[wz1000]

> Talking about a revolution

> Many economists want precisely this state intervention, but it presents clear risks. Governments which already carry heavy debts could decide that worrying about deficits is for wimps and that central-bank independence does not matter. That could at last unleash high inflation and provide a painful reminder of the benefits of the old regime.

Sounds more like a plea than a warning, coming from The Economist. Prophecies of inflation seem like a joke in a time of record low inflation with high government deficits. Just look at the case of Japan for one.

[danenania]

I'm not going to pretend I know the right answer here. It's an amazingly complex issue. But I find this to be a poor argument.

Absent central bank intervention, a productive economy should naturally undergo significant price deflation year after year as efficiency improves, causing more goods and services to be produced with the same inputs. This is why consumer technology prices trend continually downward.

So if the default, absent any intervention, would be for prices to go down every year across the board, pointing to "low inflation" numbers is a red herring. The question shouldn't be how far inflation numbers are above zero, but how far they are above the negative rate of inflation we'd see otherwise. That differential is what tells us how much wealth is really extracted from the economy via what is effectively a highly regressive tax.

[littlestymaar]

> Absent central bank intervention, a productive economy should naturally undergo significant price deflation year after year as efficiency improves, causing more goods and services to be produced with the same inputs

This comment assumes that central banks create money and that's what drives inflation but this isn't the case: commercial banks are the ones which create money (through credit).

Also, you can't sustain an economy under deflation, because deflation would just make the whole economy collapse. In a market driven industrial economy the limiting factor for the economy isn't the output, but the demand, and deflation is the ultimate demand killer (which is why basically nobody buy things in bitcoin: realizing the pizza you bought five years ago is now worth a few thousand dollars doesn't sound cool).

[thorwasdfasdf]

I hear this all the time: deflation causes demand destruction for consumers. But, how many consumers check the inflation numbers before buying a pizza? how many consumers even know what inflation is? (many do not). I really think we need to rethink this assumption that deflation is harmful.

[bob33212]

I agree deflation isn't a problem for consumers. How many people buy electronics knowing that they will be worth 30% less within a year?

It is a problem for debtors ( home owners, and corporations ) and banks.

Who wants to have a mortgage on a house that is going down in value every year?

How is a corporation going to get investment in their factory when a competitor could create a similar factory at a cheaper rate in a couple years.

Why would a bank lend money to people who may not be able to pay them back when just holding onto the money generates returns?

[SECProto]

> Who wants to have a mortgage on a house that is going down in value every year?

I do. That's how housing works in Japan - you buy a house to live in, not to save money or invest. Older houses have lost their value (largely due to perceptions of danger in old housing stock - until the last decade or so, increasing understanding of earthquake/tsunami safety meant that houses wouldn't meet current building codes)

That (combined with adequate housing stock, less zoning restrictions, and negative population growth) means that even in the biggest cities, housing is fairly affordable. You buy a house because you want the control and the permanence that comes from owning a house.

[Beldin]

> I do. That's how housing works in Japan - you buy a house to live in, not to save money or invest

Something I don't understand: if there is real deflation, your buying power increases if you wait. In this case: wait a year, get a nicer house for the same price, or pay significantly less for the current house. So even if you're not buying the house as an investment, waiting would improve your situation as a buyer. The more you wait, the better for you.

How do you ever get to actually buying a house in such circumstances?

[ford_o]

On this note, I have always heard that Japan is in horrible situation because of deflation. Is that actually true?

[javagram]

> Who wants to have a mortgage on a house that is going down in value every year?

Sounds like a car loan. If the house was cheap enough, people would probably be OK with it, but of course starting from current prices it would be incredibly bad.

[mrep]

Wikipedia describes it well [0]:

Deflation is generally regarded negatively, as it causes a transfer of wealth from borrowers and holders of illiquid assets, to the benefit of savers and of holders of liquid assets and currency, and because confused pricing signals cause malinvestment, in the form of under-investment.

