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Inflation is differential and restructuring (2021)

151 点作者 szeptik将近 3 年前

34 条评论

lordnacho将近 3 年前
Wow, this was the article I was looking for, it summarizes a number of thoughts about economics that I&#x27;d been having since the undergraduate days:<p>- There&#x27;s an authority about the field that really isn&#x27;t deserved. The models are not made properly, and there&#x27;s a lot of hand-waiving. I studied economics with a class of engineers and everyone pointed this out.<p>- The pop-sci version of economics is a bunch of easy quips. Friedman&#x27;s &quot;everywhere a monetary phenomenon&quot;, Keynes &quot;In the long run&quot;.<p>- The econ 101 version of economics is dominant in popular thought. You see it everywhere in newspapers. A more nuanced version of economics does exist, but the appeal to authority is strong in the field, because there&#x27;s no real reasonable arguments, it&#x27;s actually politics.<p>- Inflation is more interesting in a disaggregated view, for reasons mentioned. You can&#x27;t look at it as a single figure.<p>- Relative price changes are what matter in society, because they represent changes in negotiation terms between different actors. Post-pandemic and Ukraine, we should expect to see more shortages as well as more strike action. Various groups like the RMT union will decide they need to flex their muscles. Chip shortages will cause negotiation positions to change across a wide variety of affected sectors like cars, meaning push will come to shove for certain lines of business.
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vectorfrog将近 3 年前
I found this analysis wildly off-base. No classical economist would suggest that increasing the money supply raises all prices uniformly, but the author seems to think that by showing that different goods&#x27; price changes are not uniform, that some how proves inflation is not a monetary phenomenon. What?<p>From Thomas Sowell&#x27;s Basic Economics - &quot;Inflation is a _general_ rise in prices. The national price level rises for the same reason that prices of particular goods and services rise - namely, that there is more demanded than supplied at a given price. When people have more money, they tend to spend more. Without a corresponding increase in the volume of output, the prices of existing goods and services simply rise because the quantity demanded exceeds the quantity supplied at current prices and either people bid against each other during the shortage or sellers realize the increased demand for their products at existing prices and raise their prices accordingly.&quot;<p>Note the emphasis on general. There is no reason to expect that the outcome of customers bidding against each other, or producers increasing prices to meet new demand levels would be uniform across all goods and services, furthermore, you would expect that the existing climate of the time would wildly swing the actors&#x27; actions involved in these bidding &amp; pricing exercises.
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lottin将近 3 年前
Inflation is a change in the price level, i.e. an average. TFA argues that inflation is misleading because prices don&#x27;t change uniformly, and therefore inflation doesn&#x27;t fully explain every change in the price of every possible commodity and service.<p>I think it&#x27;s a straw man argument, because nobody claims that inflation fully explains changes in the prices of commodities. Instead, measuring inflation allows us to decompose these changes into a general component (i.e. inflation) and an idiosyncratic component (i.e. a change in relative prices), which is useful because it gives us more information about the causes of price changes. Inflation is only misleading if you&#x27;re willingly misinterpreting it.
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roenxi将近 3 年前
If this perspective carries the day - which is plausible - then all it will reveal is that basically nobody in the voting public should care about inflation:<p>1) Inflation is not a useful metric for financial planning. If your investments are keeping pace with inflation then you have completely failed to position yourself correctly relative to the massive money creation going on. The gold price trend is posting consistent real returns vs the CPI - which is stupid (if you believe the CPI measures inflation, anyway).<p>2) Inflation isn&#x27;t a fair metric for referencing on wage raises. Again, we can see that wage earners are slowly getting crushed as a % of the economy [0]. If they are focusing on keeping up with the CPI then they&#x27;ll get distracted from the fact that they could be doing a lot better if they could re-link wages with productivity.<p>3) Nobody knows how the CPI is calculated. If someone can find out the actual methods, weights and inputs then report back you get a virtual gold star. I did it once and it is a labyrinth to work out what they are actually measuring - I don&#x27;t believe more than a small fraction of the people debating inflation understand or care about the details of what it measures.<p>To cap off a mild rant; it is not obvious why we care about what the truth about inflation is. Few people understand the number and it is unclear what use it is for decision making.<p>The more concerning factor is that the government is creating money on a grand and accelerating scale and that is going to end badly, like it always does. Cite some examples where it has led to a golden age? Printing money literally does not and cannot plausibly solve real problems.<p>[0] <a href="https:&#x2F;&#x2F;www.weforum.org&#x2F;agenda&#x2F;2020&#x2F;11&#x2F;productivity-workforce-america-united-states-wages-stagnate&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.weforum.org&#x2F;agenda&#x2F;2020&#x2F;11&#x2F;productivity-workforc...</a>
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bojangleslover将近 3 年前
Why can&#x27;t it be both monetary and non-monetary? Say it&#x27;s a vector, one element per CPI category. Throw housing in for good measure.<p>The direction of this vector can change due to non-monetary stuff like Russia and oil. But if all of the categories, especially those without clear non-monetary drivers, rise, then it&#x27;s also monetary.<p>So maybe X = p_monetary + Q_nonmonetaty where p is a scalar and Q is a vector.<p>I think it is both. But the monetary side is controllable by our constituency. Friedman was still right.
