes, it's a hedge against future rent increases, but here's no free lunch because the inflation is already priced into the price of the house. If rents are expected to 10x in the next 10 years, you can be sure that housing prices will grow accordingly. That's why price-to-rent ratios are insane in coastal cities.
After you live in a house a long time it falls apart. Capital Expenditure restores the asset to its previous value. Bread just depreciates faster. but can still be traded, bought and sold. In Japan houses are often only ever used by one family, and the house is destroyed when the land is sold. I am taking your insistence on a cash flow perspective to its logical extreme to show that it is not always applicable.
Corn is an asset when it is bought and sold. It is food when it is consumed.
> Should farm (or food producing corporation shares) prices be factored into the CPI as well?
I clearly say at the end that if CPI is not measuring these price increases we should use a different measure. I'm not sure you understand what's going on in this conversation, but food is in the CPI.
> Also, your point about buying housing as some sort of protection against inflation doesn't tell the whole story.
Where on earth do I say this? I say that poor people are exposed to inflation the most, especially increases in housing prices. We should have measure for what working Americans are exposed to, and do not.
1. the part of a house that's getting expensive isn't the house itself, it's the land. the multi-million dollar homes in san francisco would only be worth a few hundred thousand tops if they were moved to rural idaho.
2. corporations fall part too. more specifically, their physical assets (eg. machines in factories) fall apart. In both cases they're kept up by routine maintenance. The only difference is that in a corporation the maintenance is paid from revenue before profits/dividends are paid out, whereas in a house the maintenance is paid out of pocket by the owner.
3. it's not a question of deprecation. after you eat a piece of bread it's gone. that's not due to depreciation, it's due to you consuming it.
>I clearly say at the end that if CPI is not measuring these price increases we should use a different measure. I'm not sure you understand what's going on in this conversation, but food is in the CPI.
That's my original point. Rent (and imputed rent) is directly measured in the CPI, so there's no need to measure home prices.
Consider three people, p1, p2, p3.
P1: works at job making $X and rents home entire life.
P2: works at identical job making identical $X and buys + pays off identical home.
P3: works at identical job making identical $X and buys + misses 10 mortgage payments on identical home.
P1 is WAY better off than P2 or P3. Literally, the difference between retiring and working until you die.
"can afford down-payment and also has enough stability to never miss payments" induces a VERY extreme nonlinearity in outcomes that CPI very much fails to capture.
I don't think anything you've said in this thread even comes remotely close to acknowledging the reality that over half of America lives every day.
the broader point is that asserting a house is just an asset is more a value statement (and more abstractly, an aggression) than a truism. investment has generally become decoupled from its intended purpose of producing value for the many, not just the few (i.e., the efficient allocation of capital), and this kind of misguidance contributes to that kind of misallocation.
Not exactly, because there are two definition of "asset". From wikipedia:
https://en.wikipedia.org/wiki/Asset
>In financial accounting, an asset is any resource owned or controlled by a business or an economic entity.
https://en.wikipedia.org/wiki/Asset_(economics)
>An asset in economic theory is a durable good which can only be partially consumed (like a portable music player) or input as a factor of production (like a cement mixer) which can only be partially used up in production.
imputed rent is the cashflow if you live in it.
If you own vs rent you transfer that payment stream into servicing an asset. Assuming the asset goes up that's generating an implicit cash flow (one you will have access to later when you sell the asset).
If you can buy your house with cash then your "housing" cash stream is suddenly freed to be spent elsewhere, so you "gain" a cash flow you didn't previously have.
You can make a fair argument that this is a semantic quibble or one of the usual human self-deceptions but this is how people implicitly think of it.
That's not a disqualification of an asset, if devaluation is outstripped by increased valuation over time. eg I live within a parcel, that parcel is not transformed into a liability.
I would disagree with that. Stocks that don't pay dividends don't generate cash flow either. Assets are items that are bought with the intention for them to generate value. That value might be cash flow, or it might be an increase in value so that you can sell it later. Not all assets generate cash in real time (most don't).
A house is an asset because a) it allows you to pay your liabilities for housing into an equity generating account, and b) people generally expect them to increase in value.
To put it another way, if they weren't an asset, people wouldn't care if they depreciated. I don't care that my car depreciates because it isn't an asset; I don't expect it to increase its value or hold its value.
You can buy a brand new 4 Bedroom house in a nice part of Tokyo for ~$300,000, but don't expect to make money on the deal.
More or less the author argues that stable nominal spending, ie a constant level of nominal GDP, is pretty much ideal. And would lead to falling prices as you suggest.
If you replace constant level with 'target a level of nominal GDP that rises 4% every year' you have pretty mainstream position.
Inflation measures are indeed somewhat subject. Nominal GDP has less suggement calls.
(It's still useful to try and measure inflation. But perhaps it should not be a policy target.)
George Selgin is a dyed-in-the-wool fan of fractional reserve banking. (And with good reason.)
See also eg https://www.alt-m.org/2015/07/29/there-was-no-place-like-can...
Okay okay back up.
The consumer price index is a series of numbers designed to help people understand what dollar-denominated figures mean to ordinary people going about their lives, spending those dollars. If that's "consumerism," well yes, it's a portrait of consumerism.
Many economists, mind you, believe CPI doesn't correct quite enough, and suspect that it overstates the inflation it hopes to measure by around 1%. This is because it tracks the actual prices of a certain "market basket" of goods with specific products in it, and that basket gets out of date, as people substitute products.
But if someone's "punishing savers" and "perpetuating consumerism", it's not the index, and it's not the people compiling the index, and it's not the people trying to make the index more accurate by adjusting for quality. Assign the blame where it's due. You have a beef with the Federal Reserve, and possibly with other agencies or laws which refer to the CPI to make policy.
personal beef? no. I thought this is a forum for civil discussion and reasoning?
I'm starting to understand what you're insinuating I think, but you still haven't made your point.
Whose calculations? The Federal Reserve's calculations? The Federal Reserve has access to a variety of data sources, and while the CPI is the one that gets the press, they also use series like the chained CPI, the producer price index, bond yield curves, unemployment (and not just U3, but things like U6 and the labor force participation rate).
If all you hear about is vanilla CPI, well, that's because you're looking at a newspaper.
Anyway, as I said. You have a beef with the Federal Reserve.
> why are retail accounts in germany, netherland already negative rates?
Public policy, as effected by the European Central Bank. Perhaps you have a beef with them too.
> does that make sense to you?
I mean, it makes sense as in "I understand why they do it", not as in "I think this is a great thing".
> can banks make money that way?
I've read that low interest rates do, in fact, squeeze their profits, though with regards to Germany the "three-pillar" system is crufty and weird and squeezes profits too. For instance, here is this lovely article I saw a while back, whose subhead notes "Low interest rates and the three-pillar system squish profits": https://www.economist.com/finance-and-economics/2019/03/02/c...
> danger of nationalization of banking?
I'm not sure what you're talking about any more. It seems very detached from the Bureau of Labor Statistics, or European equivalent.
Here's what I'm worried about: if you look at historical examples like say the 1970s inflation, or the post-Cold-War Warsaw Pact hyperinflations, or the post WW-2 hyperinflations in many European countries, prices didn't rise uniformly. Some industry or some region would experience very large inflation, and then eventually it would get transmitted to that industry's customers, or their suppliers. It's basically a network contagion, spread across the links in the economy.
We're seeing the early stages of this happen right now - that's what the article is about.
Powell's public comments are that "inflation doesn't turn on a dime" and "we're likely to see some localized price increases within certain industries, but no generalized inflation." The thing is - I know from history that the former can be false (particularly in wartime, and shifts from a controlled to a market economy, and the recovery from COVID has aspects of both), and the latter tells me that he's looking at the same data that I am but drawing the opposite conclusion. If 5% of firms are experiencing 30% inflation and the rest are experiencing no inflation, the PPI will read 1.5%. If that 30% inflation is in a core industry though (say food, or energy, or labor) and they pass it along to all their customers, then within 1-2 years you could have 30% inflation across the whole economy without passing through the 2% stage.
It's giving me COVID tingles from last year, where in March your overall risk of getting COVID in the U.S. was about 1:100,000, but your risk in NYC was 30%. Then suddenly your risk in Phoenix was 40%, and your risk in South Dakota was 50%, and then your risk in LA was 30%, and suddenly about 20% of the country has had it.
Poke holes in my reasoning, please.
To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading about dangers of 5G radiation).
I had a good intention once, to write layman exposition to clear most of the misconceptions. But much like the calculation of the CPI itself, it's a lot of work and ultimately not very rewarding. An unfortunate fact is that a very large part of the CPI comes from household survey responses. These are too expensive for non-professionals to reproduce and verify independently, so probably no amount of writing can really convince CPI-doubters.
My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now. This expectation is worlds away from reality which then prompts people to question the way inflation is measured.
I know you wrote that you don't really have the inclination anymore to educate on the topic but I for one would be grateful for any pointers how to explain the above discrepancy?
>I know you wrote that you don't really have the inclination anymore to educate on the topic but I for one would be grateful for any pointers how to explain the above discrepancy?
obvious answer: it's not "price index", it's "consumer price index". First paragraph from wikipedia:
>A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.
Particularly if one of those is a house and in the period of time mentioned houses not only got more expensive but they changed in character, being more resistant to earthquakes because of reinforced foundations, and because the fire departments built near them got new hoses for their trucks. So if houses were the one that went up by 4% but they also increased in quality, should we "count" them as having gone up by 4%? After all it's not like your money buys you 4% less house since it actually buys you a slightly different house but for 4% more. Now multiply the number of products and dimensions by a thousand or hundred thousand each and we have the true problem of compiling CPI.
And sure, they could use something different as a measure of inflation than CPI, but what would that be, and why it would be better than CPI? These questions need to be answered first before we move away from CPI.
CPI is very important, but the labor numbers are much better (since they are easier to measure), so CPI might become a secondary (high level, target) metric over time.
Given this, the answers to your questions should be obvious. The answer, as far as laymen are concerned, is 3.5%. Improvements don't matter either. If we eliminated every car other than a Porsche, as far as laymen are concerned then car inflation went up by around 150%.
If the answer seems obvious, then the question isn't fully understood, because there are trade-offs involved in CPI calculations.
There's no such thing as a "layman." Different people in different regions experience different CPI. Inflation for all goods in the Northeast might be 2.1% over the past ten years, but could be 1.6% in the South for the same basket. that might not sound like much, but that means that inflation is rising 25% faster in the Northeast.
No matter what you do, CPI at a national level won't accurately reflect any group. People in the South will claim it's way too high, and people in the NE will complain that it's way too low, etc, etc.
If you want real numbers, relevant to your situation, then the BLS provides the ability to calculate your own person CPI based on what you buy and where you live.
Shouldn't the solution basically be how much monthly or yearly does an average consumer spend on x good, and then that is included in the calculation of inflation by that amount.
So if the average consumer spends 30% on housing, then housing should be 30% of the measurement.
How should a measure of inflation track that?
What if Good X becomes half as expensive per unit but people consume twice as much of it as a result? Should that be reflected as a reduction of inflation? If housing per front door goes up by 100% but only up per square foot [or room] by 50%, should the inflation rate of housing be 50%, 75%, or 100%?
Excluding savings, My budget boils down to discretionary and non-discretionary spending. Roughly 1/4th of my budget is fully discretionary and will vary year to year with what I like to do, tracking inflation on the discretionary portion seems like a high difficulty activity which ultimately doesn't matter to my perception of prices.
The remaining 75% of my budget is non-discretionary covering items like
- Housing ~1/4
- Childcare ~1/4
- Food ~1/8
- Non-discretionary expenses (repairs, car, phone, computer, etc. ) ~1/8
I'm fortunate that my healthcare is inexpensive at the moment, but it's pretty straightforward to calculate my future expected health costs and my previous education costs. I'd judge that calculating inflation on the non-discretionary portion of my budget should be trivial, small items like phones/computers simply do not add up to much relative to the big ones like housing, childcare, food, health, and education.
