US Politics Mega-thread - Page 3659

On June 02 2022 00:58 Blitzkrieg0 wrote:


I'd attribute 'stubbornly low inflation' directly to the fed's policy of quantitative easing including in 2019 when Powell was chairman before the pandemic. Regardless you seem to understand that the fed has failed for the past decade. Do you understand that Powell has been chairman and part of the board of governors prior to that?

Your only point seems to be that we tried absolutely nothing so we shouldn't discuss this. The orthodox economic theory being wrong though out the world seems like the perfect opportunity to shake up that order rather than continue down the path we know is wrong.



I would agree that no one has the long term outlook to do something about the economic issues we currently face, but that doesn't do me any good.

On June 02 2022 20:48 Blitzkrieg0 wrote:


Going to steal LegalLord's post because I agree with it:



The inflation from the quantitative easing was largely seen through housing prices, education costs, and other things that aren't tracked by our inflation measure. This is the problem with orthodox economic theory. They just ignore everything they can't explain or can't fix and pretend there is nothing they could do about it. You're right that Powell became chair at the shift away from QE, but Powell did do some quantitative easing in 2019 unless you believe him when he says it totally wasn't QE.

You're still repeating this line about Biden not being able to control fed policy though. Biden nominated the fed chair. If he wanted different fed policy he would have nominated someone else. There were legislators who pointed this out when Powell was nominated like AoC and Warren, but why would a democrat listen to the left wing?

Even if the methodology changes are truly neutral, a look inside the index reveals imbedded distortions. The problem is most evident in housing, which also is the single largest component of the CPI, accounting for 42.3 percent of total measured costs. According to the BLS, rental housing accounts for 7.8 percent of total index costs. It is the imputed cost of owned homes, which constitutes a massive 24.2 percent of the index, where the error is manifest.

BLS statisticians want to know the monthly equivalent rent a homeowner would charge to rent their home. Literally. One quarter of the CPI is calculated based on the following question posed monthly to homeowners, “If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?

Even as the method seems absurdly subjective and unscientific, how would one independently test the result for reasonableness? Rent-equivalent expense is necessarily correlated with the price of housing, which is measured monthly by the Case-Schiller index.

In the past twelve months, Case-Shiller housing prices appreciated 10.4 percent. By contrast, CPI owned-home rent-equivalent costs are calculated to have increased a mere 2 percent. The 8.4 percent difference would, of its own, have more than doubled the total reported CPI, from 1.7 percent to 3.7 percent.

...

The same story is evident in medical costs. In the CPI, medical care accounts for 8.9 percent of the total index. Yet within GDP, health-care expenditures total 17.7 percent of the economy. Why the difference? The CPI excludes medical costs paid through employer insurance premiums, even though those costs eventually are passed on to consumers. Nor does the CPI include any tax-funded medical care, including Medicare Part A and all of Medicaid.

Independently, private insurance premiums have soared in the past few years, doubling or more for many consumers. Yet the government index claims health-insurance premiums since 2013 have increased by only 45 percent. The difference is due to method: The CPI indirectly estimates insurance premiums “based on retained earnings method,” which the BLS explains as “leftover premiums income after paying out benefits.” Nor does the complex methodology used to estimate medical costs account for the fundamental irrationality of the U.S. health-care market, where standard back surgery, as an example, can “cost”, out-of-pocket, anywhere from zero to $150,000.

For an unbiased look at medical cost inflation, PwC calculates that U.S. medical costs have increased an average 6.1 percent annually since 2014. Over this same period, the CPI medical care increase is 2.8 percent.

On June 03 2022 01:45 Vivax wrote:
I think Powell gets too much (dis)credit for what he does. I doubt he even had any choice at all with the amount of corporate pressure he had on him, which could be said for politicians in similar positions.

Considering that the US corporations which make up big data can probably blackmail anyone, it's not hard to think of who's pulling the strings.

It's not my intention to bash the US, but when you get Boris Johnson saying in speeches that at some point you won't even manage to hide your thoughts from google and the whole Snowden intrigue, the conclusion that big data is the most powerful player in the western hemisphere is not far off.

On June 03 2022 01:08 LegalLord wrote:
The measure of housing used within CPI is some really strange "rent equivalent" measure that excludes some fairly important things like the price of actually buying a house. Plenty of similar distortions for any of the other major expenses in a way that sound reasonable but that neither reflect the reality of life nor have enough consistency with historical methods of measurement to actually be useful. And the approach to items that have any volatility seems to be to merely label them as "non-core" and not bother giving them serious consideration. As in this article, the CPI certainly finds a lot of clever ways to underestimate the very expenses mentioned here:



And so on. I'm certain there's an apparent economic logic to each and every one of these CPI choices, individually; it has to make enough sense to at least let these Fed economists fool themselves before they start trying to fool everyone else. But after the blindingly obvious failures like the whole "inflation is transitory" gaslighting - which is neither the first nor the largest, but certainly both significant and immediately relevant - you have to be quite a fool to take their approach at face value. Being so consistently out of touch with reality for so long suggests either incompetence or ulterior motives, neither of which engenders any trust.

I should also note that while the above is somewhat more arguable due to the complexity of the issue, the claim that "JPow was already raising rates, until that pandemic thing got in the way" is much more demonstrably wrong in a way that seems pretty disingenuous to keep repeating. Just looking at the Fed funds rate shows that he stopped rate hiking in early 2019, a year before the corvid problem and just after the credit crunch of late 2018, and after that started dropping, a whole percentage point down over the year.

On June 03 2022 02:02 Vivax wrote:


Ideally it shouldn't, but when you got so many powerful entities controlling the entire information to the point of being able to fabricate it, they can compromise the entire political caste and their own owners lol. On top of it they are de facto monopolies. Try finding a country that runs exclusively open source free stuff.