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Comment by 9rx | Hacker News Reader

> an argument is that tariffs should lead to higher prices for US consumers

At the same time, though, prices can never rise higher than the consumer is willing to pay. All else equal that ultimately needs to be true, but there are many variables that do not need to remain equal, so it is not a foregone conclusion.

The 2022 food crisis offered pretty good motivation for consumers to pay more — people were truly worried about going hungry there for a while, albeit thankfully that concern didn't last long. I'm not sure tariffs offer the same kind of motivation. I expect there is a strong "Haha. No. I'm not paying more for this arbitrary reason that can be (and probably will be) reversed on a whim." sentiment out there right now.

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> At the same time, though, prices can never rise higher than the consumer is willing to pay.

ahhh, the naivety of youth. not only can they, they have.

No. Can't happen. Saying "I will sell you this widget for no less than one billion dollars!" doesn't establish a price. Price is not determined until a voluntary transition takes place. And a voluntary transaction fundamentally cannot take place without a buyer willing to pay the transacted price.

As we saw in 2022, fear of starvation is a pretty strong motivator to see consumers wanting to pay more to secure their spot in line. A random dude who likes to draw nude art for his friend saying everyone should pay more because of, uh, reasons... Not so much. That's not to say that sentiment cannot change, but without strong motivation there is no reason for it to happen any time soon.

> Price is not determined until a voluntary transition takes place

youre talking about market value. price is definitely set before the transaction takes place. you can set the price at whatever you like.

> youre talking about market value.

No. I am talking about price. Price measures what you are giving up to receive value.

> price is definitely set before the transaction takes place.

No. You're likely thinking of an offer. Offers are made before the transaction takes place. Offers are spoken of in terms of the price the seller (or buyer) hopes to see, but it is not yet set. Negotiation can still occur at this stage, as can rejection.

Vendors with a lot of traffic are able to gain a pretty good handle on what consumers are willing to pay, so often, for all intents and purposes, the first offer and price end up being equivalent. Perhaps that is what you are thinking of?

Regardless, CPI looks at what consumers are actually buying. No matter how you want to define price in some sort of vacuum, price with respect to CPI can only increase if the buyers are willing.

> No. I am talking about price. Price measures what you are giving up to receive value.

but you said "Price is not determined until a voluntary transition takes place"

so does it happen before or after the "transition" takes place? id say price is set before, market value is what actually someone paid for it and comes after

> so does it happen before or after the "transition" takes place?

As the quote you offered says, it is measured after. I suppose theoretically in some kind of bending of space and time it could be measured during the exact instant it is created, but as we return back to reality... It certainly cannot be measured before. One cannot measure that which does not exist.

> market value is what actually someone paid for it and comes after

Value is, let's say, intrinsic. Whereas price is the measurement of it. To use an analogy, it is like the difference between distance and length.

> id say price is set before

While you are certainly welcome to make up any old random definition on the spot, given that we're talking about price within the context of CPI we know it is not "set before". CPI measurement is taken in hindsight, after consumers have already made their purchases. The values it gathers are post-sale.

>As the quote you offered says, it is measured after.

i was quoting you... but you have tried to have it both ways. you said....

> Price measures what you are giving up to receive value.

notice you didnt say gave, you said giving. There is a price before the "transaction"

> Price is not determined until a voluntary transition takes place

But we had a price before we made the purchase??? If you swap price with market value in the second quote youre completely right.

Market Value is determined in this offer/sell kind of fashion precisely because it ISNT intrinsic.

> but you have tried to have it both ways

Nope. Your misinterpretation may have lead to you to believe that, but intent supersedes interpretation. Which you no doubt understand given that you came back to ask for clarification given the apparent discrepancy. That would have been completely pointless otherwise.

> notice you didnt say gave, you said giving. There is a price before the "transaction"

I'm pretty sure it said "transition", not "transaction". Regardless, while it is thoughtful of you to point out what lead to your misinterpretation, we already cleared this up in a previous comment. What are you trying to add here?

> Market Value is determined in this offer/sell kind of fashion precisely because it ISNT intrinsic.

The value was always there. We just don't know what it is until we create an environment that allows us to measure it.

> If you swap price with market value

You'll have to talk to the government agencies. I don't pick the terminology used around CPI. I am not sure where you got the idea that it is up to me? And I'm especially unsure of why you'd want it to be up to me given that you recognize that I am not the clearest of communicators.

>but intent supersedes interpretation

so dont worry about what i wrote, whats important was what i was thinking? fair enough

If market value is the instrinsic value, how could two separate markets get different prices for the same asset?

edit: https://www.ons.gov.uk/economy/inflationandpriceindices/meth...

methodology states it is based on prices quoted

> If market value is the instrinsic value, how could two separate markets get different prices for the same asset?

Much like, returning to our analogy, how the same distance can be different depending on the observer's frame of reference.

> methodology states it is based on prices quoted

And now read the rest. For "consumer goods and services purchased".

again, the US cpi concept of price is the same as the UK one. They look at price, not transaction value you absolute numbnuts. what was all this crap about price in respect to CPI again? or were you thinking something different to what you said again?

Quote from https://www.bls.gov/cpi/questions-and-answers.htm BLS data collectors visit (in person, on the web, or using apps) or call thousands of retail stores, service establishments, rental units, and doctors' offices, all over the United States to obtain information on the prices of the thousands of items used to track and measure price changes in the CPI. We record the prices of about 80,000 items each month, representing a scientifically selected sample of the prices paid by consumers for goods and services purchased. During each call or visit, the data collector collects price data on a specific good or service that was precisely defined during an earlier visit. If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, a 64-ounce container has been replaced by a 59-ounce container) of the good or service since the last time prices were collected, a new item is selected or the quality change in the current item is recorded.

> representing a scientifically selected sample of the prices paid by consumers for goods and services purchased.

Exactly. Goods and services purchased — not goods and services left unsold because the seller wanted more than buyers were willing to pay. You cannot measure that which does not exist.

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