Ironically the CPI seems to focus on the magic basket of goods and not what will actually move the needle for perceived costs by most individuals.
For example: is TV service discretionary? Is Internet service discretionary? Is broadband Internet access discretionary?
I just checked. Bell TV + Internet is advertised as $120CAD right now. Cell service combined with that add $70CAD. Per month. With taxes on top that's round about $2,620 per year if we are talking Single person household.
Now it depends on where you are and whether you live alone or not and such. In Toronto as a single person at the median income this alone can be 4.5% of your net income. I'd say that moves the needle. I pay less than half of this with a different ISP and cell provider + Netflix. Of course the precise calculations change as we move between cities and provinces as well as single person vs. families etc. as base costs get shared.
For perspective, our hypothetical individual would be experiencing house price inflation equal to a new TV, phone, and internet bill every year.
(1-bedrooms displayed the lowest price increase of any housing category in Toronto according to https://www.zumper.com/rent-research/toronto-on )
Once I have a house the inflation on that also doesn't affect me that much any more (sure, evaluations increase my tax bill - which btw is a NA thing that is irrelevant in Germany for example as long as you have a mortgage) but other items do.
1. The marginal cost of housing has little to do with what individuals pay in the short-term.
2. The median income earner requires or will require substantial subsidies or raises to keep pace with the increased costs of their home. Roughly 3-4% per year assuming that housing is the only item inflating.
3. Either the median income, median rental, or tv+internet prices we've quoted are wildly off the mark.
I'd bet that #2 is the correct interpretation of the statistics. While option 1 is possible, it hides low-quality substitutions and assumes that one can always make a substitution such as living with parents for longer.
I realize that we (or at least I am) also mixing up various things, even though I chose to quote a particular city's median income for the example.
If you are renting and your rent goes up 10% that obviously has a large effect. If you have a house and rent goes up 10% you don't care at all. If rent goes up like that, it's probable that house/condo sale prices go up too and you have to pay more in taxes. I bet the increase in taxes makes a smaller hole in your pocket, though I might be completely wrong. But this also depends on whether we stick with the example or move on to other countries, where there's no such thing as separate municipal/school taxes or where rent control is in place.
That's loosely correct; but general inflation is the change in purchasing power for currency buying final consumer goods and services, not assets which are intermediary stores of value. Purchased homes are assets (actual or foregone but using a home you own yourself) rents are consumption expenses.
> I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now
It's not. Specifically, that would be the fallacy of division, even if your basic understanding of inflation was correct. The change of an aggregate is not identical to the change in every subset of the aggregate.
1. Home prices are not captured in CPI, only rents.
2. The headline CPI is a national number. Home price inflation has actually been somewhat tame overall in recent history (2-3% per year), but it has been very geographically uneven. Some places have experienced basically no inflation, while others have tons of it.
Here is the graph for home price inflation in the San Francisco region: https://fred.stlouisfed.org/graph/?g=BLdf . You can see that it's often double digits, and certainly much higher than any headline inflation rate.
Yes, because CPI measures cost of buying service of housing. Usually, if housing prices rise, so do rents, pretty much in accord, so monitoring rents already gives you a good view on housing affordability. The extent to which cost of renting is decoupled from house prices is largely explained by changes in interest rates: lower interest rates make mortgages more affordable, which allows more bidding for houses and pushes prices up. However, this on net doesn’t do much to actual affordability of said house: at low rates, the sticker price on a house might be high, but the mortgage payments will still be low. Conversely, in the 70s and 80s, boomers saw many cheap houses on the market, but at mortgage rates of 10-12+%, these were even less affordable than houses are today.
That’s why CPI only includes rents, to make an apples-to-apples comparison.
While this would theoretically make sense, it's not actually very true in the United States. There's a significant speculative aspect to housing in some markets that results in price increases far higher than rents would sustain (this effect is actually more prominent in other markets, e.g. Canada).
Here: https://smartasset.com/mortgage/price-to-rent-ratio-in-us-ci... you can see that San Francisco prices are 50x rent, while Plano TX, which also has a high per capita income and low eviction rate, sits at 20x rent.
But it's still not obvious why for example Atlanta (22.6x) has almost double the price-to-rent ratio of Milwaukee (12.4x) if not due to speculation. Those both seem like fairly "typical America" cities to me. Would you expect Rent in Atlanta to spike heavily in the coming years? Or is the distinction you're making more about urban vs. suburban? (Since my link is just a mediocre blog, it's not clear if those numbers refer to city or metro area.)
This is literally correct, but misses the essential feature of the housing issue in CPI: A large component of the housing contribution is "owner's equivalent rent" (OER).
Last I checked (now years ago), there is a survey where BLS essentially polls homeowners with the question "How much would your house rent for?" That number is then used for the OER component of CPI.
As the housing bubble was popping, BLS felt it necessary to explain the divergence between rents and OER [1]. The statistic was an absolute mess then, and I haven't seen any reason why it got cleaned up since, although I have not followed it closely in recent years.
[1] https://www.bls.gov/osmr/research-papers/2007/pdf/ec070090.p...
Housing is a bit particular because it's a good that's almost always purchased on credit. You'd want to look at the monthly costs of housing (mortgage payment) as opposed to the sticker price, since the total cost that's affordable fluctuates based on the interest rate. Twenty years ago, the interest rate on a 30 year mortgage was about 8%, contrast it with the about 3% rates now.
Just as an example, let's say milk and eggs are the only thing on the CPI, and they're both at $2. If milk goes up to $3 and eggs go down to $1, the CPI says there was 0% inflation (assuming they don't adjust for quantity consumed). So rent can go up a lot without affecting the CPI too much, as long as the cost of other goods goes down enough to offset that increase.
Here's a graph showing inflation of different goods between 1998 and 2018: https://realinvestmentadvice.com/wp-content/uploads/2019/04/... As you can see, a lot of "mandatory" things inflated a lot, but the increase in those costs is offset by the decrease in electronics prices.
The CPI is meant, afaik, to gauge the increase in the cost of living for the "average person". It's useful for driving fiscal policy, but it's not terribly useful to laymen, imo (and that includes myself).
Houses are included in asset inflation, I believe. Here's a chart showing asset inflation: https://realinvestmentadvice.com/wp-content/uploads/2019/04/...
Real wages are more interesting to laymen, I think. Those are effectively wages adjusted over time based on inflation from CPI. Using your housing example again, it doesn't really matter if a house cost $200k 20 years ago and costs $400k now, as long as wages doubled over the same period, all things equal. Inflation is fine (for the purposes of buying a house) as long as wages rise to match that increase.
The reason many people can't buy houses anymore is that real wages have fallen. https://en.wikipedia.org/wiki/Real_wages Wikipedia has some interesting info on that. In an ideal world, inflation decreases the purchasing power of a dollar, but your employer gives you more of them to compensate for that. That never happened for many people.
You are missing one crucial aspect: interest rates. 20 years ago, typical interest rate was 8%, so mortgage payments on $200k house were something like $1400/mo. With today’s rate of something like 3.2%, the payments on $400k house are something like $1700/mo, which is 20% higher. To keep the affordability the same between now and then, the nominal wages need only grow 20%, and if they actually doubled, this would hugely increase affordability.
The same person living in Seattle might see housing prices double since they rent, food prices explode, since they live in a gentrifying area where low-cost grocers are replaced by high-end organic ones, and gasoline might not be a huge component of their spend because they drive a beater Prius 15 miles a day.
Those are two people, buying pretty similar things who experience inflation very differently than "average." Luckily, the BLS does provide different CPI figures to account for different groups of people -- for example only looking at inflation data for Seattle -- but people generally never discuss those.
The BLS largely circumvents this by using rents, actual rents for renters, and owner equivalent rents (OER) for owners. This is done by asking owners what they think their house would rent for, and using those increases for the housing/shelter component of CPI. Rents (which make up 1/3 of CPI) have increased faster than the general CPI, but not as much as house prices[1], likely because of the interest rate decrease.
There are some other complicating aspects around house prices (city prices increased faster than rural, houses sizes grew while household sizes shrank[3], so part of higher prices is just people buying more). But I believe the main aspects is really falling interests rates. A proper decomposition and attribution of most aspects probably takes months of work, enough for a econ Master theses. That's why I mentioned I don't have the energy for that. Nor do most other bloggers/pop-article writers, so they just go for popular appeal and clicks, by telling you why everything is getting worse and more expensive for you.
[1] https://fred.stlouisfed.org/series/MORTGAGE30US [2] https://fred.stlouisfed.org/graph/fredgraph.png?g=BLyd [3] https://azgolfhomes.com/average-home-size-u-s/
Otherwise, because rents and house prices don't always move in lockstep, it's hard to measure the buying power of a dollar over time.
When thinking about purchasing power over time or between different cities, I often think of it as "assume I'm buying 1/180th of an average house in that city each month" as part of a representative basket of goods.
This, of course, makes it wildly inaccurate.
All the other examples I used -- chef, journalist, writer, singer -- can win awards and recognition: Michelin stars, Pulitzer, Hugo, Nebula, Grammy, and such. Those are good indicators of their accomplishments, but that's not the same as having a set of "agreed-upon norms and standards that can be measured".
And if you decide to relax your criteria and say that having those is acceptable, then guess what? There's a Nobel Memorial Prize in Economic Sciences, and a slew of other awards for economists.
Like it or not, studying economics is something that people can and do dedicate their lives to. Would it be better if we had more clarity, transparency, and consensus when it comes to what they do? Absolutely. But dismissing the whole profession out of hand is unhelpful.
Economic theory is good for asking questions and maybe creating a standard. It has a dismal record of answering questions.
"My cost of living has doubled but your saying everything is fine since the CPI has only gone up %3!!!" and general 'let them eat cake' style behaviors saying that iPads are 'so much cheaper'[0] is the general feeling I get.
[0] https://www.reuters.com/article/us-usa-fed-dudley-ipad/ipad-...
It’s my perception that there is not much inflation in some areas of the market (chicken thighs at Kroger) and tons for the “keeping up with the Jones’s” set (organic produce, private school education etc)
My point being that inflation can be quite different based on different baskets of goods / consumption patterns
What do you think is missing, or mis-weighted?
Ex:
https://www.macrobusiness.com.au/2017/04/excluding-housing-c...
https://www.bls.gov/cpi/tables/relative-importance/2020.htm
Housing is 42.385%, of which the shelter itself is 33.316%. The rest includes things like "Clocks, lamps, and decorator items" at 0.313%.
That's American data. Maybe the Australian data (your first link) really does exclude it, but the US most certainly does not.
If people think that the basket of goods is skewed, they need to justify that by comparing it against this list. The BLS makes a ton of data available, and it's unreasonable to claim otherwise.
This is a good visualisation of which things got cheaper and others got more expensive, over the last 20 years in the USA. It shows how a "consumer price index" in which, for example, the price of tobacco is weighted at >50% the price of education, can make it seem like it's all okay.
https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_p...
This post is also good in that it layers the hike in the price of insulin on the above graph. Be prepared to scroll.
https://insulin.substack.com/p/the-price-of-insulin-vs-the-p...
2. There are around 20mln Americans in college, versus around 34mln adult smokers. Be careful about peer-group bias: how many of your friends smoke, how many went to college?
[1] https://www.bls.gov/cpi/tables/relative-importance/2020.htm
Not an index per se but the Canadian Centre for Policy Alternatives publishes living wage reports, here is how they calculated it in the last one (2019): https://www.policyalternatives.ca/sites/default/files/upload...
Uh no, housing is 32% of the CPI.
Source : https://arbor.com/blog/how-does-rent-factor-into-the-consume...
