[jennyyang]

The only time people care is when they care. And you can't predict when that will happen. It's like a flock of birds flying in the air, you can't figure out which individual bird caused the first change in direction, but it quickly spreads across the entire flock.

The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly. There is crazy inflation in things like house prices and assets like stocks. Look at the vast income inequality that has occurred in the last 15 years. Whoever is invested in stocks and housing market has made money. Everyone else is basically forgotten or left by the wayside.

[bob33212]

Inflation is intended to measure middle class distress. If gas/food/rent goes up people making under 50k can fall into poverty and bankruptcy. If GME goes up to $2000 the middle class isn't hurt much at all. Just a few hundred or few thousand people get rich.

[mr_toad]

Inflation has many measures. Household inflation is one of them, but there are many others, and using one measure (e.g. CPI) for measuring all inflation is problematic.

[roenxi]

> The other fallacy is that inflation is here, it's just not being measured by the Federal Reserve properly.

Another theory is a 0% inflation rate doesn't mean 0% inflation. It means inflation is close to the rate that goods/services are getting cheaper naturally as technology & market organisation improves.

[pmiller2]

That assumes that goods and services are getting cheaper, which isn't the case for several key necessities. In particular, housing, education, and medical care have risen far faster than inflation for the past 40+ years.

[notyourwork]

Are house prices inflation or appreciation? It may be unfounded but is an increase in value always inflation? (Serious question, not disagreeing with your statement.)

[analyst74]

Modern days, the word "inflation" tend to refer to how government measures price increases based on a basket of core consumer goods. And in that case, appreciation and inflation are completely different things.

But when talking about housing/asset prices in aggregate, a 10% appreciation means you need 10% more money to buy the same asset, thus losing 10% purchasing power. Whether you call that appreciation or inflation doesn't make a difference.

[onlyrealcuzzo]

Housing is a debt market. Houses don't cost 10% more just because prices have increased 10%. Manipulatedd interest rates have made debt service 15% cheaper. It's not that simple. Sure, you need 10% more for the down payment - I'll give you that.

[epistasis]

The other specific thing about mortgages and other debt is that banks are a source of new money when they create loans. Banks do not even have to have a fractional reserve on hand any more, and have far more flexibility to create money as long as they can survive the stress tests. Which means that banks are far more in charge of the money supply than most acknowledge.

Which can cause a huge amount of inflation in housing, if there's not enough of it to go around for extended periods of time.

[nicoburns]

Given that a large part of the increase is due to the availability of low-interest mortgages, the description as inflation seems reasonable.

[dboreham]

What's "appreciation"??

[snowwrestler]

Inflation is the amount that prices rise without an increase in real value. And if there is no increase in real value, then you haven’t actually made any money.

Conversely, if people are making money on assets in real terms, then that is appreciation, not inflation.

Income inequality is a difference in real income. It’s growing because the economy is differentially allocating real value, not because of inflation.

[chii]

> There is crazy inflation in things like house prices and assets like stocks.

but these items are not required for somebody to live - so they are not used in the inflation calculation.

[epistasis]

Stocks, no. But houses are generally considered essential. Or at least I home they will be. With the way that my community has accepted mass homelessness without any concern fir allowing new housing to be built, I fear that we may regress from the 20th century position of housing being a human right.

[chii]

The cost of housing is the rent cost (which is the imputed rent cost of your own home, if you owned the house - not the interest cost of a mortgage).