everything runs on centralized servers, where are the peers in these p2p networks?

[1] https://ethresear.ch/t/proposer-block-builder-separation-fri...

e: a letter + source

https://twitter.com/dydxprotocol/status/1468293558360805381

Here is a "decentralised" exchange going down with aws

The nice thing about the decentralised exchanges such as Uniswap or -dydx- is that you do not need their websites/ frontends because their smart contracts/ backend is available on the blockchain. Anybody can make a website that interacts with any smart contracts on the blockchain. There are even aggregator websites (e.g. https://app.defisaver.com/).

Do you know any website that aggregates the services of any TradFi banks and brokers?

Edit: Actually dydx is layer 2 now: https://dydx.exchange/blog/layer-1-wind-down

Backend/frontend? I thought this was a decentralized network. There should just be users with nodes. Backends point to clear points of failure from a disingenuous misleading project

Anyone can interact with a contract directly, you don't need any FE or BE at all.

I can't speak to the specifics of dydx since I am not a user and haven't done my due diligence on them, but with every other dex I have ever interacted with it is entirely possible to use their service entirely from the contract interface.

Its usually the first thing I do to ensure that I can access my funds without any external dependencies.

And yet they claim right on the front page "Decentralized"

Also L1 exchanges on Ethereum are arguably not decentralised. They delegate power to miners as a shortcut

would like to point out that HN was also saying BTC was over valued at $1k.

Didn't listen to you guys then, not going to now either.

You're assuming too much.

Check out dappradar for a more exhaustive list of the literal thousands of decentralized finance projects that are currently live.

You can interact with any of these directly from the contract interface itself.

why does it hard fork so much and make prior clients incompatible? why do they have a monetary policy? isn't that what fiat currency is?

the govt loves to gaslight

calls SEC behavior sketchy haha

Yes, there's lots of money involved in FDA approvals. Yes, there has been and will continue to be corruption. But over my short life, the access to information has gotten better. The knowledge has gotten better. Most medicines have gotten better.

There was the opiate crisis. There was the nutritional pyramid nonsense. There was the ignorance of sugar and erroneous focus on fat. There was also the shingles vaccine, hep C treatments, fixes to the nutritional recommendations and acknowledgement of problems with sugar.

But I do not have a better option. I certainly am not capable of understanding the human machine by myself. My only hope is that multiple organizations consist of multiple people who are mostly good and mostly right most of the time. And that is something, I think, Americans can be proud about with regards to their civilian agencies.

main chain fees is $1 right now, and lightning tx are almost free: https://mempool.space/

it's pretty fantastic people! naysayers should plan to visit El Zonte, beautiful surfing community.

I plan to visit later this year and have friends who work with Strike team etc.

The future is looking optimistic!

>their OS filled with malicious stuff and who knows what kind of backdoors is when exploited by hackers

You're going to need some citations if you're going to claim windows server has intentional "malicious stuff and backdoors". That's a bold claim to make without evidence.

We spent the entirety of the late-90s/early 2000s complaining that MS didn't force updates on users, so these massive worms were infecting half the internet with exploits that were patched YEARS earlier.

It took moving a mountain to get MS to enforce patching of consumer systems, to sit here now and claim that's malware is both irresponsible and ridiculously short-sighted. Without mandatory patching, I can say without exaggeration that the entire internet would be less safe. Anyone spewing that nonsense is either too young to remember how horrible things were, or too stubborn to acknowledge it was the right thing to do whether they personally agree with it or not.

most infosec community knows the answer. if you know yours well, good. I am not convincing anyone, anything. I just meant, there is value is looking at things objectively than reading some news articles or opinions said by some bigwigs.

it's well known fact now, it was all the FUD by microsoft that this was not widely accepted previously. Do you think they have any incentive to be transparent about that? why does everyone have to pay forcefully for windows that comes with every laptop by default?

and as Linus Torvalds simply put it decades ago: that these people are out there to make money and not make world a better place even if they pretend .

I think MS made computer adaptation over the world significantly faster, but I'm not sure about it.

"Bitcoin is bad for the planet" - fact(?)

I don't see how this logic is useful.

CPI is absurd, it only perpetuates consumerism and punishes savers. We product 2x the food society consumes - mostly wasted away, just with some supply chain efficiency - there's a lot more room for food not to be expensive though.

Okay okay back up.

The consumer price index is a series of numbers designed to help people understand what dollar-denominated figures mean to ordinary people going about their lives, spending those dollars. If that's "consumerism," well yes, it's a portrait of consumerism.

Many economists, mind you, believe CPI doesn't correct quite enough, and suspect that it overstates the inflation it hopes to measure by around 1%. This is because it tracks the actual prices of a certain "market basket" of goods with specific products in it, and that basket gets out of date, as people substitute products.

