Are there inflation indicators that aren’t government controlled? Don’t think anything coming out of trump influenced bodies is worth the paper it’s on anymore
There are plenty of indicators, not like its an exact science. Can trust the government one to be always under-reported, the incentive is obvious. I'm a fan of gold prices for longer periods of time.
What you really need to understand about inflation, is that we've had particularly exceptionally low long-term inflation in America for the last 50 years, outside of stagflation in the '70s.
And this is all enabled by globalization and global trade. Globalization fundamentally provides arbitrage for two things. Labor costs, and environmental regulation.
Because there were a lot of poor desperate countries that would build your stuff for near slave labor conditions.
In particular, China of course. But China has now passed through its phase of poor desperation. It is now an urbanized economy. So of a lot of other poor desperate countries aren't quite as poor desperate.
Globalization is fundamentally enabled by the US Navy and US military supremacy guaranteeing shipping trade on the oceans.
This has not been the historical Norm. It's actually historical anomaly caused by the power vacuum of world war II, and secondarily by the fact that the Cold war was between the US and maritime power and Russia, who are effectively landlocked.
Some scholars term China as a continental power, especially cuz of their history of invasion like the Mongols, but unlike Russia, China has a very large coastline with a lot of ports that aren't locked in by Arctic ice.
They are a hybrid Continental and a maritime power, and based on their shipbuilding, their ambitions are to become a maritime power.
This combined with American lack of enthusiasm for maintaining this global order, likely means that globalization will come to an end.
And that means onshoring production back from China.
We'll see if this actually happens, but that is the trend long-term.
And that involves a huge amount of switching costs, which essentially is going to be inflation.
I'm certainly not going to sit here and say that Trump's economic policies are correct. Of course, the proper way to handle a transition of reonshoring our production from our previous 50 years of globalization would be gradual and controlled.
Not a bunch of stupid chaotic tariff policies.
But essentially what Trump is doing is in line with everything I've described.
> What you really need to understand about inflation, is that we've had particularly exceptionally low long-term inflation in America for the last 50 years, outside of stagflation in the '70s.
What you really need to understand is that we can, and we must absolutely, generally and non-exceptionally have low inflation at all times. There's absolutely no sane reason to have high inflation in a low-corruption financial system - none!
> Globalization... US Navy... US military... China hybrid... American lack of enthusiasm for guaranteeing shipping trade on the oceans.
A bunch of red herrings meaning nothing... It's not lack of enthusiasm, it's the overabundance of enthusiasm for tariffs and sanctions backed by the same US Navy & US Military to maintain a restricted trade regime which, not-accidentally, results in the US public being trapped in a monopolized and inflationary market.
> And that involves a huge amount of switching costs, which essentially is going to be inflation.
You mean, the population will bear the costs via the inflation tax, while the rich will be getting richer, because... historical norms should not be broken, especially this one?
Historically, messed up trade led to global wars, actually, it's either global trade or global wars, there's no middle ground. You failed to mention that important historical norm which is also one of the ways to make the rich richer.
The historical norms are something we should absolutely steer clear of, not use them as excuses for more nonsense in the future!
Do you think I'm advocating for inflation as an institution?
History is history. Maybe you think AI is going to herald in some era of non-inflation and free people from the control of the ultra rich.
It's pretty apparent to me that AI isn't going to do that. It's going to do very very very very very much the opposite.
I agree that disruption of trade leads to wars. Usually of very large scale but we haven't had one of those since the advent of nuclear weapons.
And people keep misinterpreting my comment that I believe Donald Trump has good policy. I absolutely don't. That's why I said the tariffs are insane. Theoretically what Donald Trump wants to do is bring manufacturing back to his white voters in the former middle class, and bring the US into an isolationist stance.
Biden did not put troops on the ground in Ukraine. I believe bush II would have enthusiastically. Biden did not roll back the tarriffs Trump imposed in his first term either.
So generally the overall political trend in the United States is to be like this.
Ask the rest of your comment. You could ignore history if you want and hope for something different.
But.... Well you should know the quote about history, and I don't want to have to repeat it:-)
I've never mentioned either, nor do I assume what you think about them.
> So generally the overall political trend in the United States is to be like this.
The question I'm pondering isn't "what the trend is to be" but rather "why it has to change". Thinking about who and how could change it should wait, lest we end up putting the cart before the horse.
> You could ignore history if you want and hope for something different.
Being careful about not falling into the same traps as before isn't "ignoring history", it's learning from history, which is mostly the opposite of repeating it, because repeating the same thing with the same bad result is the definition of idiocy.
So that's kind of the point. The Democrats are basically going this direction too. The Republicans since world war I have been inherently isolationist.
> But essentially what Trump is doing is in line with everything I've described.
No. Trump's tariffs are too unfocused to accomplish any goal besides increasing American inflation from what I've read.
Trump's tariffs on raw materials, metals, etc make no sense whatsoever.
Motivating the creation of new mines or refining facilities should have been done through subsidies, possibly combined with promise of future tariffs.
And, obviously, Trump's tariffs on raw materials raise the cost of construction & composite products, which will likely push manufacturing out of the U.S.
I didn't say it would be effective. My point is that it is thematically aligned. I agree that it is counterproductive assuming that was what his goal is.
Our military budget remains a comically bad allocation of funds. If we're going to be isolationist and we are, we should cut our number of carrier groups in half and throw all of that money into subsidies.
>Globalization is fundamentally enabled by the US Navy and US military supremacy guaranteeing shipping trade on the oceans.
>This has not been the historical Norm. It's actually historical anomaly caused by the power vacuum of world war II, and secondarily by the fact that the Cold war was between the US and maritime power and Russia, who are effectively landlocked.
>This combined with American lack of enthusiasm for maintaining this global order, likely means that globalization will come to an end.