In this sense it is the opposite of the more usual scenario of inflation, whose effect is to tax currency holders and lenders (savers) and use the proceeds to subsidize borrowers, including governments, and to cause malinvestment as overinvestment. Thus inflation encourages short term consumption and can similarly over-stimulate investment in projects that may not be worthwhile in real terms (for example the housing or Dot-com bubbles), while deflation retards investment even when there is a real-world demand not being met.

[0]: https://en.wikipedia.org/wiki/Deflation#Effects

[IanCal]

> How many people buy electronics knowing that they will be worth 30% less within a year?

Hasn't this been happening for a long time? Plenty of computing equipment had done just this.

[dv_dt]

If it's a problem for debtors it will be a problem for just about every past college student in America starting at least a decade ago.

Now, I think we should forgive most if not all student loans, and start paying for an education, but if the system insists on the majority of college degree seekers carrying student loans then you have a huge problem with deflation.

It would also be a massive problem for corporate debt right now. I think the central bank would rather print money by the Trillions then allow deflation at scale.

[nine_k]

> Who wants to have a mortgage on a house that is going down in value every year?

People rent housing, paying monthly and knowing that they'll have nothing to own in the end. People even stay in hotels.

They are buying a service: a place to live under their control, where they want it.

[tuatoru]

> Who wants to have a mortgage on a house that is going down in value every year?

The problem is not the declining value of the house, it's that the borrower's income is declining.

To a first approximation, inflation is rising wages relative to the goods and services bouoght with them.

Deflation means falling wages, which makes it progressively harder and harder to pay back loans, so people are less and lesss willing to take on debt.

Falling ability to repay also increases risk to lenders making them less willing to lend and causing them to demand higher rates and shorter terms, reducing both investment and consumption.

> just holding onto the money generates returns

No. No, it doesn't. To generate a return, it must be used for investment or lent (ultimately) to someone who invests.

Deflation also disincentivises investment directly (besides lender unwillingness): your market will have less and less disposable income over time, so the expected value of investment declines and the risks go up. So the business case hurdle for investment gets higher and higher.

Deflation is a reinforcing feedback spiral to zero for capitalism. Inflation at about 3% - 4% per year seems to be optimal.

[JamesBarney]

One of the biggest issues with deflation is it creates a high floor on interest rates. Even if the nominal interest rate was 0, the real interest rate would be 2% severely limiting the Fed's ability to fix recessions. The current federal funds rate is 0-0.25% and with an inflation rate of 2% that gives us a real interest rate of -2%. If we had 2% deflation then the real interest would be 2%. That's a 4% difference in interest rates, which is huge.

The demand destruction comes from individuals and corporation saving more money instead of spending or investing it because they get a 4% better return in one scenario than another.

The biggest purchase individuals make is buying a house. Surely you can't argue that paying a 1-4% higher interest rate on a house wouldn't noticed by consumers.

[JoshuaDavid]

> The biggest purchase individuals make is buying a house. Surely you can't argue that paying a 1-4% higher interest rate on a house wouldn't noticed by consumers.

That depends on how house prices are determined.

If houses are priced primarily based on the cost of construction plus the cost of materials, you would expect consumers to notice a significant difference in total cost under high vs low interest rates, since the base price of the house will be the same either way and a higher interest rate will lead to a higher total cost.

If houses are priced by people looking at what the maximum monthly payment they can afford is, and are bid up to whatever that maximum monthly payment is, people will just observe that houses cost "almost more than I can afford" no matter what the interest rate is. Lower interest rates will lead to higher prices (capped at 360 (30 years x 12 months per year) times what people can afford, at 0% interest rates), and higher interest rates will lead to lower prices (down to the floor the principal being the of cost of construction).

I think most housing markets are more like the first scenario than the second, at this time, but it is entirely plausible that this won't always be the case, and some would argue that e.g. the bay area housing market already more closely resembles the second scenario.

Edit: typo

[JamesBarney]

You're right that the real estate and policy situation in San Francisco is so bad the supply is pretty inelastic. But I don't think it's perfectly inelastic. I think if the price of housing went up 10x in San Francisco you'd have more buildings being built.

But luckily for us very little of the U.S. is as screwed up as San Francisco.