But if someone's "punishing savers" and "perpetuating consumerism", it's not the index, and it's not the people compiling the index, and it's not the people trying to make the index more accurate by adjusting for quality. Assign the blame where it's due. You have a beef with the Federal Reserve, and possibly with other agencies or laws which refer to the CPI to make policy.

To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading about dangers of 5G radiation).

I had a good intention once, to write layman exposition to clear most of the misconceptions. But much like the calculation of the CPI itself, it's a lot of work and ultimately not very rewarding. An unfortunate fact is that a very large part of the CPI comes from household survey responses. These are too expensive for non-professionals to reproduce and verify independently, so probably no amount of writing can really convince CPI-doubters.

"My cost of living has doubled but your saying everything is fine since the CPI has only gone up %3!!!" and general 'let them eat cake' style behaviors saying that iPads are 'so much cheaper'[0] is the general feeling I get.

[0] https://www.reuters.com/article/us-usa-fed-dudley-ipad/ipad-...

It’s my perception that there is not much inflation in some areas of the market (chicken thighs at Kroger) and tons for the “keeping up with the Jones’s” set (organic produce, private school education etc)

My point being that inflation can be quite different based on different baskets of goods / consumption patterns

What do you think is missing, or mis-weighted?

https://www.bls.gov/cpi/tables/relative-importance/2020.htm

Housing is 42.385%, of which the shelter itself is 33.316%. The rest includes things like "Clocks, lamps, and decorator items" at 0.313%.

That's American data. Maybe the Australian data (your first link) really does exclude it, but the US most certainly does not.

If people think that the basket of goods is skewed, they need to justify that by comparing it against this list. The BLS makes a ton of data available, and it's unreasonable to claim otherwise.

This is a good visualisation of which things got cheaper and others got more expensive, over the last 20 years in the USA. It shows how a "consumer price index" in which, for example, the price of tobacco is weighted at >50% the price of education, can make it seem like it's all okay.

https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_p...

This post is also good in that it layers the hike in the price of insulin on the above graph. Be prepared to scroll.

https://insulin.substack.com/p/the-price-of-insulin-vs-the-p...

2. There are around 20mln Americans in college, versus around 34mln adult smokers. Be careful about peer-group bias: how many of your friends smoke, how many went to college?

[1] https://www.bls.gov/cpi/tables/relative-importance/2020.htm

Not an index per se but the Canadian Centre for Policy Alternatives publishes living wage reports, here is how they calculated it in the last one (2019): https://www.policyalternatives.ca/sites/default/files/upload...

My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now. This expectation is worlds away from reality which then prompts people to question the way inflation is measured.

I know you wrote that you don't really have the inclination anymore to educate on the topic but I for one would be grateful for any pointers how to explain the above discrepancy?

Particularly if one of those is a house and in the period of time mentioned houses not only got more expensive but they changed in character, being more resistant to earthquakes because of reinforced foundations, and because the fire departments built near them got new hoses for their trucks. So if houses were the one that went up by 4% but they also increased in quality, should we "count" them as having gone up by 4%? After all it's not like your money buys you 4% less house since it actually buys you a slightly different house but for 4% more. Now multiply the number of products and dimensions by a thousand or hundred thousand each and we have the true problem of compiling CPI.

Shouldn't the solution basically be how much monthly or yearly does an average consumer spend on x good, and then that is included in the calculation of inflation by that amount.

So if the average consumer spends 30% on housing, then housing should be 30% of the measurement.

How should a measure of inflation track that?

What if Good X becomes half as expensive per unit but people consume twice as much of it as a result? Should that be reflected as a reduction of inflation? If housing per front door goes up by 100% but only up per square foot [or room] by 50%, should the inflation rate of housing be 50%, 75%, or 100%?

Excluding savings, My budget boils down to discretionary and non-discretionary spending. Roughly 1/4th of my budget is fully discretionary and will vary year to year with what I like to do, tracking inflation on the discretionary portion seems like a high difficulty activity which ultimately doesn't matter to my perception of prices.

The remaining 75% of my budget is non-discretionary covering items like

- Housing ~1/4

- Childcare ~1/4

- Food ~1/8

- Non-discretionary expenses (repairs, car, phone, computer, etc. ) ~1/8

I'm fortunate that my healthcare is inexpensive at the moment, but it's pretty straightforward to calculate my future expected health costs and my previous education costs. I'd judge that calculating inflation on the non-discretionary portion of my budget should be trivial, small items like phones/computers simply do not add up to much relative to the big ones like housing, childcare, food, health, and education.

Ironically the CPI seems to focus on the magic basket of goods and not what will actually move the needle for perceived costs by most individuals.

For example: is TV service discretionary? Is Internet service discretionary? Is broadband Internet access discretionary?

I just checked. Bell TV + Internet is advertised as $120CAD right now. Cell service combined with that add $70CAD. Per month. With taxes on top that's round about $2,620 per year if we are talking Single person household.