Oh here friend, I think you forget to add a citation to all that, here's your citation so people know where the idea come from (not you):
https://en.wikipedia.org/wiki/Peter_Zeihan
I like a lot of wood Zion says especially since it provokes thought. He is a hot take internet guy.
Do I really think China is going to disappear over demographics? I think if you would gone back to the 1980s he would have looked at the Japanese demographics and said the same thing.
Japan is still around and it's doing fine.
Are we going to see privateers and one eyed captains pirating international trade like he once predicted? Not in the age of carriers.
But what navies can do is they can harass ships: board them, inspect them, delay them. Arbitrarily close shopping lanes and force them to take other routes (China could do this to make their exports preferable to say Vietnams).
Zeihan parrots a lot of other geopolitical thought and international relations thought. The general question post cold war was when the US will go isolationist. I believe largely that did not happen because US industrials wanted offshore production for cheap labor. So the US maintained its global focus.
With China, and Xi in particular, doing the things that they are doing to him in capitalism in China, that is forcing a reevaluation of companies have their production.
Sure. You could move it to Vietnam or Malaysia or Thailand or various countries like that, but that still places them within the Chinese military sphere.
When you consider that we have a country like Mexico south of our border which is extremely productive, more productive than practically any other country. We currently have our production outsourced to any degree, why not move our production to Mexico?
Most of our natural resources, especially with the discovery of shale oil in The Dakotas is sourceable from the northern hemisphere.
I don't trust any government numbers regardless of who the president is. There will always be pressure to fudge the numbers to make who ever is running things look good.
There use to be a billion prices project out of MIT that got shutdown years ago because it show higher inflation than what the rulers at the Fed wanted to show. I believe its funding was pulled or something like that.
Do you have any evidence it was shut down by the Fed? I looked briefly at the BPP numbers and they aren't that far off the CPI. There were even a few times it was lower than the CPI. There was a 2 year period that BPP was noticeably higher but it eventually converged.
What’s crazy is that of all the fudgeable numbers in economics, consumer inflation is the one they should try to be the most honest about. It’s something that consumers can more or less directly observe, so having an official number that’s much below people’s “wallet meter” is doing nothing but erode trust in government. In fact, given that a steady inflation rate actually leads to bigger and bigger price increases, most people are going to feel worse about it at a visceral level. If the government wanted to build credibility with the public, they’d come up with a metric that better aligns with people’s actual economic situations. But then that might lead to people demanding higher wages, so I guess it’s a nonstarter in America.
Honesty would require admitting that the parties are different. They are not the same, they have different values, and we can see that by who gains and loses power in the party. Which actions are unacceptable, and which actions are rewarded.
"We have no political system at all, we have a sort of corporate party with two wings, both financed by the national security state..." -Gore Vidal
All the other stuff, all the heady discourses, all the piety about the downtrodden, be then the minorities from one side, or the poor rural white man from the other, it is just a fucking smoking mirror, just tools to have loyal soldiers to their cause.
Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
Please don't post insinuations about astroturfing, shilling, brigading, foreign agents, and the like. It degrades discussion and is usually mistaken. If you're worried about abuse, email hn@ycombinator.com and we'll look at the data.
Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
The problem with gold is that it's price fluctuates just like any other commodity. The practical uses of gold accounts for only ~8% of gold mined, while half is for vanity (jewelry, a luxury product) and the rest for speculation and reserves. Similar to fiat, most of the value in gold is in people believing it has value.
That's exactly why gold is a useful proxy. The price of gold is pretty much purely a function of how much money speculators have in their pockets. If inflation is high, it means there are more dollars that can go into gold speculation, driving up the nominal cost of gold. If the cost of gold is going down, it means the dollar is strong by comparison.
If you used a proxy that had a significant utility in its own right, like say oil or steel, the price would be a function of how efficiently it can be produced and how strong the economy at large is to demand its consumption.
I don't see how that conflicts with my point. The period from Jan 1978 to Jan 1982 was a momentary spike, peaking January 1980, which was nearly 3 times the long term average from 1971 to 2008. If you set that as your baseline, everything looks like a massive decline, but really the average was quite stable from 1982 to 2004. Note that the period of the spike in gold price (1978 to 1982) was a period of extremely high inflation.
> Similar to fiat, most of the value in gold is in people believing it has value.
Much moreso, really, because the value of money is kinda sticky; it's really difficult for it to change _quickly_ because a lot of stuff is essentially priced months or years in advance. Even the pretty dramatic inflation in developed world countries in '21-'23 would not be particularly exciting price action for gold, which really can swing quite dramatically in a short period of time.
This misses the point that you can establish the purchasing power of gold very easily vs a basket of common groceries or consumer goods.
vanity (jewelry, a luxury product)
Jewelry traditionally functioned as a rough store of value because it's easy to sell quickly (albeit at a steep discount), and it makes a remarkably reliable Veblen good, as a glance at the Oval Office will demonstrate.
The price of gold is not immediately responsive to goods inflation, it can be lagging or leading and the correlation can also fluctuate. Long term it's been good at tracking money supply but short term it doesn't necessarily give you a timely signal.
Over a time frame of multiple decades, it's been volatile but overall kept pace with money supply. Timing is always tricky, even with SP500 which has given higher return.
Maybe "good at" was stretching it, but there are things that lagged forever, such as a retail savings account and Japanese government bonds. It's tracked CPI better than silver.
Due to obvious reason only the period after Bretton Woods counts.
So 55 years. 1980 and 2001 was almost half of that and the real price of gold declined by 4-5x. If you take out the spike in the late it’s still almost 2x or so compared to the 70s (very volatile period).
This wasn’t lag. M2 supply grew continuously and increased by >3x during he two decades while even the nominal price of gold declined.
After the gold standard was abandoned it became a highly speculative volatile asset.