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schemescape将近 3 年前
The title makes this sound like another conspiracy theory about the government suppressing inflation in official numbers, but the article is actually a rational dive into the non-uniformity of inflation across various categories.<p>The last section attempts to link &quot;differential&quot; inflation to oligopolies, and I&#x27;m not sure I buy their arguments there, but it&#x27;s thought-provoking nonetheless!
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lbriner将近 3 年前
The problem is that politicians and armchair critics prefer simple sound-bites like &quot;government spending caused this problem&quot; or perhaps &quot;a lack of government spending caused this problem&quot;, I can&#x27;t imagine how many frowns you would get in parliament&#x2F;congress if your explanation of why inflation is so high was as long as the article, even if it was much more accurate than a sound bite.<p>People don&#x27;t like the fact that the world is complicated and more inter-dependent than ever. I guess that&#x27;s why some people go and live in the wilderness.
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littlestymaar将近 3 年前
The biggest argument against inflation as a monetary phenomenon right now is the foreign exchange rate: inflation is higher in the US than in the Eurozone, while a dollar is worth significantly more euros than what it was worth a year ago.<p>In fact, if your salary is labelled in dollar and you live in Europe, your purchasing power increased in that period, which shows that the current level of inflation in the US isn&#x27;t cause by the intrinsic value of the dollar going down.
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j7ake将近 3 年前
Inflation can be thought of as a high dimensional vector with dimensions equal to the number of objects you buy with money.<p>Each person is affected by this inflation differently because they buy different things.<p>To “solve” this problem, the government has decided to collapse this high dimensional object into a scalar number.<p>And now we are seeing a divergence between this scalar number and the actual high dimensional object.<p>Today with digitised transaction records, there is a ripe opportunity to convert these records back into a person-specific , high-dimensional object with pretty visualisations to aid with understanding.
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I_am_tiberius将近 3 年前
I think Friedman&#x27;s general idea is correct. For me inflation is not about individual price levels but about the potential of increased&#x2F;decreased price levels. If money supply increases, it makes room for increased price levels. Without increased money supply, it would only be possible for a product price to increase if another product price decreases. In reality I think inflation already occurs when money supply is increased - it&#x27;s just not priced in as it takes time for prices to adjust. However, the period of time in which the increase happens, cannot be predicted - e.g. it can be 1 year or 100 years.
sudden_dystopia将近 3 年前
Seemed like a long winded persuasion that monetary policy doesn’t matter all that much and that at the end of the day, the disaggregated inflation we experience in the real world is the result of oligopolies, which to me, seems like a subtle plug for MMT.<p>I don’t buy it. I have heard plenty of economists and economically savvy people call BS on CPI as a metric for the very same reasons outlined here. CPI is a fallacy, mostly pushed by the the govt since it tends to generally be favorable to them and disguise the disaggregated nature of inflation. But that doesn’t mean that the underlying economic principles are false.
