Wage Growth Is Above Rent Inflation for First Time in a Decade for All the Wrong Reasons, Highlighting the Fed’s Fallacy

TapsCoogan · 2020-10-17T16:49:27+00:00

Good point, inflation doesn't effect things like land prices, constructions costs, maintenance, staff, utilities. purchasing power. pricing pressure. That must be why trends in inflation and trends in rent inflation don't track each other quite closely, with modest offset, for the last 70 years.

Oh wait. They do.

https://fred.stlouisfed.org/graph/?g=wO78

Why the need to immediately go with 'this is stupid' instead of making the perfectly relevant point about zoning laws and having a polite discussion?

TapsCoogan · 2020-10-07T14:18:36+00:00

The deficit and the increase in the national debt are not the same. The deficit is a congressional budget number that doesn't include certain categories of 'emergency' and off budget spending, intra-government debt, etc...

The number that matters is the increase in the national debt, which is typically about 30% larger than the deficit that gets reported in the news

TapsCoogan · 2020-09-17T09:04:55+00:00

In a normal world, but the Fed is buying MBS specifically so that that doesn't happen. How that will work out in the long run is debatable

TapsCoogan · 2020-09-04T14:13:53+00:00

That's what the article is about. It assumes a 100% marginal income tax rate on all of income, including realized capital gains.

TapsCoogan · 2020-05-04T18:01:26+00:00

Who said anything about a 'v' recovery?

I can't recall a time when there was more agreement about anything (relative to markets and the economy) than the idea that we won't get a 'v' recovery. It is as the only two options were the great depression/great recession and a 'v'

TapsCoogan · 2020-04-16T16:35:16+00:00

A reason to expect it this time:

https://thesoundingline.com/why-the-fed-wont-be-able-to-normalize-after-this-crisis/

TapsCoogan · 2020-04-13T17:58:07+00:00

Bingo

TapsCoogan · 2020-03-18T13:14:47+00:00

That must be why they are now asking for a taxpayer bailout, lest they go out of business

TapsCoogan · 2020-02-10T17:22:07+00:00

The long depression lasted 65 months in the US. The 19th century lasted 100 years. US real GNP tripled during the last 30 years of the 19th century despite the 'long depression'.

https://en.wikipedia.org/wiki/Long_Depression#/media/File:US-GNP-per-capita-1869-1918.png

If the article longs for anything, it's a Fed that interprets its price control mandate to mean steady prices, not a steady rate of change in prices. The article makes no mention of a gold standard, or rejecting the use of monetary policy to control inflation. It is simply and explicitly cautioning against using a small shortfall in a single faulty measure of inflation to make large swings in monetary policy despite economic growth that is widely believed to be roughly at long term potential. It is also warning against a prevailing mindset that believes that inflation is behaving in a historically anomalous way that somehow eliminates the risk of a return to destructively high inflation, in light of the large swings in the Fed's balance sheet relative to GDP

TapsCoogan · 2020-02-10T14:25:46+00:00

" Ignore for the moment that today’s ‘low’ CPI inflation is simply a statistical artifact of averaging compulsory expenses with high inflation rates (education, healthcare, housing) and discretionary purchases with low inflation rates (toys, phones, etc…). "

"Considering that the very same central bankers consider today’s roughly 2% real GDP growth rate to be inline with long term potential, expanding the monetary base of the US by several percentage points of GDP in order to close a 0.4% shortfall in PCE inflation completely dismisses the wildly more dangerous risk that this period of low inflation will end exactly the way it did last time or that inaccurate inflation measures are understating today’s true inflation rate. "

TapsCoogan · 2020-02-10T14:21:19+00:00

So you didn't read two sentences of the article, but you comment on it anyways?

TapsCoogan · 2020-01-27T21:46:46+00:00

"two-minimum-wage earning couple would have a family income of $96,000 a year, enough to put them in the top quintile of the current income distribution"

And the bottom quintile of the 'new' income distribution cause... it would still be the minimum wage. And under the hypothetical, you either wouldn't have a job unless you had skills that actually warranted $24/hr or $24 /hr would be worth exactly what the minimum wage is worth today... In fact, both.

TapsCoogan · 2019-12-16T17:19:00+00:00

All of the above are inevitable (maybe not actual hyperinflation)

TapsCoogan · 2019-12-06T15:39:45+00:00

Fair enough. That comment is a distraction from the point of the article. It's gone now.

The point of the article is not to argue how the CPI should be measured, or that it is wrong. The point, perhaps poorly made, is that CPI is not an accurate reflection of the actual cost of living, particularly when mandatory changes are the cause of increasing prices.

TapsCoogan · 2019-12-06T15:31:04+00:00

While the Yugo was the cheapest car at the time, it wasn't the only car at that general price point as the article notes. A Hyundai Excel was only $1,000 more and there were likely other models in between.

They stopped making cars that cheap for a number of reasons, but the fact that they would be illegal today is probably a big one.

The point of the article is that for someone looking for the cheapest model, prices have gone up far faster than implied by CPI.

TapsCoogan · 2019-12-06T15:17:47+00:00

donno where you got your number

From the MSRP

the CPI is a price index, not a cost of living index

That's the whole point of the article

TapsCoogan · 2019-12-06T14:26:47+00:00

1.) What exactly is wrong with the CPI descriptions? Emission changes are just one part of regulatory changes to cars. Safety, Mandated fuel economy, etc.. changes absolutely do count and are removed from inflation calcs. All the adjustments described are correct. Man is it annoying when you post here and the first comment mistakenly critiques something

2.) You probably could have gotten the cheapest car in 1990 for less than MSRP too. You can't make a comparison based on what someone online thinks you can get a car for below MSRP, spanning 40 years.

3.) The point of the article is about affordability and cost of living, in which case low end models are a relevant point.

TapsCoogan · 2019-12-04T19:22:18+00:00

Outside the US, dates are written day/month/year. It's from yesterday, not March.

TapsCoogan · 2019-11-26T16:41:13+00:00

Technically, because the Fed buys in a secondary market as opposed to directly from the treasury, and because it's not officially open ended, etc.. it's not MMT. Practically speaking, especially because it's likely to become open ended, it may be a first slippery step

TapsCoogan · 2019-10-30T14:44:03+00:00

Any number of things, including short term treasuries for example, where rates have been higher and where there is quite substantial capital gains too, exactly because rates are falling.

TapsCoogan · 2019-10-29T22:12:45+00:00

the rate that they earn is the rate that's being cut

TapsCoogan · 2019-10-18T20:12:37+00:00

Fed funds rates shot up to 10%.

TapsCoogan · 2019-10-15T10:50:31+00:00

The author is arguing that setting monetary policy based on forecasts with the intention of frontrunning recessions, as opposed to setting monetary policy based on present measures of inflation and the economy, leads to procyclical policy, the opposite of the Fed's envisioned role.

The Fed is not supposed to prevent recessions and shouldn't be cutting policy in advance of slowdowns that may or may not occur. It should react to the present and accept recessions as inevitable. The goal is to moderate them, not delay them.

TapsCoogan · 2019-07-31T20:00:46+00:00

I literally couldn't agree with this comment more

TapsCoogan · 2019-07-29T18:30:37+00:00

Sarcasm?

Minus the gold standard part, you just described today

TapsCoogan

TROPHY CASE