Now it depends on where you are and whether you live alone or not and such. In Toronto as a single person at the median income this alone can be 4.5% of your net income. I'd say that moves the needle. I pay less than half of this with a different ISP and cell provider + Netflix. Of course the precise calculations change as we move between cities and provinces as well as single person vs. families etc. as base costs get shared.

For perspective, our hypothetical individual would be experiencing house price inflation equal to a new TV, phone, and internet bill every year.

(1-bedrooms displayed the lowest price increase of any housing category in Toronto according to https://www.zumper.com/rent-research/toronto-on )

Once I have a house the inflation on that also doesn't affect me that much any more (sure, evaluations increase my tax bill - which btw is a NA thing that is irrelevant in Germany for example as long as you have a mortgage) but other items do.

1. The marginal cost of housing has little to do with what individuals pay in the short-term.

2. The median income earner requires or will require substantial subsidies or raises to keep pace with the increased costs of their home. Roughly 3-4% per year assuming that housing is the only item inflating.

3. Either the median income, median rental, or tv+internet prices we've quoted are wildly off the mark.

I'd bet that #2 is the correct interpretation of the statistics. While option 1 is possible, it hides low-quality substitutions and assumes that one can always make a substitution such as living with parents for longer.

I realize that we (or at least I am) also mixing up various things, even though I chose to quote a particular city's median income for the example.

If you are renting and your rent goes up 10% that obviously has a large effect. If you have a house and rent goes up 10% you don't care at all. If rent goes up like that, it's probable that house/condo sale prices go up too and you have to pay more in taxes. I bet the increase in taxes makes a smaller hole in your pocket, though I might be completely wrong. But this also depends on whether we stick with the example or move on to other countries, where there's no such thing as separate municipal/school taxes or where rent control is in place.

Given this, the answers to your questions should be obvious. The answer, as far as laymen are concerned, is 3.5%. Improvements don't matter either. If we eliminated every car other than a Porsche, as far as laymen are concerned then car inflation went up by around 150%.

If the answer seems obvious, then the question isn't fully understood, because there are trade-offs involved in CPI calculations.

There's no such thing as a "layman." Different people in different regions experience different CPI. Inflation for all goods in the Northeast might be 2.1% over the past ten years, but could be 1.6% in the South for the same basket. that might not sound like much, but that means that inflation is rising 25% faster in the Northeast.

No matter what you do, CPI at a national level won't accurately reflect any group. People in the South will claim it's way too high, and people in the NE will complain that it's way too low, etc, etc.

If you want real numbers, relevant to your situation, then the BLS provides the ability to calculate your own person CPI based on what you buy and where you live.

And sure, they could use something different as a measure of inflation than CPI, but what would that be, and why it would be better than CPI? These questions need to be answered first before we move away from CPI.

CPI is very important, but the labor numbers are much better (since they are easier to measure), so CPI might become a secondary (high level, target) metric over time.

The same person living in Seattle might see housing prices double since they rent, food prices explode, since they live in a gentrifying area where low-cost grocers are replaced by high-end organic ones, and gasoline might not be a huge component of their spend because they drive a beater Prius 15 miles a day.

Those are two people, buying pretty similar things who experience inflation very differently than "average." Luckily, the BLS does provide different CPI figures to account for different groups of people -- for example only looking at inflation data for Seattle -- but people generally never discuss those.

That's loosely correct; but general inflation is the change in purchasing power for currency buying final consumer goods and services, not assets which are intermediary stores of value. Purchased homes are assets (actual or foregone but using a home you own yourself) rents are consumption expenses.

> I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now

It's not. Specifically, that would be the fallacy of division, even if your basic understanding of inflation was correct. The change of an aggregate is not identical to the change in every subset of the aggregate.

The BLS largely circumvents this by using rents, actual rents for renters, and owner equivalent rents (OER) for owners. This is done by asking owners what they think their house would rent for, and using those increases for the housing/shelter component of CPI. Rents (which make up 1/3 of CPI) have increased faster than the general CPI, but not as much as house prices[1], likely because of the interest rate decrease.

There are some other complicating aspects around house prices (city prices increased faster than rural, houses sizes grew while household sizes shrank[3], so part of higher prices is just people buying more). But I believe the main aspects is really falling interests rates. A proper decomposition and attribution of most aspects probably takes months of work, enough for a econ Master theses. That's why I mentioned I don't have the energy for that. Nor do most other bloggers/pop-article writers, so they just go for popular appeal and clicks, by telling you why everything is getting worse and more expensive for you.

[1] https://fred.stlouisfed.org/series/MORTGAGE30US [2] https://fred.stlouisfed.org/graph/fredgraph.png?g=BLyd [3] https://azgolfhomes.com/average-home-size-u-s/

Otherwise, because rents and house prices don't always move in lockstep, it's hard to measure the buying power of a dollar over time.