> Responding to prior criticisms made by economist James Hamilton, John Williams explained in a private phone call that Shadowstats does not actually recalculate BLS data, rather, the Shadowstats CPI merely adds a constant to the officially reported numbers.[28]
I briefly scanned the BPP data and it was pretty close to the official CPI. The BPP is usually a bit higher, and for a short time noticeably higher, but they generally converge.
If you actually stop and think about it for a couple seconds, you should realize immediately that a “secret” inflation rate of 10% is impossible. You can lie about that for a month or two, but 10% annual inflation means prices double every 7 years, which is obviously not what we observe.
The problem the admin has is that economists at the BLS by and large aren't scared of getting fired. That work experience is gold in the private sector - most of them can easily get a job in finance and 3x-4x their comp.
With a d———- there is no nuance. You don’t get credit for fudging them and making them less bad, you save your job by releasing a positive number, the more positive the better. Truth be damned
If you implement a tiered tax credit on gross regenue earned for wages paid, that decreases exponentially from the lowest-paid worker percentile to the highest, then producers could offset the tax on imported materials by paying an increased share of the revenue to their lowest-paid workers rather than raising prices. The government wins because household buying power and taxes paid increase, the household wins because buying power increases are decoupled from price increases, and shareholders win because wage increases shift the domestic demand outward (rightward), compensating for downward shift along the demand curve from price increases.
Setting the refund rate to (the target inflation rate minus the current inflation rate) times a constant defined by the Fed alongside the reserve rate also provides the Fed a long-term lever of financial incentive: for firms to increase wages paid rather than profits paid, when the Fed raises the constant to combat price inflation, and to increase profits paid rather than wages paid when the Fed lowers the constant to combat price stagnation. It also offers a control against layoffs for profit by specifying such that reduction in workforce in each percentile reduces the target inflation rate in the above equation; a layoff of the entire lowest-paid percentile to avoid lowering prices would result in a significant tax penalty charged at the next higher percentile’s rates, unless prices were so stagnant (or decreasing!) that the Fed’s target had been adjusted to allow it.
That this isn’t coded into today’s U.S. monetary policy is certainly true; but it merely requires an act of Congress to resolve. It’s important not to take for granted that what we’re used to is therefore what must be.
Oh, sure, tax the rich! Specifically, I would start with break up the untaxable trusts and corporate holdings exemptions, and cancel the real estate “unrented properties” tax rebate so that they’re forced to lease at market rates or otherwise sell dormant property holdings. But that’s not going to have any effect on inflation, so I’m not going to discuss that further it in this inflation-focused post.
If you tax corporations directly, they’ll just raise prices to pass the tax on to workers — but if you don’t tax corporate profits properly, they’ll just raise prices to consume all worker income and suffocate the dual competitors of entrepreneurs and of quality of life gains by households — so you have to tax corporations in a way that charges them extra revenue tax when their profits go up faster than their wages, neutralized only by paying workers more and maintain or lower prices. That’s what this proposes: either they help the Fed meet inflation targets by raising wages rather than prices, or they see their profits reduced in a way that can’t be charged to workers — as doing so would raise prices and thus inflation, which would further amplify their tax against their profits, resulting in a death spiral for their corporation between shrinking demand and growing overhead. (And, in times of deflation, the opposite: they are compelled by threat of reduces profits to raise prices rather than wages, just as they do today exclusively, until inflation stabilizes at the Fed target of whatever percent.)
This all works because, in the U.S., the uncontrolled component of inflation is the growth in profits minus the growth in wages. You can’t specify a wage floor or companies will just lay people off or raise prices, and you can’t impose a simple tax on corporate profits or companies will just lay people off or raise prices. The only way to prevent that is to tax (growth in profits – growth in wages – inflation target), which in an excess-inflation climate such as today — combined with the classic U.S. revenue-scaled tax rate schedules — would cost corporations who don’t invest excessive profit growth back into their workforce more than the simple cost of the wage increases would have.
(The R&D exemption that Amazon abuses would, as previously discussed, need to be restricted to less than 100% of research costs; use the same profit tiering schedules as above so that R&D for a billion-dollar gross-profit before-deductions company is capped at one half of the annual inflation rate — once you’re making that much, you don’t need the exemption to grow.)
(Offshore labor would need to be estimated at the federal minimum wage rate adjusted for currency strength/weakness to the country hosting that labor, unless explicitly documented otherwise through worker counts and wages, which would significantly worsen the value of offshoring: offshoring-to-cheap-labor companies would be at a significant disadvantage for growth taxation versus those that simply paid the costs of domestic investment, training, and wages.)
Another thing to watch for is the BLS import prices which show prices excluding tariffs. If these remain flat for July as they did for June, it would be another data point suggesting tariffs induced inflation.
The surge in services costs seems to be a bit of a surprise (?):
> Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022. Trade services margins rose 2%, coming amid ongoing developments in President Donald Trump’s tariff implementations.
> In addition, 30% of the increase in services came from a 3.8% increase in machinery and equipment wholesaling. Also, portfolio management fees surged 5.8% and airline passenger services prices rose 1%.
> The government on Tuesday reported a mild increase in consumer prices in July, though rising costs for services like dental care and airline tickets caused a measure of underlying inflation to post its largest gain in six months.
> While financial markets have priced in an interest rate cut from the Federal Reserve next month, rising services inflation and the expectation tariffs could still significantly boost goods prices left some economists doubtful of a resumption in policy easing in the absence of labor market deterioration.
When it comes to (Fed) policy, the other thing they look at besides inflation/PCE is employment, which appears to be softening (see recent revisions which caused recent Trump-BLS turmoil).
Perhaps I'm misunderstanding the comments, but I find the comments here to be fairly disconnected from the rah rah VC world. Plenty of criticism about those systems around here, and perhaps more pointed and accurate than other places.
The domain name here isn't really driving the comments or content that I can tell.