[wahern]

Deflation tends to decrease labor demand. The ranks of the unemployed grow, and the purchasing power of paychecks (e.g. offered wages, etc) diminish faster than prices. This has happened time and again in economies all over the world. Not coincidentally, this happened to the U.K. during the interwar period, which John Keynes observed first hand.

And Keynes got to contrast the U.K.'s monetary policy with France's moderately inflationary policy. France made it through the Great Depression relatively unscathed.

Of course, Germany had strongly inflationary policies leading to hyperinflation. They also suffered terribly during the Great Depression. But Germany deliberately chose hyperinflation to spite the U.K. and France for enforcing crushing war reparations.

[roenxi]

> And Keynes got to contrast the U.K.'s monetary policy with France's moderately inflationary policy. France made it through the Great Depression relatively unscathed.

That is reducing a comparison of the French and English economies down to 1 variable. It is unlikely (nay, practically impossible) that inflationary vs. deflationary policy was the biggest difference between the two.

It is like saying inflation policy was the biggest difference between Japan and the US in the 90s. One of those countries had natural resources, favourable demographics and a fire-hose of migration. The other had limited resources, unfavourable demographics and migration-hostile policies. Their legal systems and approach to corporations was completely different. There are a large number of important variables when comparing the two. Monetary policy is important but not the be-all and end-all.

One is going to be better than the other, but 'Country A did X and did well, B did Y and did badly' isn't an argument. There is too much going on.

[wahern]

That's just one example. The Pulitzer Prize winning history book, "Lords of Finance: The Bankers Who Broke the World", has many other examples and goes into much greater depth. Of course, there are many more dimensions to 20th century economics than just inflation/deflation. Indeed, a driver of deflation in Europe was the gold standard, as the U.S. was a very large net exporter to Europe (kinda like China today) and accumulated a surplus of gold reserves (offsetting American deflationary policy), stoking deflation in the net importer countries as there was less gold to back British and French currencies.

[CuriouslyC]

Deflation is harmful because it is basically a super-regressive windfall. Those with wealth get wealthier, those with nothing get nothing.

[AtlasBarfed]

The only time I hear about deflation is where asset values (like the housing crisis) mass drop. In that case a lot of people are losing a lot of money, so they stop buying as many things.

I never hear about produced goods deflation that is a price drop like from mass efficiency gain where the existing money/assets start being able to buy more things. That should produce more demand, wouldn't it?

[petrocrat]

Deflation causes demand destruction by reducing income because deflation causes (or maybe is more a symptom of) layoffs. A consumer doesn't need to check the price of pizza if their income drops to zero. They will instantly change their spending behavior when they lose their job.

[melenaboija]

You don't need to check any inflation numbers to realize the impact of it, it is something that happens in your daily life.

Maybe don't think about it when buying a pizza (although I think even then it impacts on consumption), but I recently talked with a friend from Argentina and said that he was buying the sacks of concrete while working in US to build his own house in Argentina in the future as he did not want to deal with the contractor arguments about costs of the material due to the duration of the construction.

[littlestymaar]

> how many consumers even know what inflation is? (many do not)

Nowadays, people don't really know what inflation is because there is none (too little to bother at least) but back in the late sixties and seventies it was a huge popular concern.

> how many consumers check the inflation numbers before buying a pizza

An economy isn't just people buying pizzas. A significant part of the economy is corporate investment, or consumer spendings made thanks to credit, and those are what's really hurt by deflation.

[eli_gottlieb]

> But, how many consumers check the inflation numbers before buying a pizza?

Wrong question. The real issue is: how many consumers check the unemployment numbers before buying a pizza? Answer: a whole hell of a lot.

[WalterBright]

> deflation would just make the whole economy collapse

All we have to do is look at history to disprove that. From 1800 to 1914, for example, the USA had periods of inflation and deflation netting out to zero.

[littlestymaar]

This was a super messy economic era for the US with a shit ton of economic crisis and monetary issues were a big part of the mess, that's why the Fed ended up being created.

[WalterBright]

Most of that was due to the government's attempts to manipulate the money, such as bimetalism.