When thinking about purchasing power over time or between different cities, I often think of it as "assume I'm buying 1/180th of an average house in that city each month" as part of a representative basket of goods.

1. Home prices are not captured in CPI, only rents.

2. The headline CPI is a national number. Home price inflation has actually been somewhat tame overall in recent history (2-3% per year), but it has been very geographically uneven. Some places have experienced basically no inflation, while others have tons of it.

Here is the graph for home price inflation in the San Francisco region: https://fred.stlouisfed.org/graph/?g=BLdf . You can see that it's often double digits, and certainly much higher than any headline inflation rate.

Yes, because CPI measures cost of buying service of housing. Usually, if housing prices rise, so do rents, pretty much in accord, so monitoring rents already gives you a good view on housing affordability. The extent to which cost of renting is decoupled from house prices is largely explained by changes in interest rates: lower interest rates make mortgages more affordable, which allows more bidding for houses and pushes prices up. However, this on net doesn’t do much to actual affordability of said house: at low rates, the sticker price on a house might be high, but the mortgage payments will still be low. Conversely, in the 70s and 80s, boomers saw many cheap houses on the market, but at mortgage rates of 10-12+%, these were even less affordable than houses are today.

That’s why CPI only includes rents, to make an apples-to-apples comparison.

While this would theoretically make sense, it's not actually very true in the United States. There's a significant speculative aspect to housing in some markets that results in price increases far higher than rents would sustain (this effect is actually more prominent in other markets, e.g. Canada).

Here: https://smartasset.com/mortgage/price-to-rent-ratio-in-us-ci... you can see that San Francisco prices are 50x rent, while Plano TX, which also has a high per capita income and low eviction rate, sits at 20x rent.

But it's still not obvious why for example Atlanta (22.6x) has almost double the price-to-rent ratio of Milwaukee (12.4x) if not due to speculation. Those both seem like fairly "typical America" cities to me. Would you expect Rent in Atlanta to spike heavily in the coming years? Or is the distinction you're making more about urban vs. suburban? (Since my link is just a mediocre blog, it's not clear if those numbers refer to city or metro area.)

This is literally correct, but misses the essential feature of the housing issue in CPI: A large component of the housing contribution is "owner's equivalent rent" (OER).

Last I checked (now years ago), there is a survey where BLS essentially polls homeowners with the question "How much would your house rent for?" That number is then used for the OER component of CPI.

As the housing bubble was popping, BLS felt it necessary to explain the divergence between rents and OER [1]. The statistic was an absolute mess then, and I haven't seen any reason why it got cleaned up since, although I have not followed it closely in recent years.

[1] https://www.bls.gov/osmr/research-papers/2007/pdf/ec070090.p...

Housing is a bit particular because it's a good that's almost always purchased on credit. You'd want to look at the monthly costs of housing (mortgage payment) as opposed to the sticker price, since the total cost that's affordable fluctuates based on the interest rate. Twenty years ago, the interest rate on a 30 year mortgage was about 8%, contrast it with the about 3% rates now.

>I know you wrote that you don't really have the inclination anymore to educate on the topic but I for one would be grateful for any pointers how to explain the above discrepancy?

obvious answer: it's not "price index", it's "consumer price index". First paragraph from wikipedia:

>A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.

Just as an example, let's say milk and eggs are the only thing on the CPI, and they're both at $2. If milk goes up to $3 and eggs go down to $1, the CPI says there was 0% inflation (assuming they don't adjust for quantity consumed). So rent can go up a lot without affecting the CPI too much, as long as the cost of other goods goes down enough to offset that increase.

Here's a graph showing inflation of different goods between 1998 and 2018: https://realinvestmentadvice.com/wp-content/uploads/2019/04/... As you can see, a lot of "mandatory" things inflated a lot, but the increase in those costs is offset by the decrease in electronics prices.

The CPI is meant, afaik, to gauge the increase in the cost of living for the "average person". It's useful for driving fiscal policy, but it's not terribly useful to laymen, imo (and that includes myself).

Houses are included in asset inflation, I believe. Here's a chart showing asset inflation: https://realinvestmentadvice.com/wp-content/uploads/2019/04/...

Real wages are more interesting to laymen, I think. Those are effectively wages adjusted over time based on inflation from CPI. Using your housing example again, it doesn't really matter if a house cost $200k 20 years ago and costs $400k now, as long as wages doubled over the same period, all things equal. Inflation is fine (for the purposes of buying a house) as long as wages rise to match that increase.

The reason many people can't buy houses anymore is that real wages have fallen. https://en.wikipedia.org/wiki/Real_wages Wikipedia has some interesting info on that. In an ideal world, inflation decreases the purchasing power of a dollar, but your employer gives you more of them to compensate for that. That never happened for many people.