When I was about 20 I started listening to Sean Hannity, and while I no longer agree with anything he says, I do appreciate the glimpse I got into his way of thinking. I mention this because...
I can't tell you how many times I've heard the idea that success in free market capitalism comes from offering goods and services to customers with the right balance between quality and price, and that good quality and price is assured because of competition in the market.
But now I see that the true path to success is to first gain favor from those who already have wealth and power, and then use their wealth and power to reduce or eliminate competition.
If you can see why the former narrative is inherently appealing to the rich, you should also be able to see why
> But now I see that the true path to success is to first gain favor from those who already have wealth and power, and then use their wealth and power to reduce or eliminate competition.
is attractive to the disaffected (as Nietzsche wrote on). narratives that say the whole thing is rigged are going to be appealing because they offer a non-intrinsic explanation for underperformance.
I see what you mean, but I believe that's more so directed towards the massive scale businesses. Companies that get measured in billions and not millions.
At a smaller scale (the majority of business, but maybe not the majority of revenue), that existing wealth and power is often much smaller and eliminating competition is much less feasible.
Like a local coffee shop, for example. Or a small industry specific software company.
Maybe they matter less in the grand scheme, but they're still a big part of things.
But I do agree with the idea that VC subsidized services to then grip the market and wring them later seem counter productive to a "free market".
I can think of a lot of people who have got on by gaining favour of those who have wealth and power, the Altmans, Musks etc have done some of that. I'm not sure about the wealth and power to eliminate competition though. Tesla, OpenAI etc have competition but mostly out execute it. Or did in the Tesla case.
The Fed targets 2% at PCE (consumer) whereas this is PPI (wholesale/producer). Not always 1 to 1 but in general you expect PPI to be a leading indicator for what's coming for PCE. Part of the attention is for sure people being vigilant to see the earliest effects of the tariffs and... here they are pretty unambiguously.
The more significant concern it seems to me is the rate of increase. Nearly a full percentage point in a month seems like a lot, but I'm no expert.
The question is, is that full percentage point in a month a trend, or is it a fluctuation? You can't tell much by one month in isolation, or even one month compared to the previous month.
It's concerning. It's hard to say much more than that yet.
I think you mostly nailed it. I suspected this was going to happen to with this recent filing season having most companies recognize tariffs and already state they are mostly getting passed on.
That is the rise from one year ago in the "less-volatile PPI metric that excludes food, energy and trade services". This month was a 0.6% rise. So some people might think about how more months of 0.6% rise would cause the yearly one to increase gradually, up to 7.2% eventually if there are 12x 0.6% months. That would be pretty high.
And then headline figure PPI was even higher at 0.9% for the month, 3.3% year.
I'm less concerned with Trump voters (more or less the same people keep voting for him), and more with why ~10 million people didn't vote for his opponent (who had voted for her predecessor).
I don't believe it had anything to do with the price of eggs, either. That was presented as the primary reason, and it's so clearly wrong that it makes me suspicious.
It’s the change/rise that is high, not the value itself.
> The producer price index increased 0.9% from a month earlier, the largest advance since consumer inflation peaked in June 2022, according to a Bureau of Labor Statistics report out Thursday
According to the Federal Reserve, for many years, inflation in the United States has run below the 2 percent goal. higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes. At the same time, inflation that is too low can weaken the economy. When inflation runs well below its desired level, households and businesses will come to expect this over time, pushing expectations for inflation in the future below the Federal Reserve’s longer-run inflation goal. This can pull actual inflation even lower, resulting in a cycle of ever-lower inflation and inflation expectations.
The fed argues that, If inflation expectations fall, interest rates would decline too. In turn, there would be less room to cut interest rates to boost employment during an economic downturn.
this economics explanation feels like gaslighting every time i hear the fed mention it. the reserve literally pushed negative rates and quantitative easing for so long that people came to expect prosperity as a feature of the economic framework of the nation, and now that we have rampant inflation that cannot be controlled by normal means (prime rate) the fed somehow wants us all to understand its our fault for enjoying affordable burger meat.
Gasoline prices are not higher. Above $4 was commonplace across the country 20 years ago. Now that only exists in high tax states and large metros. Gas is cheap in the US.
20 years ago (ie mid 2000s) was a unique time of extremely high gas prices with 2008 being the all time high both adjusted for inflation and absolute. Adjusted for inflation, oil is currently higher than any point between 1990 and 2004, and in absolute terms since 2022 its been higher than any point outside of the 2006-2014 period.
This is only the nominal price, I can’t find the inflation adjusted graph, but I assume it’s clear that if the nominal price now is the same as several other periods over 10 years ago, then the gas today is cheaper over inflation adjusted dollar
I mean no offense, but it's a bit surprising that someone on HN would not understand what's wrong with this statement. It takes a very basic understanding of math to know why the YoY says very little about rapidly changing inflation metrics. MoM is what you need to pay attention to.
Frankly, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks.
And my experience usually matched it.
There's plenty of space to hide reality when building a price index.
Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
We can also do the same with housing: Capture prices as the average of a basket of cities. In reality, some cities will have absurd price increases while others are in decadence. The average prices increase of a disputed locality like NYC metro area will probably be masked by the fact that houses in BeltRustAssEnd, MI are becoming increasingly cheap. But, for the real person, what the fuck matters if BeltRustAssEnd houses are cheap as bananas? Who can get a job there?
And of course, a single number cannot capture the subtleties of reality like the fact that while it is great that 80" TVs are now so cheap that they can be bought by the commoner, this fact means fucking nothing if having a roof over your head in a place where you don't need to spend most of your live commuting is becoming increasingly too expensive for a lot of the same folks. Too bad the commoner is just a paycheck away from being in the streets as he cannot pay for a house! He now has a TV that not even Queen Elisabeth could have just a few years ago!