It doesn't track well with the experience of people on this forum because young professionals tend to live in cities with crushing rental markets, especially Silicon Valley. But the whole country, particularly thoseliving in houses not in New York or California, have a different experience.
I’ve seen this a lot around the net and I’m honestly and genuinely curious. What drives you to defend the CPI?
What drives you to question the motives of the commenter rather than responding to his arguments directly?
Perhaps, but the right way to approach this is to point out the factual errors, rather than making thinly veiled insinuations that his opponent is a shill for the BLS or whatever.
>defending the CPI calculation is almost criminal
Ah yes, because the only possible explanation for why people don't hold the same beliefs as you is because they're acting with malice.
For this and the previous point I refer you to the site guidelines: https://news.ycombinator.com/newsguidelines.html, namely:
Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken.
Assume good faith.
>Many people on fixed incomes that are adjusted based on the CPI are negatively affected. This bogus formula will be conveniently altered to stay under 2% if inflation creeps into the basket of goods being calculated.
All this does is provide a motive for why CPI might be wrong, but stops short of providing evidence or counter-arguments.
That was definitely not what I was doing at all. If I am giving off that impression then that’s my mistake but this is purely a curiosity.
> Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken.
> Assume good faith.
Please do me the same courtesy friend. This is out of a genuine curiosity for knowledge.
It triggers me in a similar way, I think, as comments like "my (sisters'/neighbours') kid got really sick after his vaccination, so vaccines are very dangerous". A small number of people really do get sick after (and sometimes even from) vaccines, and probably no amount of research will override their personal experience. But it's a bit disheartening if the level of discourse never rises much above personal experiences.
Since CPI doesn't reflect inflation, it is natural to criticize it for failing at that. Maybe it was never meant to reflect inflation, but that seems about as futile as trying to argue for the proper, original meaning of the term "hacker", not what media made it to be.
It's done an absolutely terrible job for the past 15 years, for my lifestyle and where I live. I suspect it hasn't reflect many other people's budgets either, hence the common argument of official CPI figures being nonsense.
I don't even have to look at anything other than the changing health insurance premiums/deductibles/co pays/out of pocket maximums to prove it, not to mention real estate, childcare, taxes, and education. It eviscerates any downward effect tech products and grocery prices might have.
I used to have insurance co-payment, a deduction from my paycheck, and an unreachable out-of-pocket maximum. All of that has changed.
I used to pay about $1200 rent for a crummy house in a dangerous neighborhood. Now, with a paid-off mortgage, I pay just $266 for property tax on a house that is 3109 square feet on 0.39 acres.
Childcare is my wife, so $0 then and now. Income tax remains $0 due to child deductions. Sales tax is about 7%, relatively unchanged.
Education is a new expense compared to 15 years ago when nobody was in school. If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheaper. Tuition is a tiny bit lower, but the big change is that tuition and books for the first couple years are now free if you get it done in high school. That cuts the price in half.
This is not to say that I pay less. I now have a huge family. Things are cheaper, but I'm buying much more.
In this case, technically true is not the best kind of true.
If we generalized both of your anecdata to either
- health insurance and housing got cheaper for everybody, or
- health insurance and housing got more expensive for everybody
> If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheaper
Again, that is not generally the case. In fact, the growth in education costs has substantially exceeded the inflation in most other sectors
Discounts (scholarships) are much more available.
Stuff like dual-enrollment has spread across the country.
AP is now widely available.
> I can see that college has gotten cheaper
to
> I'm not so sure college has gone up in price
You seem to be good at finding system hacks for your own, and/or proximal cases. But you continue to generalize your own experience(s) in a way that almost certainly doesn't broadly apply.
Here is Google's first link for "student loan total debt history": https://educationdata.org/average-student-loan-debt-by-year
Some stats from that:
- Student loan debt at graduation has increased 76% since the Class of 2000, a growth rate that outpaces the rate of inflation by 41%
- After adjusting for inflation, the average student loan debt at graduation has increased 326% since 1970
- Since 2003, the national total student loan debt balance has grown by 602.5%
Please provide a source to back up this claim, everything I've seen says inflation is /under/-stated, not over. CPI absolutely takes into account substitute products and CPI is not simply tracking a basket of items over time.
These substitutions are tricky, if hypothetically a consumer can move from eating fresh local produce to preserved canned produce then it's likely they will make the switch under price pressure when fresh produce increases in cost by 2x. You could calculate CPI based on the new realized purchasing patterns - or you could calculate it based on the desired purchasing pattern.
Basing CPI on realized purchasing behavior will lead to errors in how inflation is perceived or where consumers are trading quality for cost. From a monetary policy perspective ignoring this consumer tradeoff could lead to sudden shifts in CPI when consumers run out of quality substitutions.
I'd argue we've seen this in housing in the major cities where first home prices were excluded for rental equivalent, then rental quality fell in both the amount of space available in a unit as well as the overall quality of the unit. Eventually you hit the wall where quality can't be traded off any longer and you're left with many people who can't legally house themselves.
Then one day cards are 'good enough' that someone builds an application that leverages this power, and all of a sudden that becomes the new baseline. Over night you went from having a video card that is three times what you need to a third of what you need.
We might consider availability of seafood to be a given now, due to improvements in food logistics. But it wasn't always the case. For sure strawberries in winter were just not a thing one would buy until relatively recently.
If I wanted vitamin C in February before it would probably be in the form of jam or tomato sauce.
Hedonic adjustments have very minor effects on tech products (which is one of the few areas I've seen a detailed impact analysis, though not recently enough that I have it at hand.)
> Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high.
And...they do. Hedonic adjustments have an effect on how that is reflected in inflation statistics, but they don't effect the underlying processes.
> CPI is absurd, it only perpetuates consumerism and punishes savers
I think your are (among other errors with that description) confusing measuring inflation with policies targeting a small positive level of inflation. CPI doesn't do either of those things.
https://www.clevelandfed.org/newsroom-and-events/publication...
TIPS use CPI like a lot of other things in bond math: https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
At some point if the prices rise enough it should become profitable to streamline the supply chain?
And as a consequence the wages you earned by making tech year ago should have less value than the wage you earned today. You should expect small inflation. If you want deflationary money, wages should decline year by year.
If you want to save, don't hold cash.
hold what then? become investment manager in free time instead of my day job as software developer?
For the other overwhelming majority of life events, you should invest your savings prudently, instead of stuffing them into a mattress.
If you have no savings, this is a moot point - but so is inflation. Why do you care that money is losing value if you don't have any?
If anything, if you are in debt, you want inflation - because it lets you inflate your debt away.
If you are in the US and just want to keep the value, Treasury Inflation-Protected Securities (TIPS) directly from the U.S. Treasury. https://www.treasurydirect.gov/indiv/research/indepth/tips/r...
Just buy a mutual fund (preferably indexed) from somewhere like Vanguard and let them figure it out.
Any measure of inflation is subjective. That doesn't make it B.S.
Inflation is a measure on a basket of goods. There is no single basket because people buy different things. This is why there is no single CPI statistic.
Find a CPI that works for you. The federally-provided ones go as fine-grained as income bracket and metropolitan area. They're extremely precise, but may not be accurate if you have unusual purchasing habits.
Almost financial market professional, including those at the Fed, is tracking multiple measures of inflation.
Seems like a lost opportunity to create so much anxiety with a long piece like this, to then only have this single line to hint at a reason for the rise.
Can anybody more economically minded clarify if this is just post-covid rebound supply chain prices or is this food prices adjusting closer to their 'real' cost?
Also what events do they refer to regarding 'poor weather'?
I wonder how many warehoused things that require power and integrity got damaged.
It's not just food. Lumber, Steel and Oil aswell. https://www.ft.com/content/6a7c232e-9c63-420c-ac05-40aea84a9...
EDIT: noticed link is paywalled (but not when you access via google) alternative article here: https://www.reuters.com/article/us-global-markets-idUSKBN2AM... "World shares slide on inflation fears, commodities surge"
Personally, I'm surprise at how robust are the global supply chains that have been able to keep things more or less normal despise what we have been through the last year.
The quantity of reserves created by the Central Banks are irrelevant if they are not spend in the economy. There are two effects to this "printing money": one is that the interest rate goes down facilitating borrowing from the private sector. The second is that governments have the ammunition to spend in stimulus. If the two things happen we could see inflation, but, notice that this the desired effect: compensate for a fall in the normal demand in the economy.
>" [..] central banks over the world have printed an astronomical amount of money. Even though they may state there is no significant inflation, I dont buy it [..]"
It seems to me that, in your model of the world, this should be leading to hyperinflation. If this is the case, my model of the world is wrong and I will make an effort to change it. I wish all the people has been predicting hyperinflation the last 30 years did the same if it doesn't happen. Somehow, I doubt it.
By now, the quantity theory of money based in the fractional reserve banking model should be discredited.
When the rest of the world begins using other systems than the reserve currency to conduct trade, the end result is that the inflation returns home as demand for your currency drops.
Anyway, the "reserve currency" excuse doesn't explain Japan in the last 20 years or the Euro in the last ten. The theory is just wrong. I don't know what more have to happen for people changing their minds.
It's spending what can generate inflation, specifically, spending above what the economy can produce. If Biden tomorrow created a trillion dollar coin and keep it under their bed, there will not be inflation. If the Central Banks create reserves, the interest rate will fall to zero (but not more), and if, despise the low interest rates, nobody is borrowing, there will not be inflation.
That's a failure of competition keeping prices in check, and little else.
The wealthy person you are looking for is Warren Mosler. He retired to the US Virgin Islands many years ago having made a fortune off the back of people who believed in the Quantity Theory of Money
You can read his conclusions in the book "Soft Currency Economics".
https://www.cnbc.com/2021/03/08/how-the-young-plan-to-spend-...
It's possible something could set off the market today that accelerates the whole process, like the upcoming supplementary leverage ratio change. Or, the bubble could continue inflating until doesn't. But either way the whole thing is incredibly fragile and much more complicated than the "Stimulus is good for the economy" talk politicians are peddling.
There are other things like real estate and government contacts, but those are less available to the casual investor, except through stock market funds.
The market is up 2% YTD, but down 4% from peak. It’s a reasonable time to buy (better than peak, at least).
If you must try to time the market, use time cost averaging to reduce volatility from getting a peak (or trough) price when you enter the market, but know that doing so reduces expected returns. The basic idea is to put 1/n of your money in over the next n weeks.
John Hussman has a nice article on the option value of cash. https://www.hussmanfunds.com/comment/mc201201/
tldr: Suppose I offer you a security that will pay $100 two days from today. You can buy as much of it as you like today at $50, or you can wait until tomorrow. Tomorrow, I’ll flip a coin. If it’s heads, I’ll sell you the security at $99. If it’s tails, I’ll sell you the security at $25. What should you do?
Clearly, if you buy the security today, you’ll double your money two days from now. That’s a 100% expected return for each dollar you invest, over that 2-day period. If you wait, you’ll earn nothing on the first day, but you’ll then have two possibilities. If heads, you’ll get just 1% on your invested money. If tails, you’ll get a 300% return, quadrupling your money. With a 50/50 chance at each, your expected return for every dollar you invest is 0.51% + 0.5300% = 150.5%. So waiting adds 50.5% to your expected return over that 2-day period.
We have lots of things to worry about -- inflation isn't one of them.
Just inflating the bubble further, as every European bank and government is doing, to make existing property owners richer on paper and get their votes, is not a viable long term solution.
IMHO, it can't pop sooner. Houses should be for living, not for speculation and hoarding wealth. The younger generations have been screwed enough by the old established wealth hoarders.
Otherwise, the number of people in that "put their life savings as a downpayment on an overpriced house" category is only going to grow, making the problem worse when the collapse eventually happens.