You are missing one crucial aspect: interest rates. 20 years ago, typical interest rate was 8%, so mortgage payments on $200k house were something like $1400/mo. With today’s rate of something like 3.2%, the payments on $400k house are something like $1700/mo, which is 20% higher. To keep the affordability the same between now and then, the nominal wages need only grow 20%, and if they actually doubled, this would hugely increase affordability.

Uh no, housing is 32% of the CPI.

Source : https://arbor.com/blog/how-does-rent-factor-into-the-consume...

It doesn't track well with the experience of people on this forum because young professionals tend to live in cities with crushing rental markets, especially Silicon Valley. But the whole country, particularly thoseliving in houses not in New York or California, have a different experience.

All the other examples I used -- chef, journalist, writer, singer -- can win awards and recognition: Michelin stars, Pulitzer, Hugo, Nebula, Grammy, and such. Those are good indicators of their accomplishments, but that's not the same as having a set of "agreed-upon norms and standards that can be measured".

And if you decide to relax your criteria and say that having those is acceptable, then guess what? There's a Nobel Memorial Prize in Economic Sciences, and a slew of other awards for economists.

Like it or not, studying economics is something that people can and do dedicate their lives to. Would it be better if we had more clarity, transparency, and consensus when it comes to what they do? Absolutely. But dismissing the whole profession out of hand is unhelpful.

Economic theory is good for asking questions and maybe creating a standard. It has a dismal record of answering questions.

It's done an absolutely terrible job for the past 15 years, for my lifestyle and where I live. I suspect it hasn't reflect many other people's budgets either, hence the common argument of official CPI figures being nonsense.

I don't even have to look at anything other than the changing health insurance premiums/deductibles/co pays/out of pocket maximums to prove it, not to mention real estate, childcare, taxes, and education. It eviscerates any downward effect tech products and grocery prices might have.

I used to have insurance co-payment, a deduction from my paycheck, and an unreachable out-of-pocket maximum. All of that has changed.

I used to pay about $1200 rent for a crummy house in a dangerous neighborhood. Now, with a paid-off mortgage, I pay just $266 for property tax on a house that is 3109 square feet on 0.39 acres.

Childcare is my wife, so $0 then and now. Income tax remains $0 due to child deductions. Sales tax is about 7%, relatively unchanged.

Education is a new expense compared to 15 years ago when nobody was in school. If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheaper. Tuition is a tiny bit lower, but the big change is that tuition and books for the first couple years are now free if you get it done in high school. That cuts the price in half.

This is not to say that I pay less. I now have a huge family. Things are cheaper, but I'm buying much more.

In this case, technically true is not the best kind of true.

If we generalized both of your anecdata to either

  - health insurance and housing got cheaper for everybody, or 
  - health insurance and housing got more expensive for everybody

> If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheaper

Again, that is not generally the case. In fact, the growth in education costs has substantially exceeded the inflation in most other sectors

Discounts (scholarships) are much more available.

Stuff like dual-enrollment has spread across the country.

AP is now widely available.

> I can see that college has gotten cheaper

to

> I'm not so sure college has gone up in price

You seem to be good at finding system hacks for your own, and/or proximal cases. But you continue to generalize your own experience(s) in a way that almost certainly doesn't broadly apply.

Here is Google's first link for "student loan total debt history": https://educationdata.org/average-student-loan-debt-by-year

Some stats from that:

  - Student loan debt at graduation has increased 76% since the Class of 2000, a growth rate that outpaces the rate of inflation by 41%
  - After adjusting for inflation, the average student loan debt at graduation has increased 326% since 1970
  - Since 2003, the national total student loan debt balance has grown by 602.5%

Please provide a source to back up this claim, everything I've seen says inflation is /under/-stated, not over. CPI absolutely takes into account substitute products and CPI is not simply tracking a basket of items over time.

These substitutions are tricky, if hypothetically a consumer can move from eating fresh local produce to preserved canned produce then it's likely they will make the switch under price pressure when fresh produce increases in cost by 2x. You could calculate CPI based on the new realized purchasing patterns - or you could calculate it based on the desired purchasing pattern.

Basing CPI on realized purchasing behavior will lead to errors in how inflation is perceived or where consumers are trading quality for cost. From a monetary policy perspective ignoring this consumer tradeoff could lead to sudden shifts in CPI when consumers run out of quality substitutions.

I'd argue we've seen this in housing in the major cities where first home prices were excluded for rental equivalent, then rental quality fell in both the amount of space available in a unit as well as the overall quality of the unit. Eventually you hit the wall where quality can't be traded off any longer and you're left with many people who can't legally house themselves.

I’ve seen this a lot around the net and I’m honestly and genuinely curious. What drives you to defend the CPI?

What drives you to question the motives of the commenter rather than responding to his arguments directly?

Perhaps, but the right way to approach this is to point out the factual errors, rather than making thinly veiled insinuations that his opponent is a shill for the BLS or whatever.