beloch将近 3 年前
At it&#x27;s most basic level, inflation tries to measure of the affordability of living. Mango prices go down and avocado prices go up, so I buy more mangos and fewer avocados. However, what really impacts my life is how much of my income I need to spend, <i>overall</i>, on groceries to eat well. Inflation doesn&#x27;t capture the choices I must make to optimize my grocery bill, but it <i>does</i> do a decent job of representing how the all-important total on my grocery bill changes.<p>What inflation <i>doesn&#x27;t</i> necessarily do is capture how my grocery bill changes <i>relative</i> to my paycheck. If you look at the historical inflation rate, it does a semi-decent job of indicating when weird stuff happens. Wars tend to be accompanied by spikes in inflation. Things get scarce. Supply chains get disrupted. There&#x27;s less stuff to be had so, on average, people can afford less stuff. Everybody is making the same salary but things cost more. Pandemics can have similar effects. (We just happen to have gone from one directly into the other.)<p>Deflation coincides with recessions (e.g. 1929). You&#x27;d think things getting cheaper would be indicate people can afford more stuff, but it&#x27;s just the opposite. People are making less, so they buy less, and prices come down as supply exceeds demand.<p>Inflation does need the context of average earnings to be useful, but it <i>is</i> useful given that context.
zeckalpha将近 3 年前
&gt; To understand inflation as it actually exists, we must look not to economics textbooks, but to real-world data. That’s what political economist Jonathan Nitzan did during his PhD research in the early 1990s. His work culminated in a dissertation called Inflation As Restructuring.<p>The real world of PhD dissertations isn’t that different from that of economics textbooks.
cm2187将近 3 年前
Inflation isn’t measured on an average, it is measured on a basket. They are the same mathematically but the intention matters. If meat goes up 50% and fruits down 50% and the average is unchanged, that means the price of the basket that you will pay at the till is also unchanged, and you aren’t poorer.<p>Now you can argue that CPI baskets aren’t representative, and I think they often underweight real estate. But that doesn’t mean that you are measuring the wrong thing by using a basket.<p>It does explain though why the money printing 2008-2019 didn’t translate into CPI inflation, because that money was injected in the financial system, asset prices shot up, asset managers and VC investors got rich, but that didn’t affect main street. In 2020-2022, the pace of money printing massively accelerated and was directly introduced in everyone’s pockets through furlough schemes.
jschveibinz将近 3 年前
This is an excellent article. It is well written, relatively easy to follow, and the explanations are well supported by data. Cheers to the author.
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dataflow将近 3 年前
At the risk of going off-topic: I&#x27;d also like someone to write a similar blog post providing a <i>convincing</i> explanation of why the national debt supposedly isn&#x27;t wrecking the US&#x27;s future big time.<p>To me it absolutely is, because you can only keep borrowing money and paying the (increasingly large) interest on it for so long. Eventually it&#x27;ll exceed your revenue and you have no choice but to print money and hyperinflate your currency... right? Yet modern economists keep arguing it&#x27;s... fine? &quot;It&#x27;s not like your household debt&quot; or whatever the argument is.
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aeternum将近 3 年前
The non-uniformity of inflation is interesting and has been brought up by many economists recently.<p>I wonder if eventually the Fed will try to track inflation as a vector rather than a single number.
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hackeraccount将近 3 年前
I can sort of see the point the writer is trying to make. Certainly inflation is not evenly distributed - see healthcare, see post-K-12 education, see housing - but all that said they don&#x27;t seem to grapple with the recent history of inflation. I&#x27;m thinking of Volkher putting a stop to inflation by raising interest rates - cutting off the money supply.<p>As for the idea that oligopolies are behind inflation, it seems a cry too much the reverse of saying it&#x27;s all Governments fault.
perryizgr8将近 3 年前
That&#x27;s a lot of words and complicated statistics to argue against a simple graph showing M1+M2 supply since 2020 overlaid on a graph of inflation in the same time period. I think the lady doth protest too much...<p><a href="https:&#x2F;&#x2F;thefreethoughtproject.com&#x2F;80-of-all-us-dollars-in-existence-have-been-printed-in-just-the-last-two-years&#x2F;" rel="nofollow">https:&#x2F;&#x2F;thefreethoughtproject.com&#x2F;80-of-all-us-dollars-in-ex...</a>
imtringued将近 3 年前
The author talks about how accounting identifies are weird gotchas but the problem here isn&#x27;t that there is a weird gotcha, the problem with MV = PT is that pretty much all variables are unknown except the general price level. Nobody knows what the real quantity of money is, nobody knows what the velocity is since it would require marking individual dollars and counting how many times they change hands.
