bostonbubble.com

[Renting in Mass]

Once again, this is only debunking the CPI, which is only one measure of inflation. You still have to explain why other measures of inflation that are calculated differently also show low inflation.

And you can't determine whether or not there is a general rise in prices by extrapolating from personal experience. To use your weather metaphor, you're essentially saying that you can determine the average worldwide temperature by sticking your head out the window.

It seems odd to me that you would discount all official statistics but put complete faith in something some guy on the internet says.

And for the record, I'm not arguing that inflation isn't imminent. It might be. I'm saying that there hasn't been inflation yet.

[admin]

[GenXer]

Sometimes the exceptions prove the rules, and empirical evidence is sometimes a lot more powerful than statistics, which hides the outliers.

The 'data' itself can have a huge bias, and be misinterpreted as a result. A small data set can have a very skewed distribution, so that the median is far from the mean, so it would not say much about where prices were going. And of course it is often manipulated to get the desired result. At some point it becomes a matter of belief, regardless of what the data says.

I don't need to see a fake number to know that prices everywhere are rising. A trip to the store will tell you that. Or should I say hundreds of trips to dozens of stores by thousands of people. Anecdotal? Maybe. Good empirical evidence? Absolutely. Evidence that is much better than official statistics prepared by PhDs for people who live in a bubble? You decide.

[admin]

[Renting in Mass]

[GenXer]

It would be confirming a bias, if you started with one. Statistics can be cooked any way you like to confirm to any bias you like as well, and it can also be interpreted in many ways. My point is that empirical observations can sometimes be more accurate than biased statistics.

That is not to say that accurate observations can lead to better predictions about the future. But it is important to explain your observations in a manner that does not lead to inferences that are based on assumptions. You can easily convince yourself that gas/oil/food prices have risen in the past year, so saying that inflation is higher this year than last year is a statement of fact. Now, if you asked me how MUCH higher, I'd have to resort to statistics, which is probably not going to be accurate, since an average for a volatile random variable is not an accurate descriptor of the statistis (you will need higher moments as well).

When a number that is given to you says that there hasn't been much of a jump in inflation from last year, and you observe a change empirically, then you have to ask yourself whether you can trust that number at all. So, again, my point is that many things can be observed empirically, and that you need to draw the right conclusions that are realistic without making any assumptions.

[admin]

[GenXer]

Given how much people typically spend on food/housing/healthcare, it is pretty clear that there is a difference between this year and last year. Between food, gas, rent and healthcare this would probably be a good 80% of a typical budget. I only need to see that the 80% of spending is affected by price increases - this is part of empirical observations that do not require statistics. I'm definitely biased about the other 20% - it is inconsequential for a typical consumer.

[Renting in Mass]

[balor123]

That article I linked backs up GenXers claims. Healthcare is included as only ~6% of CPI but constitutes ~17% of GDP. Inflation data shows that health insurance costs had a marginal increase over last year while my employer tells me that their group, which covers many states and demographics in the US, saw their costs rise 27%. In the end the cost increase was minimal but that's because the quality of the product was reduced.

So for the BLS people here I have a question. The BLS notes that an adjustment is made if the quality of a product improves. For example, a computer last year costs $500 and this year suppose it costs $600 but the performance increased by 30%. The BLS makes an adjustment because you are getting more value for your money now. Or they might decide that computers increased in cost and you can hire an accountant instead. My question is - does the BLS make negative adjustments as well? We may be only paying 1% more for health insurance but we're getting less coverage in its place, resulting in higher out of pocket expenses.

The BLS is the only one that I've seen claim so far that health costs only rose 3% over the last year. My company claims that their health insurance group is seeing double digits for tech companies and most analysts were predicting in the 10ish range at the start of the year. I think the BLS has decided that they don't need to take into account diabetes medication because you can buy suicide pills for a fraction of the cost instead.

That aside, while you can find the break down by category and a lofty description of how complicated their process is you have little insight into how they fudge those numbers. To be fair, that's also the most complicated part of the process and would be very hard to detail. I might like an independent audit at least.

[admin]

[balor123]

Yeah I don't think that anecdotal evidence by itself is damning but just raises suspicion. We have the same problem with CPI - anecdotally it looks suspicious but because we don't have or understand the full calculation we're also unable to convince ourselves that it is a good measure. There seems to be widespread suspicious, especially under the circumstances under which it has been modified in the past.

[admin]

[balor123]

Because the market is cooked too. The Fed now owns more treasuries than anyone else, including China. There's no winning some games and this is one of them. The game now is to minimize losses.

[admin]