We've also had quite a history of crashes, crises, inflation, etc., since the Fed was created.

[immawizard]

People don’t buy stuff in bitcoin because of the high transaction costs, and low adoption in points of sale. If you believe that bitcoin price will go up in the future, you would buy bitcoin instead of pizza using dollars.

[wz1000]

Two things:

1. It isn't clear that the (real) cost of essentials like food, shelter, clothing, healthcare, education is actually going down significantly.

2. Even if what you say is 100% correct, this "extraction of wealth due to inflation" seems to be a somewhat stable scenario, and certainly hasn't lead to the apocalyptic visions of collapse that inflation hawks perennially create a ruckus about. So even if you think we are living through a hyper-inflationary doomsday scenario, certainly this is a very different doomsday than what one is usually led to imagine (Zimbabwe, Wiemar Republic, Venezuela etc.). Maybe inflationary Armageddon isn't so bad after all!

[autokad]

I generally dont worry about inflation, I roll my eyes when certain financial people talk about the inflation boogieman that hasnt existed for 40 years.

however, we are in a unique situation that has the potential for causing hyper inflation. I say potential because I still think it's not a likely outcome. We are paying people not to work, but eventually someone has to produce something. We ALL can't wfh or be unemployed and collect checks as if we were employed and expect our Amazon deliveries and canned food to arrive; someone has to make and deliver it.

Eventually all the extra money laying around today will chase yesterday's production. I think this is why we often see hyper inflation scenarios stem from low inflation environments. it sounds counter intuitive at first.

This is why we have to be extremely careful when we try to pick and choose what is essential or not. Now we got situations were food is rotting on the vines and milk being dumped down the drain. I dont think we will enter hyper inflation, but we have to be careful about it.

[JamesBarney]

I only glanced through the wikipedia, and it doesn't seem at all like hyper inflation stems form low inflation environments.

https://en.wikipedia.org/wiki/Hyperinflation#Notable_hyperin...

[tuatoru]

> 1. It isn't clear that the (real) cost of essentials like food, shelter, clothing, healthcare, education is actually going down significantly.

It is if you think about it. In the 1970s a baby born premature at 28 weeks would have been unlikely to survive. Healthcare quality has increased enormously. If you could get 1980-level healthcare it would cost less of your wage than it did in 1980.

Food, clothing, transport, and heating have unambiguously fallen as a proportion of wages.

Education is perhaps an outlier here. The spiralling cost is usually explained as a zero-sum social signalling mechanism that is super important for life outcomes, and its rising price as being enabled by the falling cost of everything else.

[roenxi]

The spiralling cost of education is a bit illusory; the actual cost of education is rapidly approaching 0. I can gain free access to a stunning amount of front-line academic research, and anyone can have access to pretty much all of it for prices that are low relative to what it would have cost in the 80s.

You can probably listen to free lectures by country-leading authorities on any STEM subject. Well, TEM. I'm not sure about biology and the other sciences. Access to humanities-related texts is also unbelievable vs the 80s.

The cost of getting socially certified as having become educated is growing. Not the cost of education.

[chiefalchemist]

I won't call it cause but there certainly seems to be correlation between lowering food costs and healthcare increasing.

Truth is, worldwide there are more deaths from the side effects of too much food, than not enough.

[nerfhammer]

That's only true if people don't want better stuff over time, only larger quantities of exactly the same stuff

[derg]

Yep. There's a concerted effort to keep bringing up high inflation as a means of forcing more austerity. The mythical "high inflation" hasn't materialized but the cries continue to happen.

[take_a_breath]

There is a reasonable argument that we do have inflation, it’s just being shown in assets prices, not commodity prices. Things like education, housing, stocks, art, startup valuations, and more have signs of inflation even if oil and food prices don’t.

[derg]

I would agree to this but this isn't necessarily a blanket monetary policy of spending too much money across the board and is a result of political capture by the wealthy where it's used to keep fueling the infinite growth machine for the already wealthy.

I mean housing policy in itself is entirely political: weaponized zoning laws and the lack of new construction to match the growth of the country are a direct result of this infinite growth machine. Housing being considered "an investment" will further perpetuate this price inflation because there is a vested interest in not allowing property values to decrease which is what happens when you can build to match demand.