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Terry_Roll将近 3 年前
Inflation, in all theories, doesnt measure the change in quality of the product either. Planned obsolescence is a stealth and legal form of product destruction that the buyer doesnt know about until after they have purchased something which is why the saying exists &quot;buyer beware&quot;.
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twic将近 3 年前
I&#x27;d be interested to see plots of median or upper-quartile inflation across the CPI categories in there too. In periods of high inflation, is the high variation really random variation about an increased centre, or does it reflect the departure of an extreme from an unchanged centre?<p>In the article and my suggestion, there&#x27;s also an unexamined assumption here that the CPI categories are peers, on which it&#x27;s valid to do statistics. It&#x27;s not clear to me that &quot;medical care commodities&quot; and &quot;shelter&quot; are really things it makes sense to take an arithmetic mean of.
dang将近 3 年前
I changed the linkbait title* to something that the article actually says, but it&#x27;s a bit obscure. If there&#x27;s a different phrase in the article that gives a clearer summary of what it actually says, we can change it again.<p>* &quot;<i>Please use the original title, unless it is misleading or linkbait</i>&quot; - <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;newsguidelines.html" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;newsguidelines.html</a>
yyy888sss将近 3 年前
Inflation is an expansion in the money supply, such as new discoveries of gold or or printing paper money or creating credit. A baker would say he will &#x27;raise&#x27; or &#x27;lower&#x27; the price of his bread, not &#x27;inflate&#x27; it. Defining inflation by the CPI or a similar measure is like defining the rain as a &quot;increase in height of a river&quot;. It is the rain that CAUSES the rise in the river, and inflation CAUSES a general rise in prices.
kklisura将近 3 年前
As an absolute layman to this field, the Friedman’s &quot;inflation is ‘always and everywhere a monetary phenomenon’&quot; has appeal to me in that it offers a (simple?) solution: &quot;government austerity&quot; as noted in the article. Whenever I read other views on inflation and even this article, they fail on providing any solution for either fixing or taming the inflation.
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adammarples将近 3 年前
Bafflingly long article which I read all the way to the end waiting for a point. The first point was interesting, inflation is an average, maybe its variance can tell us something. The current inflationary spike is evidently driven by used car prices. Then a long ramble to conclude that it&#x27;s caused by large corporations. Driving up used car prices? OK
js8将近 3 年前
If economists accept that there are winners and losers in society, they will never agree on a single theory. Therefore, the most successful economic theory, neoclassical economics, rejects that assumption, despite it being factually wrong. It is successful precisely because it can be agreed by all economists.
sylware将近 3 年前
Prices increase because some human beings do increase prices.<p>It is not &quot;mother nature&quot;: there are moneraty&#x2F;economic &quot;rules&quot; made&#x2F;enforced by a few humans to organise(oppress?) others humans. Don&#x27;t be fooled.<p>To deal with inflation is to deal with those humans who are increasing prices.
kkfx将近 3 年前
The &quot;monetary phenomenon&quot; is a symptom the illness is private money: money MUST BE an unit of measure of many substrate (work, time, resources) we all agree, so MUST BE generated out of thin air (as it is) by STATES not by some privates that loan to the States generating the meaningless &quot;public debt&quot;, a concept that simply CAN&#x27;T EXISTS.<p>If State&#x27;s treasury generate money and all Citizens behind them exchange that money, taxes act for their own purpose witch is not financing States out of Citizens pockets but to redistribute richness to ensure a fair enough society where those who do more&#x2F;are lucky get rewarded but still NOT being able to assume so much economical power to endanger the society at a whole.<p>Than inflation will not exists, or at least it&#x27;s a kind of marginal concept almost non one is interested in.<p>If we are, like we are now, than inflation, mostly artificial, is a mean to cyclically made people poor to push a change against peoples and peoples will, like war or a new society built not to serve us humans but to serve very few of us who happen to be a human cancer, human as any cancer is part of the ill person, equally dangerous and lethal, to be cured by all means to try to survive...<p>If people do not understand that in sufficient enough mass, well a modern society is not possible and that means those who understand can only do their best to survive AGAINST other citizens-subjects waiting for a cyclic collapse and when this collapse happen, since there is no Democracy so no human rights try to get the hardest and inhuman revenge against those who happen to have, again, provoked the mess. Hoping that again in the history such big mess have made enough people understand who is the enemy.<p>If you think a separate society can work, like Indian&#x27;s casts... Well... Try to look at history, yes for a certain time it work, but only for a certain time, so here the choice is moral in the sense: did we live ONLY for us or also for leaving an heritage?
emptysongglass将近 3 年前
How should tech workers be negotiating yearly raises taking inflation into account and should they even wait a year before approaching HR?<p>What are some counter-arguments I should prepare myself for?