Yeah. Most people should build their own inflation index. It's not hard whence you realize the biggest expenditures are usually 1) mortgage/rent, and 2) food. I wouldn't be surprised that given the rate hiking in recent years going along with higher food price, some people see dramatic "inflation".
Ofc one can always say that No this is not the academic way to define inflation, but who cares?
> Frankly, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks.
The public in general can be really bad at perceiving the truth. I might take note of people's feelings to go and recheck something but I would not trust peoples feelings with stuff like this to make any sort of conclusion.
Verifiable metrics* are the only way to get any sort of objective handle on this.
* Edit: I replied below that I should have said verifiable metrics and context with discussion. Verifiable metrics are necessary but not sufficient.
Let's unpack this.
The real, objective reality of people living their lives is not the Truth.
But, instead a single index based on what is basically a bunch of arbitrary choices of a bunch of bureaucrats, subject to all kind of agendas and political/economical/social pressure, and based on an simulacrum of science that stands upon a bunch of questionable premises and unfalseable propositions is Truth.
The pythagorean cult of number has been a disgrace for the human race.
> The real, objective reality of people living their lives is not the Truth.
People usually aren't objective though even when looking around at their own lives. When evaluating inflation in groceries they'll point to a few things that have had some pretty massive spikes (beef, eggs, soda) and ignore a lot of the other things in their shopping cart that hasn't had anywhere near as much inflation (grains, pastas, lunchmeats, pork, lots of vegetables, potatoes, lots of fresh fruit, etc).
It can be pretty difficult for most people to actually be objective when looking at the world. Tons of people let emotions dominate what they see.
I'm not arguing the BLS price index numbers are entirely perfect measures of reality, but the number of times I've had people tell me things like eating out is 10x more expensive than it was a few years ago is quite high. Is that an objective reality?
Yes, economic metrics can be reductive. E.g. believing GDP is a measure of well being is a common reductive mistake. However, the public are often wildly incorrect. I should have been more precise and said that in order to have a productive analysis and make good policy you need objective metrics and context with discussion.
>The public in general can be really bad at perceiving the truth. I might take note of people's feelings to go and recheck something but I would not trust peoples feelings with stuff like this to make any sort of conclusion.
Good advice for non-inflationary times as well.
But either way sometimes I'm only interested in what effect it has on the general public more than anything else.
I have no metrics other than real-time experience against what has been published over the last 55 years and how it correlates anecdotally, so please don't take what I say as serious fortune-telling, when it's nothing but ancient history ;)
Five years ago even seems like it's gone and almost forgotten.
This week at Walmart, where they have better data if not better economists than thou, they rolled back some sensitive stuff I've been watching for about 10 years or more. First of all there had been great hesitation for over a year to raise anything more than they had in earlier years (it was already up a lot), but you could tell there was internal pressure building as other retailers could hesitate no more. They've got to be able to have a decent markup in the face of constantly rising costs, or why even bother. So earlier this year the cumulative price increases over 5 years finally reached a full 50%. I can only imagine there are some Walmart leaders who never wanted it to happen just because they are patriotic Americans and it's not right, others who hesitated as much as they could because of "optics". That's a fairly sobering line to cross when prices had remained absolutely stable for many years since launch, as designed. But 50 full percent it did reach, and that was the stuff they were trying to hold back most on.
Not like the 300% or more gradual increase over 10 years on many non-bargain items more often sharing eye-level shelf space. These are not a growing category because Walmart is moving upscale, no it's because so many people having upscale habits can't afford upscale prices any more, when not too long ago they could easily.
That 50% increase over 5 years on selected bargain program items? Just rolled back to when it equaled only a 33% increase, real quick this week. This is back in line with the prices before the latest rise. Probably hoping it works since people still seemed to be buying OK at those prices before, not much differently than last year, or they wouldn't have dared raise them in 2025 at all.
No rollbacks on the +300% items at this time though.
I don't want to consider tariff-sensitive items either, or those competitive with Amazon, that would be a whole different equation. But this particular "Walmart Rollback" is not like the rest, and I've seen them all since they built their first non-rural store to begin with in my city decades ago.
This time it's not the kind of over-competitive tactic they were famous for using, when they were building bigger stores than ever and "monopolized" that terminology for marketing. Now it's a quiet rollback in response to fewer shoppers, spending less on bargain items where there is no remaining competition. After holding off on price rises for so long, nominally catching up with inflation was not nearly intended to determine the point at which consumers couldn't take it any more, but you've got to face it when things stop flying off the shelf. If you weren't paying attention they don't want everybody to remember that the prices were that much higher a few weeks ago, it was embarrassing. Yes, they needed the money, but it's not going to do any good if there's not enough people able to purchase.
Also this week, a local pawn shop temporarily not loaning money or purchasing almost any items except for gold, because "people just aren't buying or redeeming other merchandise any more".
Just so happens that 10% per year over 5 years adds up to about 50%. Walmart wouldn't have jacked prices that high if it wasn't undeniably needed finally based on all the data they have.
I've noticed this for a while, I remember what it felt like when Nixon was getting ready for his recession, and he was absolutely as non-crooked as he could get. And I well remember how it felt when it reached a conservatively government-reported 10% per year. At the beginning I was actually in what they call "fintech" today, first modem in town, woo hoo. People now look back on it like it was a relatively difficult blip in time, but I assure you it was a slow-motion dumpster fire that outlasted Reagan.
Sooner or later, people can't afford anything any more anyway, consumers crater and interest rates skyrocket along with inflation since there's no carrot remaining and it's going to take a big stick to beat whatever's left out of a dead horse. Then off to the glue factory for the spent carcasses after that. Economic statistics can only apply to the cash flow that continues to occur, resulting in 100% survivor bias. Only those who have extremely good fortune and are relatively unscathed can judge when the devastation "ends", and "recovery" begins. That's the only financial signal that you've got, consumers would never notice on their own since no recovery ever has a realistic enough "upturn" for prices to actually come down or the lost purchasing power of the dollar to recover. At all.