>defending the CPI calculation is almost criminal

Ah yes, because the only possible explanation for why people don't hold the same beliefs as you is because they're acting with malice.

For this and the previous point I refer you to the site guidelines: https://news.ycombinator.com/newsguidelines.html, namely:

Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken.

Assume good faith.

>Many people on fixed incomes that are adjusted based on the CPI are negatively affected. This bogus formula will be conveniently altered to stay under 2% if inflation creeps into the basket of goods being calculated.

All this does is provide a motive for why CPI might be wrong, but stops short of providing evidence or counter-arguments.

That was definitely not what I was doing at all. If I am giving off that impression then that’s my mistake but this is purely a curiosity.

> Please don't post insinuations about astroturfing, shilling, brigading, foreign agents and the like. It degrades discussion and is usually mistaken.

> Assume good faith.

Please do me the same courtesy friend. This is out of a genuine curiosity for knowledge.

It triggers me in a similar way, I think, as comments like "my (sisters'/neighbours') kid got really sick after his vaccination, so vaccines are very dangerous". A small number of people really do get sick after (and sometimes even from) vaccines, and probably no amount of research will override their personal experience. But it's a bit disheartening if the level of discourse never rises much above personal experiences.

Since CPI doesn't reflect inflation, it is natural to criticize it for failing at that. Maybe it was never meant to reflect inflation, but that seems about as futile as trying to argue for the proper, original meaning of the term "hacker", not what media made it to be.

Whose calculations? The Federal Reserve's calculations? The Federal Reserve has access to a variety of data sources, and while the CPI is the one that gets the press, they also use series like the chained CPI, the producer price index, bond yield curves, unemployment (and not just U3, but things like U6 and the labor force participation rate).

If all you hear about is vanilla CPI, well, that's because you're looking at a newspaper.

Anyway, as I said. You have a beef with the Federal Reserve.

> why are retail accounts in germany, netherland already negative rates?

Public policy, as effected by the European Central Bank. Perhaps you have a beef with them too.

> does that make sense to you?

I mean, it makes sense as in "I understand why they do it", not as in "I think this is a great thing".

> can banks make money that way?

I've read that low interest rates do, in fact, squeeze their profits, though with regards to Germany the "three-pillar" system is crufty and weird and squeezes profits too. For instance, here is this lovely article I saw a while back, whose subhead notes "Low interest rates and the three-pillar system squish profits": https://www.economist.com/finance-and-economics/2019/03/02/c...

> danger of nationalization of banking?

I'm not sure what you're talking about any more. It seems very detached from the Bureau of Labor Statistics, or European equivalent.

Here's what I'm worried about: if you look at historical examples like say the 1970s inflation, or the post-Cold-War Warsaw Pact hyperinflations, or the post WW-2 hyperinflations in many European countries, prices didn't rise uniformly. Some industry or some region would experience very large inflation, and then eventually it would get transmitted to that industry's customers, or their suppliers. It's basically a network contagion, spread across the links in the economy.

We're seeing the early stages of this happen right now - that's what the article is about.

Powell's public comments are that "inflation doesn't turn on a dime" and "we're likely to see some localized price increases within certain industries, but no generalized inflation." The thing is - I know from history that the former can be false (particularly in wartime, and shifts from a controlled to a market economy, and the recovery from COVID has aspects of both), and the latter tells me that he's looking at the same data that I am but drawing the opposite conclusion. If 5% of firms are experiencing 30% inflation and the rest are experiencing no inflation, the PPI will read 1.5%. If that 30% inflation is in a core industry though (say food, or energy, or labor) and they pass it along to all their customers, then within 1-2 years you could have 30% inflation across the whole economy without passing through the 2% stage.

It's giving me COVID tingles from last year, where in March your overall risk of getting COVID in the U.S. was about 1:100,000, but your risk in NYC was 30%. Then suddenly your risk in Phoenix was 40%, and your risk in South Dakota was 50%, and then your risk in LA was 30%, and suddenly about 20% of the country has had it.

Poke holes in my reasoning, please.

I'm starting to understand what you're insinuating I think, but you still haven't made your point.

Hedonic adjustments have very minor effects on tech products (which is one of the few areas I've seen a detailed impact analysis, though not recently enough that I have it at hand.)

> Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high.

And...they do. Hedonic adjustments have an effect on how that is reflected in inflation statistics, but they don't effect the underlying processes.

> CPI is absurd, it only perpetuates consumerism and punishes savers

I think your are (among other errors with that description) confusing measuring inflation with policies targeting a small positive level of inflation. CPI doesn't do either of those things.

Any measure of inflation is subjective. That doesn't make it B.S.

Inflation is a measure on a basket of goods. There is no single basket because people buy different things. This is why there is no single CPI statistic.