I think we run into real problems in America trying to protect people from the consequences of their own bad decision making. In addition to being deeply patronising, it eliminates so many of the normal incentives to be responsible and pushes up risk appetite across the board.
If individuals make poor investments (whether on a house or gamestop otm call options) they'll learn their lesson and move on. There's enough of a safety net in America to ensure no one truly goes hungry from bad luck (and before you point to homelessness- that's a complicated issue intertwined with drug addiction, mental illness and in some cases a free lifestyle choice)
This attitude that the market must always go up has never worked out historically, just makes the eventual reckoning that much worse.
Fortunately that mentality means that renters like my wife and I who want our future kids to grow up in a good house in a quality school district can just keep saving money, waiting to capitalize on the inevitable normalization when all the speculators and eggs-in-one-basket people fail to learn from history... again.
I really hate this comment. I am worried about not being able to ever being afford a house for my family. Avg income in my neighborhood is ~49k but a 2 bed condo here are selling for 450K and getting outbid by 75k over the asking price. Its insane.
Maybe you already own a house and are happy that prices are up. But its really weird to tell other ppl what they should be worried about.
Sure, and your point about housing prices mattering is a good one (see my other comment on this story). But, this describes maybe a few dozen housing markets. Probably only a couple dozen if you cut out resort/ski towns. It's a regional problem, not systemic problem with the national economy.
Its a national problem
https://www.redfin.com/us-housing-market
'few dozen' is what like 3 dozens? Assuming its a problem only in 36 markets. Wouldn't that be a 'national problem' ? 36 markets should covers a majority of population in the country.
E.g., in the Midwest you'd have to be in a nice part of Chicago or choosing the most expensive city neighborhood of a mid-sized city to find a meaningful number of $525K 2 bed condos. And even then, spending that much on a condo is 100% an unnecessary luxury. 10 minutes in any direction prices will crater, and by the time you get to the suburbs starter homes are from the $200s and $525K is a mansion. For the entirety of the midwest and most parts of the south.
Even on the coasts $525K for a 2 bed condo is a Big City thing. E.g., $500-$700K is the going rate for 2 bed condos in most of Boston, but drive an hour away from Boston in any direction? Not so much. Hell, even Wakefield has a 2 bed condo below $300K and that's only a 25 minute drive. And that's one of the more expensive housing markets in the US.
Living 20 minutes from major city centers via public transit has become a luxury, sure. But it's just not accurate to say that $525K for a 2 bed condo is "normal" in the US. It's not. It's quite specific to a very high CoL markets.
When I look at real estate in general in Chicago, it's been dropping a little, not a ton, but it's not like how other are describing the huge increase in housing costs in other parts of the country.
It seems like there are big regional differences going on with housing costs in the US. Supply/demand and policy I'm guessing are making the difference.
It, uh, describes all of Canada actually.
https://www.reuters.com/article/us-canada-economy-housing-an...
Also, more Americans live in California than any other state. So if it’s an outlier, it’s an especially impactful one.
Prices are up for multiple reasons, including more pressure on shipping channels due to increased demand for goods across the board.
Also, this article is largely about inflation in developing nations like Indonesia. The inflation noted in countries like the United States is more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
1. Biblical scale locust infestation in much of Africa, and Asia
2. Floods in East Asia
3. Early winter in Russia, Ukraine, and North China
4. Failed, and missed sowing of grains in much of above regions
5. Shipping disruptions, and resulting food spoilage, and waste
6. Granaries busted, and people burning through many months worth of grain, and flour in much of third world due to initial COVID panic
7. Financial speculators having the best field run on agriculture in decades
8. Anxiety about point 6 repeating runs on food wholesalers again
https://www.aljazeera.com/news/2020/12/10/nobel-winner-wfp-w...
Borders are shut so no backpackers come in, so a lot of fruit died on the field.
https://www.nytimes.com/2021/03/02/world/australia/agricultu...
It should be noted that the entire industry is notorious for doing every dodgy thing they can get away with, wage theft, rent theft, extreme conditions, so local workers stay as far away from these jobs as they can.
Other industries have done OK though. Wheat grain, for example, is predicted to be pretty average: https://research.csiro.au/graincast/wheat-yield-forecasts/
In Europe, there are seasonal harvests that require surges of workers, who are sometimes legal and sometimes not. For example loads of foreign workers flock to the vineyards in France, Italy or Spain to collect the grapes for winemaking. It's around 3 weeks of work, obviously not worth a permanent contract.
There were very few restrictions in those countries by the time of harvest (September) so wine prices, to my knowledge, have remained largely unaffected, but if it happened otherwise, winemakers would have been, without doubt, lobbying against the restrictions.
You need to take into account that income differences within the EU are enormous. Badly paid job in Germany still translates into very paid job in Bulgaria or Romania. That is why a lot of the seasonal workers come from the Balkans. Within a month they make enough money to live off for several months back home. No qualification needed.
[1] https://en.wikipedia.org/wiki/Backpacking_(travel) [2] https://immi.homeaffairs.gov.au/visas/getting-a-visa/visa-li...
Pay the 400 bucks and you're good for a year.
You can work legally as long as it's no more than 6 months anywhere, and it's pretty easy to get around that.
You can extend your visa for another year if you do 88 days (~3 months) of "farm work" -- doesn't have to be on a farm per se, I know a guy who worked in a hyper-remote rural gas station ("road house").
I worked on a very remote cattle farm digging watering trenches and welding cattle pens. Then hitchhiked across the country.
Many containers are abandoned in countries that aren't on major routes because they took PPE to those countries, but never bothered to bring the empty containers back.
Also lots of boats moored off the US East and West coasts, plus Europe, waiting of loading/unloading because of delayed supply chains due to COVID.
It's a butterfly or ripple effect of high optimized supply chains being affected by small changes caused by nature/the government throwing a virus shaped spanner in the works.
https://www.reuters.com/article/us-usa-fed-dudley-ipad-idUST...
Obviously, this particular exchange was of no comfort to those who suffer from high food prices, but why should monetary policy be the remedy for high food prices (to the exclusion of its current goals) instead of looking for remedies in fiscal policy, trade policy, regulatory policy, or other instruments better suited to a more targeted redress?
But I don't think it's even technically correct from the perspective of price stability. The inflation the central bank cares about is the kind that is the result of (to simplify) "too much money chasing too few goods". Technological deflation is totally orthogonal to that, and should be ignored to the extent possible.
Furthermore, even on its on terms, the calculation isn't correct. A fifty percent faster CPU doesn't mean the effective price has fallen fifty percent, because the CPU is only occasionally the bottleneck. (And do they ever adjust inflation upward for quality reductions?)
Also, Dudley said:
>>“Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,”
Well, yes-kind-also-no?
It's not an index that describes the cost of necessities or human survival. It's an index that describes how consumers spend money on goods and services, such that the value of the money remains more or less constant.
In that sense, yes, people's computer-money spending patterns can affect the price of food. Literally anything else in the index can do so as well. No, the index is not "assuming" anything can "displace" food; it's just never set out to be a thing where food is this sort of baseline.
I can't be 100% sure, but you seem to think that there should be an index which cares more about food. Moreover, you seem to think that more public policy should revolve around this price index rather than the vanilla CPI that is currently used.
However, I would suggest that monetary policy is far blunt an instrument. It is one of the least-targeted tools possible, with the largest set of possible side effects, and food is too small a slice of the economy.
There's a reason we go for economy-level price stability instead of sector-specific. Imagine if the US had a real bumper crop, more corn and soybeans than you could eat: to meet food price stability targets the Fed would be obligated to shrink the money supply until the corn was as expensive as it used to be, and everyone's mortgages, loans, and credit cards would be harder to pay off.
https://news.ycombinator.com/item?id=26390606
>There's a reason we go for economy-level price stability instead of sector-specific. Imagine if the US had a real bumper crop, more corn and soybeans than you could eat: to meet food price stability targets the Fed would be obligated to shrink the money supply until the corn was as expensive as it used to be, and everyone's mortgages, loans, and credit cards would be harder to pay off.
That I don't have a problem with. The concern is with the opposite scenario: say the Fed is pumping enough money to raise food prices 20%, but techno wizards increase production efficiency across the board by 20% and exactly cancels it out. In that scenario the Fed should say, "wow, we're pumping too much money", not "inflation is just right", because they've stolen credit for the gains of technology.
So pick whatever definition of inflation you want. Just understand that what normal people care about in terms of inflation is how many pieces of paper they need to achieve the basic goals of their life and your definition is totally irrelevant to their set of concerns. Your having a totally separate conversation then they are with nothing but some semantic overlap.
The 2021 Chevrolet Spark costs $13,400 (and appears to come with $1000 of "bonus cash" that would bring that down to $12.4k?), gets 38 MPG highway, and has a standard rear camera and touchscreen. You can buy it today - a brand new car, of reasonable quality, from a top name American company, for $160-ish a month for a 7-year note. It is far safer than any car sold in the 70s, it accelerates faster than most cars sold in 1970, it has navigation and a backup camera standard in the base model. Its paint and coatings will last forever, its battery is sealed, and it requires nearly zero service in the beginning of its life.
Look at a budget car in 1970 - Car and Driver's recommended budget pick was the Ford Pinto, $2500 as tested. It was described as "uncomfortable" with four adults - you really should stick to two, they said. The fact that the cars were still running after the first 15,000 miles was, according to Car and Driver, "an indication of the soundness of their basic engineering." It had painful, uncomfortable bucket seats. The Pinto, and I quote, "substantially more powerful than normal store-bought economy cars", had a 0-60 time of eighteen seconds - this is a car described as "nimble and powerful" in its time. _All_ of the budget cars delivered to Car and Driver had "serious defects" straight from the factory - in the Pinto's case, the camshaft had been installed incorrectly. Ford apparently built a whole series of them that way, then lost track of which. For a budget car to not squeak while braking was apparently impossible, so instead of discussing _if_ they squeaked reviews discussed how the squeaks sounded (the Pinto was apparently not bad - the Chevy Vega was described as a "depths of hell" squeak.) According to the manufacturer, in the first 24k miles, you would need a minimum of eleven hours of shop time, best case scenario, to keep the vehicle running. People describing their normal use mentioned they added a quart of oil a week to the Pinto - ludicrous today. And I won't even get into the safety of 1970s cars - a reminder that the Ford Pinto was famous for literally exploding into flames (the controversy came eight years later, 1978 or so), but despite this its safety is considered today "comparable to other 1970s subcompact cars" (aka terrible, but not remarkably so for the time.) Despite all this, it was a popular car for the time and got good reviews in its day.
At the current low minimum wage of $7.25 an hour, you would have had to work about the same amount of hours to buy a budget car today as in 1970 - the budget cars of today being spaceships in comparison. Drive a 70s car and a 2020s car down the road and you'll quickly understand that the modern car is a paradise of comfort in comparison - noise, smoothness, how it drives, handles, vibrations, emissions, etc etc. Many Western states have top speed limits of 80 mph, where the flow of traffic is 85 or higher - your Pinto would feel terrifying and be extremely unsafe at such a speed: if you crash you die.
Of course, the same applies to many things. Improvements in phone cameras mean that for many people, the cost of a phone+camera has gotten far cheaper. Quartz watches can last a lifetime and are far more accurate than mechanical watches. Remote control toys, flashlights, batteries, lightbulbs, washing machines - all cheaper. These things add up!
Reading your other comments in the adjacent thread, I think you're not seeing the forest for the trees. Yes, a CPU that is 10% faster has little marginal utility, and it does not provide you with much (if any) dollar savings in your pocket. But at the same time, the largest single-year increase in the price of bananas in the last few decades was a few cents a pound: those few cents in your pocket don't really do much either. For increases in both the cost of living and food, you're going to have to look at the ten- or twenty-year picture. Look at the total cost of a laptop that meets your average Joe's requirements. Look at the total cost of ownership of a car. Look at the cost of lightbulbs, toothbrushes and bicycles.