[PoachedSausage]

The housing situation is one giant prisoners dilemma loose-loose, nobody wants to loose out. I've long believed that houses/land are overpriced but I've recently (Just prior to Covid) become a home owner because I needed somewhere to live and the mortgage repayments are cheaper than rent here. It could have been a spectacularly bad move.

[sacred_numbers]

Well, it's not a lose lose situation to the people that don't own property yet. They would greatly benefit from housing costs dropping, since they could afford to buy their own house or pay less in rent. The problem is that the people who don't own property tend to have less political power and influence than property owners.

[PoachedSausage]

I agree that the basic human need of shelter should be more affordable. I remember 10 years ago, when prices dropped after the financial crisis, people were saying "this is it" but it is politcally untenable to allow prices to drop. So those that didn't own eventually got tired of waiting and then when they have bought they don't want a drop, because who wants to burn money?

[secabeen]

It could be a bad move overall, but there is a floor to the loss, because you get a secure roof over your head that you can become attached to. That has value, especially with a family and community nearby.

[yomly]

Yes there is so much mental gymnastics involved in "basket of goods"

My dad bought a house and had a kid in London aged 27. He didn't even have a degree and was an immigrant arriving with all the money he had scrounged in his hand.

Compare that with the London of today where £200k buys you a 80sqft squat:

https://www.dailymail.co.uk/news/article-8541513/Micro-studi...

But you know, house prices and rent aren't a good so there's no inflation so there's no problem right? /s

[atomi]

All that extra liquidity is going straight to capital assets. People think deflationary assets are a good thing (for themselves), but they tend to promote stagnation.

[somethoughts]

This is correct based on data I've looked at. In fact if you are okay choosing non-capacity constrained housing and education, even those are not having much inflation. If you are okay with community college or even better self motivated to learn online it is very much affordable. If you are ok not living where every else is, the cost of a house is inflating by cost of lumber and local labor costs versus infinite inflation for houses which face land/NIMBY/zoning constraints.

[JamesBarney]

Education, housing(rent, not the price of a house), and medical care. Are all included in the CPI. Education and medical care are going up due to reasons unrelated to inflation. Shelter is going up at 3% due to supply constraints.

The prices of houses, stocks, art, and startups are not. The reason is that assets prices are very heavily affected by interest rates.

Imagine a house that costs $100,000 but rents out for 10,000 a year in profit because interest rate are 10%. Now imagine interest rates drop to 1%. Arbitrage will mean that individuals will borrow money at 1% and buy the house and collect 10%. This drives up the price until the return on the house matches the return of other investments, or basically until the house is worth $1,000,000. Now the cost of rent hasn't changed, but the price of the house has gone up 1,000%.

Did the economy experience 1,000% inflation? No because the cost of living hasn't changed.

[take_a_breath]

Assets experienced a 1,000% inflation. People can still scrape by being consumers and renters (cost-of-living), but owning assets moves farther and farther out of reach.

Since our economic system is built on assets (they appreciate, you can borrow against them, etc.), the inequality gap keeps growing.

[ls612]

Housing and education are both represented in the CPI. Housing alone is almost a third of it.

[adjkant]

I haven't dug in recently to the CPI, but I wouldn't be surprised to find underlying flaws in the CPI's representation of different groups of people such as people who live in urban areas, people who are in a specific income bracket, etc. The CPI may reflect those things, but if those proportions are off it can significantly affect the inflation number it spits out.

I'm not an economic expert but it baffles me that people pay attention to a single CPI and don't look at many at once when analyzing economic policy. A single CPI optimization is inherently going to cater towards the effects on one group, but without study we don't even know what that group is.

[natch]

Agreeing with what you have said here, but you might have to leave food prices out of the argument soon. I don’t know what numbers economists look at for this, but just as naive consumers we are noticing that food prices are going up.