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sorokod将近 3 年前
Related: &quot;Vimes Boots Index&quot;<p><a href="https:&#x2F;&#x2F;en.m.wikipedia.org&#x2F;wiki&#x2F;Boots_theory" rel="nofollow">https:&#x2F;&#x2F;en.m.wikipedia.org&#x2F;wiki&#x2F;Boots_theory</a>
Straw将近 3 年前
This article makes a number of misleading claims I think stemming from a misunderstanding of inflation- which does not mean &quot;price increase&quot; but rather &quot;a general increase in the prices of goods and services in an economy&quot;- that&#x27;s right, we define it as an average.<p>Okay, what about the variation? Definitely, prices for different goods change differently, and the NYT even has a calculator that estimates it for you based on your consumption: <a href="https:&#x2F;&#x2F;www.nytimes.com&#x2F;interactive&#x2F;2022&#x2F;05&#x2F;08&#x2F;business&#x2F;economy&#x2F;inflation-calculator.html" rel="nofollow">https:&#x2F;&#x2F;www.nytimes.com&#x2F;interactive&#x2F;2022&#x2F;05&#x2F;08&#x2F;business&#x2F;econ...</a> Try it out with a few different choices- you&#x27;ll see that pretty much everyone experiences significant price increases, out of line with the previous decade- so the CPI while not perfect definitely tells us something.<p>The fact that the standard deviation is greater than the mean does not tell us its not meaningful- for example, if I give you 1 million samples from a normal distribution with mean 0.1 and std 1.0, you can meaningfully tell me the mean is greater than 0.<p>Individual components of the price index don&#x27;t give a useful item to take the variance of, because very few people have all their expenses in one component. We&#x27;d actually like the dispersion of the change in expenses for each person&#x2F;company to understand how much expenses rise in general. I suspect this will be significantly smaller since most people have &#x27;similar&#x27; spending profiles, at least compared to the hypothetical consumers which only buy one component of the price index.<p>Okay so why do prices change differentially more during inflation? This is a tough one, and recently there are obvious confounding factors (covid) that make it difficult to dissect. But I think even Friedman would expect this, because he claims that quantity of money leads inflation by 6 months-2 years, and we wouldn&#x27;t expect it to propagate through all supply chains at equal speed. This also means that the standard theory is predictive and can&#x27;t just be an accounting identity- the prediction (which we can make after the huge increase in M2 in 2020) is that prices will rise, with some delay but eventually about 30%. I&#x27;m not counting any change in the output of the economy here, so with covid disruption I wouldn&#x27;t expect this to have particularly good accuracy. Let&#x27;s see how it pans out!<p>Finally, we can look at things like the price of gold: it rose significantly pretty much in line with the M2 money supply. I don&#x27;t know of anything that would significantly affect gold supply recently, so it would seem the demand comes from devaluation of the dollar or fear of it.
nathias将近 3 年前
great article<p>&gt; Price-change variation rises and falls with the average rate of inflation.<p>I think we can see it as a decay of money as a tool, its main function of being a unit of account becomes disrupted because its self-referential aspect increases.
FuriouslyAdrift将近 3 年前
This article conflates monetary inflation with the EFFECTs of monetary inflation...<p>Inflation within the context of state level economics is the reduction in relative value of current monetary holdings.<p>That&#x27;s it.<p>There&#x27;s nothing magical, hidden, or complicated about it.<p>How it arrives, how it is dealt with, and how much is desirable for specific effects is all up for debate and the article has some great info and analysis there.<p>The most common reasons are monetary expansion and scarcity changes in resources. The most common methods of adjustment are monetary contraction and increases in resources.