So yes, he is correct: technological improvements do cancel out increases in the cost of living elsewhere! The few bucks you save by not topping up your oil can pay for more expensive bananas, the thousands you save by your car lasting longer can pay for higher rent, the hundreds you save by not needing a camera can pay for a fatter bar tab. But, at the same time, tone deaf to say that to a working class audience in Queens NY in the depths of a recession while you're bailing out the big banks.
In some cases, though, there often isn't much of a choice. I can't buy a (new-ish) car without a rear-view camera, now that they're mandated. I can't hire a builder and tell him that I don't need GFCI outlets, or HVAC, or fire sprinklers; it's all required by code. If I wanted a ~1000 square foot house, I could have built one 50 years ago, but today my planning department wouldn't approve.
Similarly, I might have been content with the experience of using my iPhone 4 back in 2010, but I can't recreate that for much cheaper today. Even if I could buy an iPhone 4 for cheap, it no longer receives security updates, and many apps have dropped support, or at least focus their QA on newer devices.
Or I might have been content with the 2mbps connection my ISP offered back in 2000, but now their plans start at 50mbps. Even if I could find a cheap 2mbps plan, it wouldn't be as practical given the bloated state of websites today. (I mean it's doable, buy my quality of experience would be much lower than it was in 2000.)
The reason I like the car as an example is because it is a quality upgrade and also a lower cost. A vehicle with more than twice the lifespan translates directly into cash in your pocket. You save cash on a regular basis by not needing to purchase a quart of oil a week, 11 hours of mechanic time (while the car is still new!), more expensive tires, more spark plugs, more coolant, etc.
I get your point that quality upgrades are _occasionally_ mandatory, but the majority are not. If you want to save money by skipping the improvements (get a TV, flashlight, keyboard etc from 2001, or a more spartan smartphone) - go ahead, plenty of people do, and they save money for it. But if you want the latest tech, and a palace on wheels, and international travel, and organic food, and a fancy university on your resume, well, those things cost money.
Fun fact - community college enrollment has dropped year over year for about a decade now (today it stands at almost half of its peak enrollment.) There are plenty of budget smartphones, but the most popular phone in the world by far is the non-SE current-year iPhone, costing $800 to $1600 depending on configuration and the place you buy it in. A safety razor is cheap and effective (I use one) but Gilette sells millions of copies of expensive razors. The American middle class, in particular, wants to consume at a very high level, increasing every year, and it will not be satisfied with less. Interestingly, this consumption has shaped the political debate on the American left. Student loan forgiveness, which as planned today would be a colossal handout to the upper middle class, is wildly popular. Money for the millions of Americans living in true poverty is discussed nowhere, while left circles are furious that couples making 160k won't get any extra thousands with the latest stimulus bill.
(Also, the rear view camera is a tiny, tiny fraction of the car's manufacturing cost. Yes, as an option it costs $xxx, but option sticker prices are nowhere the actual cost of the option.)
That is, it doesn't follow that every technological gain has that effect, and it doesn't mean that that year's technological gain canceled that year's gain in costs of necessities. It doesn't mean that a new iPad's being 50% "more powerful" translates into it providing the utility of 1.5 "iPad 1"s. And it especially doesn't mean that improvements purely for luxury entertainment goods can ever truly act as substitutes for necessities.
Dudley was speaking as if that past year's improvements in the iPad really did cancel, in some substantive way, that past year's gain in necessities. (Remember, the iPad was released in 2010, and the story is from 2011.) It's not relevant to compare to e.g. not having mobile videochat integrated into your phone at all (since we had that in 2010), or the efficiency of cars from the 70s.
>The few bucks you save by not topping up your oil can pay for more expensive bananas,
And as above, those fuel efficiency improvements happened over decades; there wasn't significant gain in the prior year that obviated the extra costs.
Edit: Furthermore, as in the other reply, I think price changes purely attributable to technology aren't relevant to the kind of inflation central banks care about, and shouldn't be regarded as offsetting the "too much money/too few goods" problem.
If you go to bls's site, you can easily tell what it's being canceled out by. From the looks of it, it's mostly being canceled out by low energy prices.
Also electricity is at all time highs, depending on the tier and time of day I’m paying 0.50/kWh. During the pandemic this has been killing me. I can’t believe that energy prices are low at least around here.
on page 5 it says gasoline prices are down 9.2% YOY, but electricity is up 5.9% YOY.
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The soaring food inflation refers to developing countries like Indonesia, which are facing a different set of problems.
This is not demand-pull inflation. People are not eating more than they were a few months ago.
This is supply constraints making their way up the chain, constraints in the supply of shipping and in the supply of produce.
You would not have liked the 80s.
But 2% per year faster than inflation is already quite bad. Remember, this is exponential.
Well, of course. Using office space in many areas is illegal, and even where it's not, it's unwise. People are substituting residential-housing space, instead, so demand is way, way up. Construction is booming, but not so quickly as to take the edge off those prices.
> with a rent moratorium
?!?!? whatchew talkin' 'bout
There is/was a rent moratorium in the US, which would have reduced housing expenses in practice.
But that's just not true. There may have been some small local/regional areas that did (not aware of any, but maybe...) and some individual landlords may have, but there was never a federal rent moratorium.
What was done at the federal level was a temporary _eviction_ moratorium... but rents are still incurred and due (plus penalties and interest for late payments.) The restriction is simply that landlords can't evict during the period of the moratorium for late/non-payment anyone who lost jobs/hours during the pandemic and would likely become homeless or be forced to live with additional people.
If the government tried went beyond that to a rent moratorium, they'd definitely lose. It would be a "Law impairing the Obligation of Contracts," explicitly forbidden in the Constitution. Like, the original Constitution, not even an amendment: the Constitutional Convention forbade it even before they guaranteed the freedom of religion and of speech.
I guess my TV is a good emergency snack for when I can't afford food.
Only if it's an Apple ;).
I'm sorry, I'll show myself out.
Another crash coming in the next couple of years?
Sure all feels like inflation to me.
"Overall, CoStar data show the largest rent increases have come in higher-end properties, where average rent for a vacant unit in the Inland Empire has grown 9.3% over the last year, compared with the previous four-year average of 3.8%.
In older, more rundown properties where lower-income households are likely to live, rent is up 3.4%, compared with the previous four-year average of 4.9%."
1. https://www.latimes.com/business/real-estate/story/2019-12-2...
2. https://www.latimes.com/business/story/2020-11-23/rent-falli...
Each vector corresponding to a delta of price and time in a generalized location for a specific good.
Something like the CPI cannot be a hard science as it refuses to acknowledge that each and every person will experience inflation based on the inflationary vectors of goods and services multiplied by a persons relative use of said goods and services.
Every person experiences a unique inflation rate, and to try and average that in something as wholly simplistic as a basket of goods is pure chicanery aimed at making this topic intractable.
A proper measure of inflation should start from the individual level and reason from there.
So if on average 1 loaf of bread is bought by a US consumer and a loaf of bread's rate of inflation is increasing(or even decreasing) by %x, and that's %y of the average consumer's expenditure, then that should contribute %x*%y of the overall inflation rate experienced by the average American consumer.
Clearly this is a complex line of reasoning, but it should be the basis of thought on measuring inflation. Yet, housing and medical expenditure are not even considered in CPI. CPI is a terrible measure that I believe was designed to obfuscate.
Again, inflation means an increase in the general price level. An increase in the price of bread is not inflation, because the price of bread is not the price level. It can be used as a data point to try to estimate a change in the price level, but by itself it doesn't tell us anything about the inflation rate (unless of course bread is the only good being produced in the economy).
[0] https://www.bls.gov/cpi/tables/relative-importance/2020.htm
It is political. The method in which inflation is created benefits bankers via interest. Further, higher inflation widens the divide between the asset class and the rest of us.
However, the mainline (I would say propaganda) is that `...they know better than you` where `they` are unelected technocrats.
Capitalist economies have a short boom bust cycle and a long one. Short ones cause recessions every 10-20 years. Long ones cause depressions every 100~ years.
It was clearly stated that Covid (if nothing else) could easily cause a recession, with other factors played in as well then it could easily trigger a depression.
https://www.thoughtco.com/difference-between-a-recession-and...
As soon as countries adopted fiat money, that one cycle mostly disappeared and even its timing became much more variable. But there are a lot of confounding factors, so this isn't the smoking gun it appears at first.
There's a reason that interest and usury are prohibited in Islam, Judaism, and Christianity.
Market competition is good. Interest and usury are destructive dangerous practices.
> At times, many nations from ancient Greece to ancient Rome have outlawed loans with any interest. Though the Roman Empire eventually allowed loans with carefully restricted interest rates, the Catholic Church in medieval Europe, as well as the Reformed Churches, regarded the charging of interest at any rate as sinful (as well as charging a fee for the use of money, such as at a bureau de change). [1]
So we see how the Church changed its opinion over time. They weaseled their way out of the prohibition, and today they don't say anything. Separation of Church and State also made it easier to engage in these sorts of practices.
On a side note: I have seen some good analysis/speculation/theorizing done about how interest/loaning would work in a world without government-regulation. Have a look, there may be some redemption in those concepts for you if you divorce them from government meddling (which I would posit, causes a huge chunk of all the evils we blame on capitalism).
The superior model is investments, similar to how VCs invest in companies in exchange for equity. Loans are to be relegated to charity only. If we apply all this, loans will become close to non-existent. We have seen this successfully work because interest is prohibited in Islam, yet it was able to flourish especially in the Islamic Golden Age to push the boundaries of knowledge and science and exploration, during a time where Europe was in the dark ages.
That sounds like a government problem--not a capitalism problem. Though I do agree that this is the heart of the fiat issue.
Economics is complicated. Pointing to one lever and saying "I understand the whole machine" is lazy. I call it 'playing dot to dot'. If you just draw lines between any dots you please, you can make the picture look like anything you want.
But there is a real picture there, it has lots of dots, and its worth understanding. Pontificating on the internet is not showing real understanding.
I'm not claiming to understand the whole machine, however, we know for certain there are rotten practices that make the machine unstable and also much more difficult to understand. Interest and usury are at the core, along with other things that are prohibited by Islam (e.g. selling things that you don't own and several more).
Once those are removed, the system will become much more stable, fair, and better off for everyone.
If anything, they got better since the introduction of Keynesianism, not worse.
It's inherent to capitalism. Don't try to delude yourself.
(It doesn't have to be "pure". "Simple harmonic motion" is the result of when the negative second derivative fully characterizes a system. There are, of course, plenty of systems that aren't as simple, and things get complicated... but where ever you get a significant negative second derivative you've got a system that is going to exhibit some sort of cyclic behavior, even the the cycles vary wildly in size, duration, how fractal the value behaves on smaller time scales, etc.)
In fact, historically, they haven't.
This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices.
And this loop is the unique and defining feature of capitalism. It didn't exist before capitalism, and in experiments like those of the Soviet Union, it didn't exist either, because there were no capital markets at all.
What you're describing is a behaviour of capital markets, but due to a lack of perspective it's described as a behaviour of economies in general - and it isn't.
Basically every time varying system, no matter how complex, can be thought of as a system of differential equations. Human systems of production -- any such system -- is a time varying system, and as such, probably has some cyclic behavior, instability, etc. somewhere inside.
I gave examples of economic systems that do not.
(Also, as you read my message here, recall my claim isn't that communisms has cycles and capitalism doesn't, but everything does because there is no way to build an economic system that doesn't have -d^2/dt^2 terms showing up somewhere in it.)
The economy of the USSR, in aggregate, literally only ever suffered two recessions - one in 1963 due to political instability (which was a very minor fall in GDP), and one at the beginning of WW2. The collapse of the USSR itself was a purely political issue - the USSR maintained growth right up until its dissolution.