Find a CPI that works for you. The federally-provided ones go as fine-grained as income bracket and metropolitan area. They're extremely precise, but may not be accurate if you have unusual purchasing habits.

Almost financial market professional, including those at the Fed, is tracking multiple measures of inflation.

Related: https://news.ycombinator.com/item?id=26259279

If they're not giving you a one-page report on the methodology for how they arrived at each individual point-in-time price figure that they recorded, well, I'm sorry, it's true, their methods are in that sense "hidden".

Publishing the particular products looked at, or even the particular stores visited, would invite market manipulation of the CPI figure by re-pricing the included goods.

https://www.clevelandfed.org/newsroom-and-events/publication...

TIPS use CPI like a lot of other things in bond math: https://www.treasurydirect.gov/indiv/products/prod_tips_glan...

And as a consequence the wages you earned by making tech year ago should have less value than the wage you earned today. You should expect small inflation. If you want deflationary money, wages should decline year by year.

If you want to save, don't hold cash.

hold what then? become investment manager in free time instead of my day job as software developer?

If you are in the US and just want to keep the value, Treasury Inflation-Protected Securities (TIPS) directly from the U.S. Treasury. https://www.treasurydirect.gov/indiv/research/indepth/tips/r...

Just buy a mutual fund (preferably indexed) from somewhere like Vanguard and let them figure it out.

For the other overwhelming majority of life events, you should invest your savings prudently, instead of stuffing them into a mattress.

If you have no savings, this is a moot point - but so is inflation. Why do you care that money is losing value if you don't have any?

If anything, if you are in debt, you want inflation - because it lets you inflate your debt away.

More or less the author argues that stable nominal spending, ie a constant level of nominal GDP, is pretty much ideal. And would lead to falling prices as you suggest.

If you replace constant level with 'target a level of nominal GDP that rises 4% every year' you have pretty mainstream position.

Inflation measures are indeed somewhat subject. Nominal GDP has less suggement calls.

(It's still useful to try and measure inflation. But perhaps it should not be a policy target.)

George Selgin is a dyed-in-the-wool fan of fractional reserve banking. (And with good reason.)

See also eg https://www.alt-m.org/2015/07/29/there-was-no-place-like-can...

imputed rent is the cashflow if you live in it.

https://en.wikipedia.org/wiki/Imputed_rent

If you own vs rent you transfer that payment stream into servicing an asset. Assuming the asset goes up that's generating an implicit cash flow (one you will have access to later when you sell the asset).

If you can buy your house with cash then your "housing" cash stream is suddenly freed to be spent elsewhere, so you "gain" a cash flow you didn't previously have.

You can make a fair argument that this is a semantic quibble or one of the usual human self-deceptions but this is how people implicitly think of it.

I would disagree with that. Stocks that don't pay dividends don't generate cash flow either. Assets are items that are bought with the intention for them to generate value. That value might be cash flow, or it might be an increase in value so that you can sell it later. Not all assets generate cash in real time (most don't).

A house is an asset because a) it allows you to pay your liabilities for housing into an equity generating account, and b) people generally expect them to increase in value.

To put it another way, if they weren't an asset, people wouldn't care if they depreciated. I don't care that my car depreciates because it isn't an asset; I don't expect it to increase its value or hold its value.

That's not a disqualification of an asset, if devaluation is outstripped by increased valuation over time. eg I live within a parcel, that parcel is not transformed into a liability.

You can buy a brand new 4 Bedroom house in a nice part of Tokyo for ~$300,000, but don't expect to make money on the deal.

Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".

Right, but using the raw purchase price of the house isn't a good measure. Mortgage rates dropping would cause housing prices to go up even if monthly payments stay the same. What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent.

>Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".

From a finance perspective there's no difference between a house and a share in a corporation. They're both productive assets that provide returns. In the case of a house, it provides shelter as a service, which can either be consumed by the owner (by living it it), or by selling it (renting it out). The only difference is that with a house, the relation to you is more direct, as opposed to a tiny fraction of a multinational entity.

From a finance perspective, theres no difference between food and a share in a corporation. They're both productive assets that provide returns. In the case of food, it provides sustenance as a service, which can either be consumed by the owner (by eating it), or by selling it (on the side of the road, or in a restaurant.) The only difference is that with food, the relation to you is more direct, as opposed to a tiny fraction of a multinational entity, and it depreciates much faster.

/s/

when you have a hammer, everything is a nail. When you see the world through finance, everything is a series of cashflows. The ability of a worldview to be applied to many things does not mean it is applied well to those things.

The primary purpose of a house is to, well, house people. Shelter is a necessity. People who are most vulnerable to inflation are the poor, who mostly rent, and thus pay current market prices. They also pay the most for healthcare on a per care instance basis, and often pay for college with expensive debt (5%) if they go to college.

If CPI, etc, are not measuring these price changes, perhaps we should use another measure that does.