When prices come down like they did at Walmart this week, anybody think that's a sign of recovery? After rising uncontrollably more so earlier this year than last, in order to catch up with the ongoing inflation that they previously hoped was slowing? When an increasing rate is so undeniable now that some non-positive indications eventually escape from BLS when it's already long structured to prevent downturns in sentiment? Which has really turned out to work when it papered over minor financial downturns, and when a little one snuck through they called it a "great" recession when it was a non-event by comparison to the real thing, and people believed it. Meanwhile it's no co-incidence that BLS looks to be slated for extreme cuts to transparency from here.
It's a familiar sign that financial malfeasance of Nixonian proportions is already underway. Lickety-split.
> Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
I don't know how this works in other countries, but in the US the weights do not change month to month like this. If consumers keep making this choice over a period of years the index will eventually get reweighted, but reweighting only happens once every few years.
(Of course, if you were an official put in charge specifically to cook the books you could just reweight on a monthly basis like you describe, which is something that might well happen now...)
This is the the Producers Price Index. It tracks wholesale prices which are far less affected by locality. It also doesn't measure housing prices at all.
The PPI is not a measure of consumer inflation. It's a leading indicator for it.
sure, but are there any alternatives? To make data backed decisions you need to measure something, even if not perfect it gives you some sort of relative direction for the things measured. Not perfect but better than no data at all
Picturing a future political cartoon of hobo-looking guys sitting around a winter fire burning in an old oil drum — one guy is holding up a newspaper (wut?) and saying to the rest, "Hey guys, it's fine because it says here that the employment numbers reported are the best ever!"
They fired the head of the BLS because they didn't like the numbers. Explicitly. You kinda have to conclude they're going to cook the books. Like they're doing everywhere else.
That interview was unfortunately timed (taped before nomination, broadcast afterward). My takeaway was that they are not trying "just not report the numbers" _yet_.
The challenge with that idea is that investors and business people depend on these numbers being solid for investment decisions like "building a new factory" or "investing in GPUs."
Without solid numbers I wouldn't be surprised to see a shift to "assuming the worst case" and much more conservative and lower investment.
It's nice to have agreed-upon, citable facts though, even if only so that voters know who's full of crap during a debate. When the next R candidate says that Trump handled inflation beautifully, it's important to be able to point to an authoritative source that shows that that claim is BS.
The majority of R voters don't care about authoritative sources. In fact, authority when it comes to information is a negative in their view, based on all available evidence (ie elections over the past few decades). We're well past the point that debates matter.
R voters say you can't trust mainstream media and then cheer when this administration fills it's ranks with mainstream media people from FOX, including the head of defense, top D.C. Prosecutors, etc.
In Norway our food prices has gone up by more than 4 in one month while we are destroying any capacity for local production while we have protectionism that would make Trump blush.
It's probably newsworthy, but this is an American website and Norway isn't exactly on the same level as the US. I wouldn't expect the same level of attention, at least internationally.
It still baffles me that he has convinced so many of his followers that he's going to lower grocery prices by raising prices. It almost doesn't even make grammatical sense, let alone any practical sense.
Before someone decides to try and explaining to me that tariffs will bring back work to the US and help our economy, I just need to say that is orthogonal to the point of inflation. It's possible that the tariffs will be a net good. I don't think they will but at least that's something that's on the table, but they will absolutely not lead to lower prices. If it were cheaper to manufacture goods in the US then we'd already be manufacturing goods in the US.
Tariffs need to be higher to bring back manufacturing back to the US.
Most companies are looking for countries other than China with no tariffs and bringing it back to US is not even a consideration.
Plus, by the time you can start manufacturing in the US it would take at least 1-3 years to get a factory ready. Then, you have a new president and these might go away. Too much risk to make rash decisions on moving manufacturing.
And to build new factories you need things like steele, etc. Lots of which now have... high tariffs on them.
The policy is not intended to bring back manufacturing, or it would be tuned to enable/encourage the inputs needed for bringing back manufacturing.
But tariffs sure have encourage a lot of people to meet with the president and make 'special' deals with him to get themselves/their interests exemptions.
You're forgetting that a lot of tariffs didn't kick in until August 1, and aren't included in this. So it's likely that we'll be seeing inflation far higher in the future. I'm guessing we're going to over 20% YoY, and even that may be a lowball.
During Trump's first term there were still adults in the room, mostly keeping him from doing anything completely crazy. This time they have all been replaced by toadies and yes men. It's a completely different time.
> I dont think it’s the tariffs. I really think the entire category of merchants looked at each other and figured it was fine to raise prices.
Those statements aren't contradictory. Pricing in non-commodity goods is always a human phenomenon, driven ultimately by the idea that a business can 'get away with it' without losing too many customers to competitors.
Tariffs, on the other hand, provide a good reason/excuse to raise prices. Affected firms see their cost structures blown up, so they have to raise prices at least somewhat. Unaffected firms see that their competitors are raising / must raise prices, so they know that they can raise their own prices in the now less-competitive market. That's how and why tariffs work: they give domestic firms protection to have profits in excess of what they would have under a free trade counterfactual.
Any argument that tariffs don't raise prices is a very long-term one, relying on the idea that it will be easy to open new firms and expand domestic production to ultimately return to a competitive market. This has nearly no effect on short-term pricing, and it's why the least-damaging changes to tariff policies are long-run and well-telegraphed plans, slowly implemented.
That's what tariffs do though. If you have a product that competes with another that now costs more due to tariffs, you're now free to raise your prices as well, in order to maximize profit. Your product may not have a tariff, but it does have greedy shareholders that see that they can now raise their earnings because competitors suddenly aren't so competitive anymore.
Try going on a shareholder earnings call. They're free. It's company executives trying to impress shareholders. It's the only place I've ever heard people brag about how much they've raised their prices.