I understand your point, but it is a case of diagnosing a second-order effect but not taking into account it's actual impact. Outside of capitalism, there were not really any economic systems that had such gigantic vorticity that they would spontaneously enter disastrous depressions.
Those cycles that you diagnosed, for example, eventually ended up by either a worker lying to stop the cascade, or someone at the planning office realizing the issue. They never snowballed into a Great Depression, because that simply could not happen. The reason the behaviour of unrestrained vorticity is possible in capitalism is because of capital markets. Without capital markets, or an equivalent, the behaviour you are diagnosing is inevitably dampened.
Think about it like a PID loop - there is a -d^2/dt^2 term in it, the D-loop term. But because of the I-term and the P-term, if you tune it correctly, general error always goes down over a full wavelength. Capital markets allow the D-term to overpower the loop.
The article mentions that US food prices are inflating at a much more pedestrian 3%:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
I highly recommend taking 30 minutes to watch it, the person speaking is a well regarded economist.
You mean Ray Dalio? Wikipedia says he's a hedge fund manager and has a MBA, but no economics degree.
We printed our way out of a pandemic recession, so who knows what other nuclear options will be used to avoid near-term recessions.
As far as homes, there HAS been real estate inflation, but homes are now better insulated, have much more efficient heating and cooling (and now have actual cooling whereas in the past were often uncooled), have more bathrooms, and have much more efficient and cheaper lighting (which doesn’t need to be replaced as often and has lower fire risk).
Clothing is so plentiful and cheap it’s a bit silly (and this used to be a major practical purchase and highly labor intensive to mend your clothes, so I’m not talking just fashion).
A lot of things people actually need really are much better than in the past.
I hope we fix the housing price issues, though. This is really bad.
That all matters less than the location of the house.
None of that really makes a dent price-wise in the more expensive real estate markets.
...Food price rises ARE inflation!
It's much clearer to say "the rest of the basket hasn't risen above normal yet, but I am concerned the headline I quoted will mislead people who don't understand inflation.
https://amp.theguardian.com/environment/2015/dec/02/arable-l...
Maybe for rich people. If you have an income of 2000/month, with the first 1000 or so going to rent, food is likely your second largest expense.
Housing is by far the largest component (42%) (contrary to the common misconception that housing is not in the CPI), followed by Food and Beverages (15%) and Transportation (15%). If you want to up-weight food, you must necessarily down-weight some other component. The prime candidate would be shelter (most other categories are already much smaller than food), but that's of course not the answer that CPI-doubters are looking for.
I am curious as to whether the CPI targets the average person or the average consumer. Rich people spend more. They consumer more and are therefore overrepresented in most consumer-related measurements. Is the CPI meant as a measure of the cost of living or a tool for the calculation of available spending power?
Causally, inflation in the US is driven by the Fed's 2% average inflation target.
How those 2% distribute amongst the basket of good is a different question, of course.
https://fred.stlouisfed.org/series/CUUR0000SEHA
I believe those are the two housing sub components of the basket, with owners’ equivalent rent weighted more than the rent one. Eyeballing it they both look under 2%.
I agree they're not the entirety of the basket, but they are a core component.
There is no "general price level".
Here's the full list, which make up the "general price level": https://www.bls.gov/cpi/tables/relative-importance/2020.htm If you believe food is underweighted, then what category do you believe is overweighted?
Seriously, would it? I’m not an economist. I am aware of RPI/CPI, and inflation is measured independently in different countries within the Eurozone, so it’s not like we can’t have multiple measures for different purposes or populations.
Inflation is measured based on the changing the value of a dollar. So no, you can't have different inflation for different people.
You can have a separate idea of a poverty line or cost of living. But that's a different concept and would need different measures.
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
The study found that food prices are rising faster than inflation.
3% is high, and 1.5% over inflation is also concerning, but I think a lot of people are jumping to conclusions based on the headline. Those inflation numbers would go unnoticed by most during normal times. We’re only seeing these headlines because inflation is a popular media topic right now.
I saw another analysis suggesting a 75% drop in media coverage of Biden vs. Trump, at this same point in each’s presidency. That’s a useful statistic that I have a hard time finding in a comprehensive way.
We have dozens. Countless companies have tools to show you how things are happening on social media, and all the big new outlets mirror their content to social media. At the most simple level, basic word counts can track how issues appear and disappear. When you hear about a 75% drop in coverage of "Biden v. Trump" that is almost certainly taken from the number of times those two names are included in news reports. Counting words or highlighting the use of new words does not require AI.
Low inflation is essential to justifying the monetary easing policies that have been sustaining the stock market through the pandemic... so it is important for everyone to keep an eye on how dialog changes around these numbers.
[1] https://www.aei.org/carpe-diem/chart-of-the-day-or-century-3...
Much of that increase can be traced back to increased shipping costs during COVID lockdown.
Monetary policy isn’t the only or even the primary driver of inflation. In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services).
The alarmism in the comment section largely comes from people misreading the headline. The article is about soaring food costs in developing nations, but the comment section is treating the headline as if it’s about US food prices.
After two degrees in economics, my perception is that monetary policy is definitely considered a primary driver of inflation, probably THE primary driver. But this is probably irrelevant - see below.
> In this case, the inflation comes from increases demand on a portion of the food supply chain (shipping services).
Yes, for example: "in North America... a shortage of both shipping containers and truck drivers".
> The alarmism in the comment section largely comes from people misreading the headline.
To me, it feels alarmist for Bloomberg to consistently say "inflation" instead of "price increases" throughout the article. A temporary problem with supply/demand is not the same as inflation. Food prices will almost certainly fall back to their normal trajectory within a year or two, once supply/demand normalizes, whereas if there was truly inflation that would almost certainly NOT occur.
To be fair, three out of the seven categories that are under inflation can also be considered "essential". Imagine the outrage if cars (or more generally, transport) and clothing increased 2x over inflation, or if cellphone/internet access became less and less affordable (remember all the "internet should be an essential service" headlines at the start of the pandemic?).
the other big correlate is just goods vs services (even textbooks are service-like due to editions). I am not an economist but I'm really curious whether rapid depreciation caused by planned obsolescence of e.g. consumer electronics is causing a poor measurement of price trends in that area. Today's iPhone will cost much less next year, but the cost of maintaining a cutting-edge smart phone keeps going up.
inflation is measuring the value of a currency. CPI is a way to infer inflation from the nominal price of consumer goods; but it is not the definition of inflation. put another way, if an apple costs twice as much as it did last year, that fact is not enough to say whether the currency inflated.
my real point here is that nominal price increases do not necessarily imply inflation. if the price of one type of good is increasing much faster than the others, a better explanation is that the real value of those specific goods is increasing. does this matter to ordinary people buying food? not really. their main concern here is the nominal price of food compared to their nominal earnings.
There, fixed the headline.
For a while, one of the key US inflation measures even assumed that if people's medication went up in price massively they'd substitute it for whatever medicine hadn't exploded in price even if it was for some completely different condition! And I'm not convinced that, even for things which genuinely are substitutable like different kinds of food, it's actually possible over the long term to substitute your spending in a way that matches up with official inflation figures.
Does anyone have the data sets and the formulas used to calculate the CPI? No, I don't think so, because they are hidden.
Until the data used to calculate the CPI is open, it is all speculation.
Be sure to refer to overview.txt and for more high-level details refer to https://www.bls.gov/cpi/data.htm and https://www.bls.gov/cpi/methods-overview.htm — you might also find relevant information on weighting here https://www.bls.gov/cpi/tables/relative-importance/home.htm
Typical entries in the AP (Average Price) series look like: APU0000701322 2015 M05 1.335
where APU0000701322 is a pound of spaghetti or macaroni, and M05 is May.
I thought of telling you off for spreading misinformation to incite, but I figured that saying it this would gets my point across more strongly.
That survey data is what is not open as far as I know: https://www.bls.gov/opub/hom/cpi/data.htm.
In plain English this is the fractional reserve banking system providing a cornucopia for all. It's really using debt to finance not capital creation, but current consumption. This cannot possibly end well.
I don't understand the distinction here. Capital creation results from meeting the needs of current consumption, no?
Seems like we may need a new technical term to replace "fractional reserve banking", because the Fed reduced reserve requirement ratios to zero percent a year ago.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
For examples of climate havoc, look at the drought in Taiwan and the deep cold in Texas.
For examples of resource contention, look at oil and even at nickel. Those batteries meant to replace oil in turn require cobalt or nickel (at least for certain applications).
The climate havoc and resource contention have much greater than linear effects. I don’t think most people realize this. Food shortages lead not only to higher prices but to civil unrest.
https://www.ishares.com/us/products/239757/ishares-sp-gsci-c...
In other words a commodity ETF.
Is this panic buying? Is it OK? Does it hurt other people? I’d be interested to hear some different points of view.
I call this FCA, aka "Food Cost Averaging".
But don't panic buy. Don't now go to the store and stock up massively. Put in an extra shelf-stable item, and next time you go shopping do it again, but don't panic now. That's how you create a food shortage.
Even if you add "only" 10% extra to your purchase, I think that's what happened with toilet paper. I purposefully didn't buy any, figuring the crazies would get their fill soon enough, but a month later it was still going and we were trying not to be in the store more than once a week to prevent that being a spreading place but could now only buy 2 rolls at a time per family and many stores were completely out. Of course, we didn't even have to ask neighbours yet (some neighbors will have had to spare, not as if the rolls all disappeared into thin air) so it wasn't bad in any way in the end, but this panic behaviour is unnecessary and very quickly detrimental, even when a majority of people understand it's unwarranted.
No, they were going down the drain.
The tragedy is that much of the food being stocked up in people's homes will go to waste as they don't have the facilities or knowledge to store it properly. Food suppliers have way better storage facilities than you do at home. They know how to keep food available all year round. There's also plenty of food to go around as should be blindingly obvious by observing the waistlines of people around you and that's including the fact that the food supply chain already has a ton of waste built in.
Tragedy of the commons.
It is like energy and power demand on the electical grid. You lower the peak power demand.
You should always have some amount of food reserves. Space allowing, at least a few days of food. Canned and dry goods with long shelf lives - eat the oldest of this first during regular usage and refresh the stock so you don't end up with 5 year old canned goods.
> Is this panic buying?
A little, yes. There's not much risk of long-term food insecurity in the first world (at least not in the US). There are occasionally disasters that affect us short term - think hurricanes, floods, electricity outages, earthquakes, winter storms in Texas. I'd advise being able to get through those.
> Is it OK? Does it hurt other people?
It can hurt others. At the beginning of the pandemic there was a lot of panic buying. Part of that was an overreaction, part profiteerism, part of it was the world being unready to pivot to consumer goods (like with toilet paper). Do it gradually. Don't go out and buy out a canned goods section at your local supermarket.
On the other hand, having a stock on hand already can be helpful. It means you won't need to join the panic buying, because you're already stocked, and you stocked at a time when the system could easily handle it.
It is a good thing for everyone to have some supplies on hand. It makes all of society more resilient against all sorts of disasters. It means that if your area finds itself in need of emergency services, those emergency services may not have to go to you, leaving them for someone else who may be in more trouble (e.g., someone who was at the epicenter of whatever and legitimately had their supplies totally destroyed).
It is the socially responsible thing to do to have some vital supplies on hand and be able to survive independently for a few days on as few services as possible in your area.
The article mentions that inflation in the United States is much more pedestrian:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Buying and storing food is an inherently inefficient process relative to buying the same food as needed. You would end up spending more to build and maintain food reserves than you would save against inflation. Far more.
The article doesn’t suggest that we’re at risk of running out of food.
In a crisis bad enough that your prudence and foresight significantly affects other people by depriving them of food you can give them some of your food.
But in that situation you're probably done for already, and should have gone up in the hills, eh?