Clearly not. After you eat a bread, it's gone. After you live in a house it's still there. A better analogy would be something like a farm, which continuously provides sustenance as a service.

>The primary purpose of a house is to, well, house people. Shelter is a necessity. People who are most vulnerable to inflation are the poor, who mostly rent, and thus pay current market prices. They also pay the most for healthcare on a per care instance basis, and often pay for college with expensive debt (5%) if they go to college.

Should farm (or food producing corporation shares) prices be factored into the CPI as well? Like housing, food is also a necessity, and buying a farm would ensure you're protected against inflation in food.

Also, your point about buying housing as some sort of protection against inflation doesn't tell the whole story. Yes, it's a hedge against future rent increases, but here's no free lunch because the inflation is already priced into the price of the house. If rents are expected to 10x in the next 10 years, you can be sure that housing prices will grow accordingly. That's why price-to-rent ratios are insane in coastal cities.

After you live in a house a long time it falls apart. Capital Expenditure restores the asset to its previous value. Bread just depreciates faster. but can still be traded, bought and sold. In Japan houses are often only ever used by one family, and the house is destroyed when the land is sold. I am taking your insistence on a cash flow perspective to its logical extreme to show that it is not always applicable.

Corn is an asset when it is bought and sold. It is food when it is consumed.

> Should farm (or food producing corporation shares) prices be factored into the CPI as well?

I clearly say at the end that if CPI is not measuring these price increases we should use a different measure. I'm not sure you understand what's going on in this conversation, but food is in the CPI.

> Also, your point about buying housing as some sort of protection against inflation doesn't tell the whole story.

Where on earth do I say this? I say that poor people are exposed to inflation the most, especially increases in housing prices. We should have measure for what working Americans are exposed to, and do not.

1. the part of a house that's getting expensive isn't the house itself, it's the land. the multi-million dollar homes in san francisco would only be worth a few hundred thousand tops if they were moved to rural idaho.

2. corporations fall part too. more specifically, their physical assets (eg. machines in factories) fall apart. In both cases they're kept up by routine maintenance. The only difference is that in a corporation the maintenance is paid from revenue before profits/dividends are paid out, whereas in a house the maintenance is paid out of pocket by the owner.

3. it's not a question of deprecation. after you eat a piece of bread it's gone. that's not due to depreciation, it's due to you consuming it.

>I clearly say at the end that if CPI is not measuring these price increases we should use a different measure. I'm not sure you understand what's going on in this conversation, but food is in the CPI.

That's my original point. Rent (and imputed rent) is directly measured in the CPI, so there's no need to measure home prices.

Consider three people, p1, p2, p3.

P1: works at job making $X and rents home entire life.

P2: works at identical job making identical $X and buys + pays off identical home.

P3: works at identical job making identical $X and buys + misses 10 mortgage payments on identical home.

P1 is WAY better off than P2 or P3. Literally, the difference between retiring and working until you die.

"can afford down-payment and also has enough stability to never miss payments" induces a VERY extreme nonlinearity in outcomes that CPI very much fails to capture.

I don't think anything you've said in this thread even comes remotely close to acknowledging the reality that over half of America lives every day.

Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born.

> From a finance perspective there's no difference between a house and a share in a corporation.

From an investor's perspective, perhaps.

But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements.

Consumer finance is finance.

and that's fine, because rents are tracked directly in the CPI.

>But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements.

That's what they tell themselves, but from an analytical perspective there's no difference between buying a $1M house that provides you $5000/month return in the form of imputed rent, and buying $1M in stocks/bonds that provides you $5000/month return in cash, which you can use to pay rent.

Only for embarrassingly impoverished analytical frameworks.

Unless you know of a bank that will loan me seven figures at sub-3% interest rates based on 10% down and my income, and then let me spend that money in the stock market :)

That does indeed make a x% return in the housing market more attractive than a x% return in the stock market, but has to be considered against all the other factors as well eg. diversification, actual returns (historically stocks have higher returns), risk (10x leverage also means 10x more loss), costs (stocks require no upkeep, houses require yearly maintenance), etc. At the end of the day though, it's still an investment as opposed to something you consume.

the broader point is that asserting a house is just an asset is more a value statement (and more abstractly, an aggression) than a truism. investment has generally become decoupled from its intended purpose of producing value for the many, not just the few (i.e., the efficient allocation of capital), and this kind of misguidance contributes to that kind of misallocation.

Not exactly, because there are two definition of "asset". From wikipedia:

https://en.wikipedia.org/wiki/Asset

>In financial accounting, an asset is any resource owned or controlled by a business or an economic entity.

https://en.wikipedia.org/wiki/Asset_(economics)

>An asset in economic theory is a durable good which can only be partially consumed (like a portable music player) or input as a factor of production (like a cement mixer) which can only be partially used up in production.

At some point if the prices rise enough it should become profitable to streamline the supply chain?