>Tariffs did not make the price of your BLT go up, it’s greed.
What do you want to do about it, Stalin? Use the power of the state to legislate away human greed? Imprison these greedy people? Impose price controls (which have a long, storied history of not working and only leading to shortages and queues)?
We build economic policy around human nature, not otherwise. Humans will always seek to maximize profit at all costs. If you lock out foreign suppliers from competing using tariffs, local suppliers will reason that they can charge more and will rightly do so. And tariffs in one area end up affecting so many other areas in unforeseen ways. That's how tariffs on chemical fertilizer might end up affecting the price of something as mundane as bacon, lettuce, and tomato.
That's why free markets are important. They give buyers options, and sellers then have to lower their prices reasonably to be chosen/picked from that sea of options.
If you want lower prices, remove tariffs and trade restrictions.
> What do you want to do about it, Stalin? Use the power of the state to legislate away human greed? Imprison these greedy people? Impose price controls
Fair enough
But in the same spirit, I will just murder you. What are you gonna do? Police human nature?
A lot of domestic goods can be affected by the tariff war US is waging. We are a part of a global economy. Additionally, ICE raids are adding to the issue.
Even for products made in the US if other things increase the cost of running a business those costs will get passed on to the buyer. It takes LABOR to get bacon, lettuce and tomato....have you heard about ICE raids and crops getting wasted because people are not showing up to work? That will affect prices as less produce = higher prices as demand increases.
If equipment gets more expensive, then cost of produce gets more expensive. I work for a manufacturing company...under Trump our cost has been spiking due to insane tariffs....those costs are passed to people who make equipment and to farmers, then to YOU.
Business is always "greedy", but it's true that it took some external events to make them realize they could get away with higher prices because consumers had gotten lazy about comparison shopping and alternatives. Good on you for boycotting increases by eating simply.
Because business is not a single monolith, and because it is greedy, it kills the naive idea that "businesses raise prices because they can".
Any gouging price increase is a gaping hole for a competitor (businesses are greedy and therefore will take money from other businesses) to come in and steal business. This is something that is obvious to people who have been on the business side and mostly opaque to people who have only ever been on the consumer side.
I'll hold my breath for the fast food chain that lowers its prices to better compete with the chains that raised theirs.
We have plenty of examples, with documentation and receipts, of businesses participating in price fixing, collusion, and other cooperative behaviors that result in higher prices for consumers and reduced competition between businesses.
You are naively assuming that all businesses express greed in the same way. Some of them realize they can make quite a lot of money with a lot less work by working together to raise prices. Not all markets are easy for a newcomer to break into, competition is far from guaranteed if the established players are cooperating.
The issue isn't that we have plenty of examples (which is actually a handful, people always go to the same 2 or 3 cases, but I digress), it's that we have orders of magnitude more counter-examples that are ignored.
It's important to not build your world view on headlines, because headlines are headlines because they are outliers. It's not news when companies competitively adjust prices, it happens thousands of times a day all over the economy. If there was an "undercut on price" button in business meetings, you wouldn't even be able to read the text on it it would be so worn out.
Fast food chains are giant corporations. Where you would see the difference is in the mom and pop shop, who can now undercut the big chain and probably has better quality food.
Mom & Pop shops aren't present at most highway exits like the big chains, and would need to become unbelievably, impossibly successful locally to generate enough capital to expand widely. They can't effectively compete with major chains. It's not a meaningful expression of the other poster's point.
It’s the tariffs. You’re assuming that everyone will raise the price and have the same goals. Some businesses will see it as an opportunity to undercut and gain market share.
After all, total profit = sales margin * sales volume. You can increase your profit by increasing your volume because you kept your prices unchanged while your competitors decided to increase prices.
Tariffs affect local product prices in a lot of ways.
1) They reduce competitive pressure so local producers can raise prices without losing market share (that is the actual point)
2) They increase local demand for production capacity and labor in general, driving up costs even in sectors that are completely unaffected by the tariffs themselves
Tariffs raise the price in tangential ways. Tariffs on Chinese steel means US chicken wire producers switch to more expensive US sources. Increased demand for US sources make it even more expensive. Farmers buy the more expensive chicken wire, passing the added expense to McDonalds, which passes it on to you.
Yeah, but that does not really matter; everyone else that imported meat (or feed ) now competes for McDonalds suppliers, which means higher prices.
You can also expect to pay more for labor itself, because every bit of industry that you bring back (or scale up, at least) with tariffs competes with the essentially fixed labor pool, and there was not a lot of slack (unemployment) to start with.
This is true if and only if those products have no imported inputs, and if tariffs aren't causing general inflation which is forcing up wages of the people making them via cost-of-living increases.
Ultimately, unless you're an autarky (in which case tariffs are in any case irrelevant), high tariffs should be expected to lead to broad price increases, even for goods which are not directly imported.
it works as long as all businesses are working together to fix prices, all it takes is one to undercut the other and reap the reward then it's every person/business for itself. I don't really care because, like you, my thought is go ahead and raise prices all you want I just won't be buying.
Yes, stop going to McDonalds altogether and cook at home. For $6 I can get a pack of 4 pack of artisanal and locally made sausages and dip them in mustard for literally the same value, far more food, and 1000x better taste. Stop supporting these poisonous companies.
You are right. An entire category of merchants (made in USA) looked at others (importers) who now need to pay increase prices due an import tax and figured it was fine to raise prices. Those greedy businesses who figured that you can raise prices just below the import tariffs and make consumers pay. Oh wait, what were you saying about tariffs?
Just because something is happening for years doesn't mean there cannot be extra incentive to make it worse today. But you just handwaved tariffs away.
and did the inflation go up by 0.9% in a month in those years?
Do you not want to appropriate accountability to anyone that isn’t sitting around in a top hat and monocle?