John Titor said something that scared the shit out of me. Paraphrasing, it was something like, "If you want to survive, move to a place three days further out than a starving person can walk."
( https://en.wikipedia.org/wiki/John_Titor "John Titor is a name used on several bulletin boards during 2000 and 2001 by a poster claiming to be an American military time traveler from 2036." )
If you're worried about the collapse of civilization then, no, stocking up is not going to help as much as just getting way the hell out there in the woods and being self-sufficient. You'll be rolled by starving people. ("People always raid before they starve." https://spaswell.wordpress.com/2016/11/18/dr-gwynne-dyer-geo... )
For disasters less severe than that, then YES! Stocking up is the responsible thing to do and we should all do it as a matter of course, virus or no virus.
Even assuming that there's some kind of enormous EMP that kills all modern cars, there are plenty of pre-80s cars around and around a third of Americans have bikes. You can cover some serious distance on a bike if you're motivated enough (aka by hunger.) There are millions of horses in the USA, not to mention other animals and tools you can use for transportation (canoes etc.) If your bet is to hope that your fellow members of the most adaptable species on Earth won't get to you, you're generally screwed. If you plan to use force (say firearms) to hold back your place, well, that'll attract attention from anyone else (if you look at failed states, you're likely to see roving bands of criminals with more firepower than you.)
There are fairly few examples of people who made their apocalypse preparations and actually rode out the local serious disaster in their bunkers, so to me, it's obvious what your best bet is - to simply live in a safe, sane and successful society.
It doesn't sound cool it sounds terrifying, for exactly the reasons you lay out.
> it's obvious what your best bet is - to simply live in a safe, sane and successful society.
Yeah it's obvious to me too. Do you know where I can find a planet like that? And a flying saucer to reach it?
How can farmers meet the payments on their loans?
Reading 'The great depression: A diary' and looking at the world today just shocks the hell out of me. We are following it step for step and the crash is going to be devastating.
Edit: In Sweden we have/have had similar situations with temporary immigrants that for example pick berries for exploitative wages, but that’s because there’s no actual minimum wage per se - in the rest of society decent wages are ensured by strong unions (except in areas where demand is high anyway, like say for software developers).
I'll pay you minimum wage, but charge you exorbitant amounts for board and lodging and you have no choice because it's the middle of nowhere.
Or for the extra dodgy types, cash payments below minimum wage because they know international workers are less likely to know their rights and be aware of what the minimum wage is.
This, btw, happens all across the EU is my impression. Modern-day slavery very much alive globally even!
Jobseeker agencies paid by the Federal government to 'place' workers, this doesn't factor in the jobs actually being suitable or useful mind.
The workers on unemployment are also required to apply for a quota of jobs or risk losing their benefits, even though there may actually be no new jobs to apply for.
If farmers paid good wages they wouldn't need to rely on foreign labour and food prices would go up. This is a workable solution, but is is what people living in western countries want?
We have the same issue here in the UK with the NHS.. We pay NHS workers terrible wages so we need to import foreign labour because wages aren't high enough to attract domestic workers. In one sense it's great because we get better health care than we would otherwise afford and foreigners have an opportunity to get better pay in the UK (even if it's bad by UK standards).
I've found many people here get angry about what we pay NHS workers while also getting angry about NHS waiting times. If we wanted to we could increase wages which would either require resource cuts and lower output or higher taxes for the same level of care. It would also mean we wouldn't need to depend on foreign labour, but who benefits from this? By paying more foreigners now have less opportunity to move to the UK and British citizens have sub-par / higher cost health care.
Presumably, it's the same with agricultural workers. Sure you can pay more, but who benefits from it? The root "problem" is that labour is extremely cheap outside of developed countries. Developed countries can cut themselves off from that labour supply if they like, but I have no idea what the economic incentive (or benefit) of doing so is for either the workers or the citizens. Call it modern-day slavery if you like but these are consensual working relationships, which presumably wouldn't take place if they didn't benefit both the worker and the employer.
So long as labour remains cheap outside of the developed world a trade off will always exist – paying more will just mean higher prices for citizens and fewer opportunities for those living in the poorest parts of the world, but on the up side you can say you pay a fairer wage by your own national standards.
The UK has done, it is known as Brexit.
It would end supply of people who are willing to work for unlivable wages, thus making wages for low-end work to go up. The lowest rungs of society would benefit greatly from it, while everyone pay would pay for it (via increased prices).
(Australia's geographical isolation makes it difficult to attract seasonal workers, unlike throughout Europe where traveling for work is comparatively cheaper and easier.)
However, farmers have always benefited from the fact that people wanted the visa more than the didn't want to work — many workers are taken advantage of. Now that there are none of these workers, farmers are having to complete for labor like anyone else and that is costing more than they intended.
No locals will do the work because... Why would you. Living in a caravan for the whole summer and working 12 hours a day isn't a good deal. Maybe its worth it if you intend to move back to a county where you get much better purchasing power?
For example, people from Central America trek up at risk of their lives through dangerous drug lord territories to get to US states where they can work illegally for less than minimum wage, then send that money back to their families because they can make much more doing that than they could at home and may have no other choice.
The working and living conditions can be terrible, and answer is not to deport them or make their conditions worse; that hurts the host country as well as the workers and creates more division. Similar workers boosted the US culturally and economically because industry and governments embraced them for labor and taxes.
Really? Top voted comment on Hacker News? Yikes. Things have really gone downhill around here. Stick to tech, folks.
"During the early 1920s, for example, prices dropped a total of 20%. And during the worst years of the Great Depression, from 1930 to 1933, prices fell a total of 25%"
I mean, the title of the article was even : "Food Prices Soar Globally"
If you want to be a doomer, than at least compare it to the stagflation of the 70s, but honestly, that's probably not accurate either.
I, for one, appreciate it. This thing on HN where you have to beat around the bush and phrase your sentences objectively and in a general way, when everybody knows that you are just talking about a specific instance, saying things like "if you [x] then someone may respond [y]" when it is clear that someone literally said [x] so you can just say [y] in reply.. All that stuff is incredibly tiring to read IMHO. If you just want to call out someone's bullshit you should be able to do so in a straightforward manner and in a tone that corresponds with "calling out someone's bullshit".
If we could just be a little bit more honest here I think it would be an improvement.
Following up with your example: If someone simply states [y] then the context of where [y] came from is lost and the discussion turns into a person saying [x] and a person saying [y], which is a step too close to becoming Twitter.
While I agree it can sometimes be a bit tiresome to read and write, I say this significantly improves the overall quality of the conversations.
But this is commonplace elsewhere on the Internet and you can see the results. Too often the argument deteriorates into ad-hominem mud flinging.
HN is pretty rare in its analytic culture. I appreciate it and enjoy the difference from Twitter, Reddit et al. enormously.
It is important to realize that we cannot really read the minds on the other side of the screen and a lot of our assumptions what somebody really wanted to say are just prejudice.
And in that vein, the most reasonable interpretation of the thread ancestor is "look, we've been through this sort of thing a couple of times in the last 7,000 odd years of recorded history - why does this all seem to be surprising to the people in charge and catching them unprepared?".
We know we've been here before, and it isn't that crazy to say the current state of the world looks like the prelude to WWI or WWII. Reading books like "The great depression: A diary" is a pretty decent idea. It would have been much more helpful if old mate had argued why there were similarities. Maybe with coaxing they would have. "Yikes. Things have really gone downhill around here. Stick to tech, folks." does not encourage anything half as productive as looking to the past for answers. There are bigger problems afoot in 2021 than tech.
You should not be shocked by that, because every comment starts out as the top comment, votes only affect how quickly it drops. If you come back a few days later and the top comment is still confidently wrong, maybe you can be shocked then.
EDIT: It's energy. https://www.bls.gov/cpi/
But the article is really about 40% spike in global basic commodities for the global poor, not 3% US bump.
Just the usual scaremongering.
I also shop at Tesco and the stocks haven't changed at all.
Still, why even have brexit if we're going to do our level best to pretend we're still in the EU as hard as we can. Is being subject to full export restrictions, hammering British businesses, while allowing many European goods to flow in un-checked really the brexit you signed up for?
Zero problems in any of the major supermarkets in my area in the South East. My food bills haven't increased notably either, if anything, looking at my bank statement right now, they seem lower over the past 4-5 months than the year before.
The only anecdotal thing I have noticed, is that there a few new brands on the shelves that weren't there previously, but that's probably just observational and confirmation bias, because I was looking for something, I saw it.
Are you in a really shitty area or something? I only saw what you described in the first week of lockdown one. Nothing has noticeably changed in my local Morrisons for the last few months.
Aldi, Lidl, M&S, Morrisons and the local greengrocer all seem the same as usual here.
depression spurs eating binges.
being inside what to do, oh lets make more advanced food. lets bake cakes with the kids instead of sending them out to play with friends. etc. etc.
so increased consumption in combination with other, probably more important, pandemic problems.
Supplier A only supplies to restaurants it's normally a safe bet, so that's all they do. No restaurants buying - holy shit - my entire crop is excess...
I'm not a farmer but this is what I've read.
There's also the fact a lot of panic buyers might buy too much, then end up throwing a bit away because of fear that when they need it - it won't be there, but then it just spoils at home, etc.
Also food banks are taking a lot of the food. More people actually have money for food (one thing the govt does do is make sure people don't starve (usually) maybe more if you have kids).
TLDR: You can't just move all restaurant food to consumer/grocery like it's a commodity in Factorio... it takes a lot to shift global supply chains and get new contracts on how deliverables are received, etc...
There are a lot of people comfort eating and generally grazing out of boredom. I'm sure I've been eating a little more than I should with the crappy foods. Plus, people are saving so they are probably buying more foods to stock up on and thus throwing it all away.
All of this - and things like toilet paper - shifts to consumer goods instead of bulk goods, which takes different equipment and processing in factories, often at different times. A portion of school lunches in the US are the result of government subsidy foods: Cheeses, potatoes, and so on are very low cost to public schools.
In short: Consumer foodstuff demand has increased.
Additionally, more folks are spending a bit of time with food, changing the demands. Plus, home and slightly depressed/anxious with newly found free time means you have more time to eat - and many have taken up eating more.
And then you do have crops that couldn't be picked, disruption in shipping (food travels far), and disruptions in factories that complicates things.
Actually, what we had was a sudden reduction in the amount of flour being used by bakeries, and an increase in the amount of flour being used at home. There wasn't a shortage of flour - there was a shortage of small bags to put it in for selling at a supermarket. The industry was all set up for selling a decent proportion of flour in really large bags.
Likewise, for simple goods like vegetables, dairy, and beer, some suppliers have suddenly had their customers disappear, because they normally sold to restaurants, pubs, and caterers, where other suppliers have not been able to keep up with demand, because they sold to supermarkets. The obvious solution is for the suppliers who previously sold to caterers to sell to supermarkets instead, but it takes a while for these contracts and logistics to be sorted out.
Interestingly (well kinda) the similar yeast shortage is still not back to normal. The shortage was partly related to packaging and the yeast at my grocer is still in the post COVID foil packaging and not in the packages it was before. (Luckily I had yeast in the freezer)
(Also - seriously, you have 1 pound bags of flour over there? Most bags here are 1.5kg (3.3 pounds), with some specialist flours in 1kg (2.2 pounds) bags. 1 pound seems a little small.)
Continuing to inflat the money supply is the politically expedient option. Price inflation is a related phenomenon. The Fed is unable to decrease it's balance sheet in a meaningful way.
Some politicians are critical of central bank monetary policy. They are frequently maligned.
Thirty year rates at 1.28%!
The same was true for Covid at the beginning, no one could quantify how bad it actually would be with wild figures in the 5%+ mortality rate. So we screamed for shutdown.
