I mean, if you believe the FED then you have to just dismiss this as inflation. But I think it's a lot more complicated.
1. Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it.
increasing monetary mass dilutes the purchasing power of the dollar. No one would argue that inflation doesn't increases the price of financial instruments - everyone correct returns for cpi. But we're correcting the returns with a metric that denies that those instruments can have inflation.
Meanwhile, what have we seen in the past 20 years?
Price of housing (not included in the cpi) and financial markets have seen great returns. This despite the '08 financial crisis.
2. Printing money isn't the only thing that affects the price of goods. The cost of producing them does as well. Inflation is hidden by the dismantling of industry.
Well what have we done over the past 30 years? We've outsourced everything to countries that exploit slave labor. So if (as an example) the dollar is half as good, but the price of labor goes from 50% to 10% of the purchasing price, most of the inflation is now masked. Does the CPI track that my 1.1X more expensive sweater was made with slave labor? Or does it just track that the hourly cost of a handyman (local labor) has stagnated?
Meanwhile things that cannot be off-shored have become expensive. My house. My education. My health care.
3. Hidden inflation. It is universally agreed that appliances made today are of piss poor quality. They're poorly made, with cheaper parts, and thinner sheet metal. How do you track that properly?
Food packages have become smaller (rounding down when doing unit conversions is an easy freebie). A 125 g. bag of chips is a 110g. bag of chips.
> Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it.
The reason the basket of goods is focussed on consumer goods is because the price level of concern (where it is used, there are many other price indexes used for other purposes) is the cost of living, not cost of investing. Hence, the Consumer Price Index, the main inflation index monetary policy is concerned with. (There are also broad and industry-specific Producer Price Indexes, which are used for other purposes.)
The cost of investing wouldn't be measured by asset prices, but interest rates (inverted: low interest rates are a high cost of buying future money directly, which also drives up the cost of speculative instruments which may be redeemable for money in the future.) And, yes, the cost of investing is deliberately high currently, there is no secret or conspiracy about that. It's the overt policy.
> Price of housing (not included in the cpi)
Cost of housing is included in the CPI (both actual and imputed rent are part of the calculation.) It's a major component of the overall CPI. [0]
1. Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it.
increasing monetary mass dilutes the purchasing power of the dollar. No one would argue that inflation doesn't increases the price of financial instruments - everyone correct returns for cpi. But we're correcting the returns with a metric that denies that those instruments can have inflation.
Meanwhile, what have we seen in the past 20 years? Price of housing (not included in the cpi) and financial markets have seen great returns. This despite the '08 financial crisis.
2. Printing money isn't the only thing that affects the price of goods. The cost of producing them does as well. Inflation is hidden by the dismantling of industry.
Well what have we done over the past 30 years? We've outsourced everything to countries that exploit slave labor. So if (as an example) the dollar is half as good, but the price of labor goes from 50% to 10% of the purchasing price, most of the inflation is now masked. Does the CPI track that my 1.1X more expensive sweater was made with slave labor? Or does it just track that the hourly cost of a handyman (local labor) has stagnated?
Meanwhile things that cannot be off-shored have become expensive. My house. My education. My health care.
3. Hidden inflation. It is universally agreed that appliances made today are of piss poor quality. They're poorly made, with cheaper parts, and thinner sheet metal. How do you track that properly?
Food packages have become smaller (rounding down when doing unit conversions is an easy freebie). A 125 g. bag of chips is a 110g. bag of chips.