[nostrademons]

There's a tangent on this in Carlota Perez's Technological Revolutions and Financial Capital. Basically you get this phenomena of "two moneys" - rather than the economy acting as a monolithic entity, a new socioeconomic system grows up around the new fundamental technologies, and then goods/services/assets that are connected to the new economy (tech companies, programmer & data scientist salaries, Silicon Valley real estate, SV daycare prices) inflate rapidly while everything connected to the old economy remains stagnant. This sucks if you're trying to manage daily life in the new economy - you may be making $600K/year, but a crappy house is now $3M. It's pretty awesome if you're in the new economy but buying something from the old economy though. A new TV is about an hour of compensation for a mid-level Googler; a cruise to Antarctica is about a month's worth.

The usual outcome of this situation is something far worse than high inflation. Instead, you typically get a financial crisis, then war and conquest as the new technologies are applied to weaponry.

[Can_Not]

Reminds me of the heightening contradiction, my generation is "criticized" for buying Starbucks instead of saving for a home, so sure I'll not drink a Starbucks daily for 577 years and use that money to buy a home. It's financial advice that ignores the fundamental problem.

[staplers]

I find myself waiting and hoping for a complete and utter financial crash just for the opportunity to be able to afford a home. My income is several times above the poverty line.

It makes me feel sad and guilty but that is the reality. Inflation is real when you look for it.

[RestlessMind]

Then you better buy a home sooner. Because as soon as there is a financial crash, central banks are going to flood the economy with new money to prop up stocks/bonds/homes prices. The template was originally tried after 2008 crash (ZIRP, multiple QEs etc) all over the world and is put to test again during the COVID shutdowns. Since the sky didn't fall the first time and not falling the second time, that is going to be a go-to tool for policymakers.

[staplers]

So you believe that hyperinflation is coming?

[RestlessMind]

In things which are supply constrained? Yes. Think bay area houses or gold or bitcoin.

In things where supply is near-infinite? No. Think digital entertainment, cheap calories or cheap clothes.

[nine_k]

You mean, current real estate prices in places like SV is not a hyperinflation yet?

[mrep]

Have you considered looking for a job outside of the west coast because inflation adjusted price per square foot hasn't actually changed for a lot of the US [0]. It's mainly just the west coast where home prices have ballooned (in the US at least).

[0]: 0]: https://www.supermoney.com/inflation-adjusted-home-prices/

[natch]

Looking for just one job is not enough. To feel secure leaving silicon valley, you need a wide choice of jobs and employers in the area where you go to, in case the first job doesn’t last. From here every other place looks to have more limited options.

[LargeWu]

Well, it's clearly a tradeoff. By staying in the Valley, you are prioritizing having options at many startups at the expense of home ownership.

I live in Minneapolis. Not as wide ranging options here, but many of them are at fortune 500 companies (relatively stable), and homes are affordable. I'm sure you can find examples in many other similar cities.

The Valley may have the most opportunities of anywhere, but to say that there's just no work anywhere else is a bit ridiculous.

[mrep]

The bay area might have the most programmers, but there are still tons of programmer jobs outside of it. 80% of programmers don't live in california [0]. Almost every fortune 500 company has some software developers so there are jobs in every decent size metropolitan area. A lot of the big companies also have satellite offices you can work at. I just moved from Seattle to Chicago and it only cost me 4% of my salary and I've already had 5 recruiters ping me on linkedin since I moved here a few weeks ago.

[0]: https://dqydj.com/number-of-developers-in-america-and-per-st...

[staplers]

That article doesn't account for lot size, which generally provides more value. It can be argued that a house surrounded on 3 sides by other houses with no outside area is less valuable.

[bluGill]

It can be argued, but it isn't correct. I know of houses where the next house in any direction is several miles. They sell for cheap after being on the market for a long time.

People do like space, but the like cities as well. Suburbs are an attempt to compromise.

[mjevans]

I suspect others are seeking the same type of freedom that I am, or maybe it's direct inverse.

I want freedom from the impact of other people; no more noise through the walls, smoke in the halls, or the unwanted scents from cleaning and cooking when the windows are opened for ventilation. Even renting a house I can't escape this and now there isn't one 'grounds-keeping day', it's every freaking weekend day that someone near me decides to mow their lawn.