Problem though is that now it's very much clear that Covid was nowhere near that level of mortality, still bad but not the doomsday scenario. Now we we'll have to see what the cost of maintaining the reaction to the initial Covid doomsday estimation; with lockdowns and short term shoring of the economy through fiat currency production.
Looking back at the Spanish Flu, https://www.inquirer.com/health/coronavirus/coronavirus-covi... showed that lockdowns ended up being cheaper than no lockdowns
Unfortunately the ruling class will always find a way to trickle down costs, so it's no surprise that the poorer you are the more impacted you are. With or without lockdown
"I am once again asking for your financial support" meme for tax payers bailing out megacorp bonuses yet again
Also, it was believed that COVID presented a threat to the broader economy because it could overwhelm the healthcare system, preventing the broader workforce from accessing treatment. However, one approach is to triage COVID victims, denying them hospital beds so that those beds remain available for the broader population. Liability or elected officials’ sensitivity to accusations of "letting grandma die" prevented some countries from implementing this triaging, but other countries could.
The inflation in countries like the United States is much lower (around 3% on food compared to 1.5% overall inflation).
Ironically, some of that inflation is due to increased demand for goods providing more demand for shipping services due to lockdown. People had a lot more money to save or spend during lockdown (personal savings rates spiked upward), so shipping prices are inflating due to demand. Food is often shipped, so these inflation costs are partially from shipping costs.
Most people in the western world aren't likely to buy more food, just because they have more money.
Not saying, we won't see inflation, who knows, but I doubt we'll see it in household items.
If you have more money and you use it to buy more food, that's not inflation.
Inflation is when you have more money and you use it to buy the same amount of food. Give people more money, and you will see the price of everything rise without seeing the amount of stuff they buy go up.
In the specific case of COVID in the UK, people have been given money to replace the money they would have earned. The people don't have extra money. The system hasn't changed except for the fact that the money is coming from the government instead of the their employer.
Care to elaborate, because *if* there is going to be a fallout from these massive stimulus packages, it certainly doesn't feel predictable to me.
Indeed, we all like to think doomsday scenario, and covid-19 have trained our brains to think the unlikely is likely.. but it's not even obvious there is going to be a fallout from all this stimulus.
No, the problem is that there isn't enough food in the first place. The rising price rewards farmers who produce additional food. You just need to run a stimulus program for farmers so that they can expand and mechanize their farms to increase yields.
I wish people would look at physical reality first and then look where physical reality takes the market rather than looking at the market and ignoring what physical reality looks like.
That's the issue here: not only is stuff you need getting more expensive because of the expanding money supply but the new money is being used directly to cause it rather than helping the individuals that need help.
See here what happened to the correlation between productivity and labour income after this https://wtfhappenedin1971.com/
The graph uses average hourly wages which does not include overtime, bonuses, shift premiums, and employer benefits. It also doesn't account for all workers.
https://files.stlouisfed.org/files/htdocs/publications/es/07...
total compensation tracks pretty well.
If I misinterpreted your comment (I think we agree), I welcome your explanation of why purchasing power stays the same when efficiency increases since 1971.
i would expect that purchasing power remains consistent for people doing the same work.
It's true that capital gains is captured by those who own the capital - but those who do own such capital had to take capital risk to obtain such gains.
Labour income (aka, wage income) increased if the labour changed to be more efficient without said use of capital - for example, programmers' income is very high. But for someone whose labour output hasn't changed from the 70's, is it expected that their purchasing power somehow increases (compared to someone else's)?
I still see graphs as these https://wtfhappenedin1971home.files.wordpress.com/2020/06/im... as clearly saying labour compensation correlated with advances in technology until 1971, when there was a dramatic shift, and that this is also the time when supply of $ was put in the hands of central bankers rather than any real and external asset.
>Frank Martin, bought the restaurant from Philippe Mathieu in 1927, and then the coffee was priced at a nickel.
They mention US inflation down below:
> In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation.
Money printing isn’t the only or even the main driver of inflation. Increased demands for goods during lockdown has put upward pressure on shipping costs, which is reflected in food prices.
All around us, obscene amounts of food is going to the bin.
--
On a related topic, quite a few commenters here have made uninformed or intentionally misleading comments about the relationship between inflation indexes and food/energy prices. Let me quote this explanation posted 10 years ago by a PhD student of economics at MIT:
"Food and energy are not excluded from the Consumer Price Index. The standard CPI, which is used to make cost of living adjustments to Social Security (among other things), reflects a full consumption basket, including food and energy.
The index that excludes food and energy is the core CPI, which is used for a very different purpose -- namely, the U.S. Federal Reserve's decisions about U.S. Monetary Policy.
A few observers seem to believe that excluding food and energy from the core CPI reflects either deep ignorance or conspiratorial neglect on the part of monetary authorities. Nothing could be further from the truth. In fact, core CPI (along with some alternatives like mean-trimmed price indices) is a very sensible reaction to the dilemmas facing monetary policymakers.
Suppose that the Federal Reserve had a mandate to stabilize the full Consumer Price Index, and that food prices suddenly doubled. To keep the CPI at a stable level, other prices would need to decrease. The problem, however, is that many prices are sticky, meaning that they do not instantaneously respond to changes in monetary and macroeconomic conditions. This is especially true in the service industry (which comprises the bulk of both Gross Domestic Product and the CPI).
To create these compensating price changes within a relatively short timespan, the Fed would have to impose extremely tight monetary policy, with sky-high nominal interest rates. And as we saw in the early 1980s, a large increase in nominal interest rates is extremely destructive to the real economy, leading to a massive increase in unemployment. Given our already weak economic conditions, such a policy would be even more damaging today.
Core CPI is a way to prevent this kind of needless suffering and unemployment. By targeting a stabler set of prices, the Fed avoids the wild swings in monetary policy that would inevitably arise from targeting an index that includes commodity prices. In other words, the demagogues who assail core CPI have it all wrong: the average American would be much, much worse off if the Fed targeted a volatile measure like headline CPI."
Source: https://www.quora.com/Why-are-food-and-energy-costs-excluded...
And then it made sense to me. When the cost of everyday goods go up, there is more money flowing in meager industries.
That means more money for the average joe. (Or it used to be before robot corporations overtook farming.)
And that means more concentration of resources for the normal guy. Which means smaller housing compared to McMansions. And smaller cost of living all around. The problem is that today’s large rich population become not so well off. And poor people hit a better standard of living.
Higher food prices may be a good thing.
Inflation may come right after. This is not good.
A. More left for the rest
B. No need to produce the amount produced right now
C. Reduced impact on the environment
But yeah, let's think about that ,once we do actually have a crisis, as a last resort. Keep stuffing your bins with food you didn't eat and wondering why prices soar.
Ends up being Food and semi conductors.
Therefore food prices shift right?
Consumption is probably the same for most families, albeit they may buy 10% more to make sure certain staples are good in case of a shortage.. more so during the ebb/flow of covid-19 waves and lockdowns.
So a family might end up wasting more food just to be sure they have enough for planned meals or alternatives.
A lot of people are having mental health issues from lockdown, that can affect eating behaviors as well - depression can cause gain or loss of appetite so that's up in the air - could also make you plan to eat in but then decide to get take out because you're too depressed to cook. (Source: I've done this as my anxiety/depression has been really bad this year and my wife who's never been depressed is barely functional this year).
I think the biggest thing is just everything's shifting. We're not just dealing with covid-19 but also fires and other natural disasters. Unfortunately, I think climate change could keep this the norm even if covid-19 is completely normalized (i.e. we return to some semblance of normal).
Covid-19 variants could also keep things an issue. I'm going to get flagged for fear-mongering but I don't see how the next decade gets any better than it is right now, except for fleeting relief cycles as we come out of the pandemic ... but there's a lot of shifting global strife.
You can almost feel the change from day to day everything's changing faster and faster and it's getting harder to predict the future. Kind of like the singularity when technology speeds up.
This is not about the USA. This is about the vast majority of the mankind that lives on developing countries, vast armies of people already under the threat of food insecurity in the best of times, now unemployed and facing the threat of food inflation.
This is the stuff that create coup d'etats, dictatorships, rampant crime and wars.
Meanwhile you're working on automating work to make this people even more unemployable, and have the nerve to complain about a small food price increase in the frigging US of A.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes 'Boots' theory of socioeconomic unfairness.”
< https://www.goodreads.com/quotes/72745-the-reason-that-the-r... >
So in short: no. Everyone is wasting.
That would've prevented him from spending hundred dollars on bad boots over and over again. So i argue that it's poor planning.
So an enterprising banker would be willing to lend this poor person $50, to be repaid with eight $10 installments yearly, for a total of $80 - a 60% return on investment (7.5% pa returns).
This would've kept the poor person's cashflow the same - $10 per year, and he'd have paid an extra $30 for the priviledge of the upfront capital, but saved $20 vs buying new shoes every year for $10, ten years straight.
If those shoes were so important, this would've been the way to do it, not buy a crappy pair every year that end up costing you more in the long run.
Edit: my main point is that financing is a potential way out for those who lack the capital, but is able to to handle the cashflow.
Poor people generally don't have access to capital except at incredibly high APRs that typically make things worse, not better.
> So in short: no. Everyone is wasting.
The wealthiest 20% of the world's population consume 80% of resources, while the poorest 20% lack the basics to survive.
It just takes 40 seconds of research to completely disprove your point.
""" The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".[1]
In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of January 2021, it remains in effect.[1]
The law was amended in 2010 to add motion picture box office futures to the list of banned futures contracts, in response to lobbying efforts by the Motion Picture Association of America.[2] """
When normal ingredients we used became unavailable, it caused us to continually try new things. I have to admit I was pretty surprised to see today's customers buy up the basic scratch ingredients like rabid consumers early in the pandemic. Flour, sugar, etc. were all a real pain to get a hold of.
I thought prices were increasing pretty steadily before the pandemic and now it's even worse. I can remember so many items being as cheap as 25 cents each during the 90s and into the 00s... now most of them at $1.50 each. Meanwhile, our state minimum wage has increased not nearly as much (but employers are having to offer closer and closer to double to rope in anyone).
How long have you been having a pandemic for?
Joking aside (that sentence read a bit weirdly), I don't think you should compare what happened in the 90s with what happened since 2020-02. If inflation surpasses minimum wage in the long term, that's not the same as prices soaring because of supply chain changes. And for what it's worth, I've not noticed any price increases here between 2020-02 and last week. This is way too anecdotal and conflating different situations to be useful.
[1]: https://www.epi.org/publication/charting-wage-stagnation/
I see that as a win. Neither flour nor sugar is essential or healthy.
Gotta love some of the people on HN. Maybe it's just the late night crowd?
In my little bubble, in the Bay Area, it feels like plain old greed, and opportunity, but not price gouging.
When the government tells me where I can shop, along with my fear of how certain stores have dealt with Covid precautions, my buying habits don’t take price into account like before.
The first few months; I bought transportation, and raw costs, but now I’m not so sure.
My local Safeway has raised prices on everything. At first, they looked like they were trying to be fair. Now——it looks like they know people can basically shop fir food, so why not raise prices on everything while they have you there?
Same goes for Homedepot. Yea, raw wood prices, and appliances have gone up, but it looks like everything they sell went up.
I haven’t been into Whole food because my local store has had too many sick employees.
(While we are on prices, Mercury Insurance refunded me $6.46 on a $600 policy, and that was last year. Why hasn’t my insurance gone way down? It just seems like accidents would be down? My policy is minimum I can legally get away with. I was going to switch to an insurance company that bills per mile, but my old car does not have a computer that Tye “honesty” devise can plug into. I would be happy to send the company a picture of my odometer monthly, but that is not an option.)
Which government is telling you where you can shop? In what way do they do that?
Pre-pandemic, I suspect I purchased over half of my caloric intake from a food vendor other than a grocer. 15 years ago, that would have been 90+% (as so I expect the younger cohorts today would be similar)