Conversely people might like living far apart so they've got the freedom to make a mess, do things an HoA would hate (I argue HoA's exist due to lack of proper, and local, laws and enforcement). For that matter, HoAs are also something that others force as an anti-freedom.

I think what I would really like is a bunker, someplace with nice thick insulation and isolation and very good air filters. However I'd still like to be able to easily visit stores for food, so probably some kind of suburban bunker.

[staplers]

You didn't provide evidence. Larger lot size absolutely does provide more value.

[cure]

> It's mainly just the west coast where home prices have ballooned (in the US at least).

And the Northeast, which is apparently more expensive per sq foot than the West, according to your source.

[derg]

Yes, this is true. I guess I wasn't very careful with my wording as I was talking in the classical sense of "there's too much money now so your dollar is now worth 20 cents across the board" inflation and not necessarily failed political policy, which housing is absolutely apart of.

[antisthenes]

I've come to consider the official inflation figures as absolute nonsense. It's a shame, really, because the BLS does a lot of good work, and outdated metric calculation methods really put a tarnish on an otherwise great agency. I'm not sure how much of that is being held hostage to political goals.

Things that are in actual demand [1], like health care, education and housing (in desirable areas) have absolutely been outpacing inflation.

Sure, if you measure the absolute basics needed to not die in a society, the figures might make sense (as it would be mostly food and clothing, both of which are dirt cheap. So cheap in fact that most of the time they can be had for free! Thrift stores and food banks are your friend)

But if we're talking about a thriving society and population, surely our aims should be set higher than the very first step on Maslow's hierarchy of needs?

[1](it's not Smart TVs and Smartphones, although even flagship smartphones have recently ballooned in price far outstripping any sort of inflation figures)

[derg]

> But if we're talking about a thriving society and population, surely our aims should be set higher than the very first step on Maslow's hierarchy of needs?

Very much agreed.

The issues with sectors that have been outpacing inflation aren't due to a blanket "we're pumping too much fiat into the economy" but are absolutely political choices.

Healthcare: The US does spend too much here for what we get in return but this is a political choice. We could institute Medicare for All and _save_ money [0]

Education: Again political here. How much funding has been stripped at the state/local level for the universities and how much can be attributed to extremely bloated administrations? Other countries can manage education just fine.

Housing: this is current housing being weaponized to increase the value of property while artificially limiting what, where, when, who, and how much can be built at any given time. See: all of California. Housing as strictly a monetary investment now dictates that nothing is ever allowed to depreciate, only ever increase.

[0]https://www.thelancet.com/journals/lancet/article/PIIS0140-6...

[secabeen]

> Healthcare: The US does spend too much here for what we get in return but this is a political choice. We could institute Medicare for All and _save_ money.

This is absolutely true, but also exceptionally hard. Extracting the $1 Trillion/yr out of the current healthcare system is going to put a lot of people out of work. We'll need a good system to re-train them for new work too.

[erentz]

The change from CPI to “Chained CPI” back in the 90s (?) has been a bit of a con IMO. It was designed to reduce the amount of inflation reported. Making it the official inflation metric used for social security meant that SS cost of living adjustments went down screwing people on social security (that they had already paid for). It also then started to get used later on to set the tax brackets. Which again screws people by slowly pushing them into higher tax brackets.

I prefer the older CPI system. It’s still imperfect but it was fairer.

[ytpete]

Surely there must be some price index that uses a basket including these additional important "goods"... does anybody know of one?

I think items like housing and transportation costs are used by some regions when calculating the cost of living that determines the "poverty line" for aid programs. So there's probably already a well-vetted process for looking up some of those price points. Then it's just a matter of aggregating them and tracking that value over time...

[taneq]

Inflation is a consequence of 'the average consumer' having more money to spend and thence becoming less price sensitive. The reason we haven't seen inflation is that the stupendous amounts of money printed recently have all gone to people who already have more than enough cash to spend.

[martin_bech]

Well it has in Venezuela, with the printing of money. But maybe you need a measure of scarcity to trigger high inflation.