WE are shitty greedy people. Shitty greedy people will use tariffs and become shittier and greedier. So yes, you are right, tariffs will make it worse.
This society lacks civil sense, moral sense, ethical sense, communal sense, common sense, from top hat to bottom bare feet.
You don't think it is the one thing being wielded as a personal enrichment device by a giant man child that cheats at golf is the cause? Well okay good luck with that.
No. The price creep has been happening for years even under Biden. As someone mentioned, tariffs were just an excuse to accelerate it. The things in your grocery store are domestic goods.
We can look for mythical technical explanations as to what’s happening, but all things used to explain anything in our society is just to describe the state of your fellow man. Your fellow man is greedy. There.
Because it’s getting bad. I’ve dealt with overpriced pizza where they try to save money on the sauce and cheese. They are beginning to nickel and dime customers the way banks and the tech industry engineer margins and fees.
I called some of these places and had to tell them to stop scamming customers. Fuck that, I’m buying a pizza oven.
Tariffs
Price gouging and folks continuing to pay
Lack of alternatives - have a garden? Know how to work on a car? Etc.
Genuine competition for resources around the world and increased demand for those resources
That’s funny, I’m looking for intellectual honesty. And honestly admitting no one here really has any fucking clue about global trade, economic effects, and policy would be a good start.
Nah.. “I’m an intellectual, I read tech blogs and listen to NPR… I’ve never made anything outside of a computer program, but listen to my opinion on tariffs that happens to align with all my media sources!”
Over the years I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher. Can anyone here verify this?
Our main problems involve under the table unreported to the public military expenditures. If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900. Those costs are a bleeding hemorage to the middle class tax payer who aren’t getting a cut of military profiteering because they don’t own ‘defense’ stocks.
Consumer debt is almost as much of a worry as government debt.
Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
> Over the years I have read a few articles or blogs
Without linking the blogs or articles it’s hard to say much.
Inflation is a topic that attracts a lot of quackery. There are a lot of blogs and websites that go viral from time to time with claims that the “true” inflation number is dramatically higher.
There is a quick reality check you should run whenever you encounter these claims: Take the claimed inflation number over a period of time and calculate the net multiple. Then run a reality check on something like a $500,000 house or a $5 hamburger.
There’s one prolific website and author who claims the “true” inflation rate is some number like 11% going back decades. If you do the math, that means something purchased 50 years ago in 1975 would cost 185 times less. A $1,000,000 home today would have been $5,400 in 1975 and a $5 hamburger today would have been less than $0.03. Obviously these numbers don’t work, so you can discard the author’s claim.
Actual inflation numbers over long periods are very sensitive to small changes due to compounding. Even over a 10 year period. When you see someone claiming dramatically different results, run a quick math check.
Also be careful for the cherry pickers: They’ll identify one or two outlier year-over-year jumps (eggs during COVID, home prices during a housing rush, insurance prices in a city after a fire) and try to use those as their basis.
At the risk of defending quackery, most claims about inflation being inaccurate involve the changes made to CPI estimations in 1996. I'll go as far as to say I've never heard any claim that is inaccurate going back to the 1970s.
McDonald's regular hamburgers don't cost anywhere near $4 for most people. A hamburger at the McDonald's down the street from me costs $1.59. A cheeseburger costs $1.79. A double cheeseburger costs $2.79. A Quarter Pounder w/Cheese meal today is ~$8 today, in the 90s it was ~$3.
I remember you could get two cheeseburgers for a dollar in the late 90s, so ~$0.50. The inflation rate for something to go from $0.50 to $1.79 that's a 4.5% inflation rate, still quite a way off from people's arguments of 10%. And for the QPC meal comparison, that's ~3.3%. Higher than 2% for sure, but its also a single restaurant comparison on a single item here where its highest cost component (beef patty) has experienced overall higher rates of inflation compared to most other things. A restaurant that many people feel has gone up in price more than expectations of the rest of prices.
Good response. I might suggest not using housing because so many people treat it like an investment, which means its value goes up faster than inflation (if it's a good investment). But otherwise I totally agree with you.
The defence budget is America's job program. Very little of the money that is defense spending ends up in defense shareholder pockets. The overwhemling vast majority goes to propping up America's (now) anemic industrial base. Remember that virtually all defense dollars are constrained to only be spent on American made things and services. And most of money sent to the big contractors goes to the gazillion sub-contractors they use.
This is why the defense budget is never cut. By anyone red or blue. It's a funnel of money that can be pointed at any location in the US and give a bunch of decent full benefits jobs.
If you don't think it makes sense to scale it by GDP (though I do), then in real terms it has gone through cycles since 1965, with definite periods of decrease, even though the overall trend is upward:
https://www.johnstonsarchive.net/policy/edgraph.html
All spending everywhere is essentially “salaries and compensation”. It’s not like you get to the end of the supply chain and suddenly are paying God. Money always goes to people.
I don't agree. If I dig a hole in my yard and find a huge chunk of gold, when I sell it very little of what I charge will be for my labor.
Also, even if you're right, the "salaries and compensation" of anyone outside the U.S. are effectively NOT that, since the thing in question is whether defense spending is mostly a jobs program.
> when I sell it very little of what I charge will be for my labor.
That's debatable. Without the labor input the product doesn't exist as far as the market knows. However, if you want to discount the labor portion, which is an equally valid take, it remains that what was said was “salaries and compensation”. Any compensation you receive for giving up the gold in your possession was already recognized. As said earlier, the exchanged value doesn't go to God, it goes to people.
> since the thing in question is whether defense spending
is mostly a jobs program.
You can certainly play a game of semantics here, but generally "job" in this type of context refers to any kind of economic role, not necessarily direct labor. "It is my job to provide gold to the world" doesn't imply that you are the one doing the actual extraction. The significance of "job programs" is in offering opportunity to derive an income, not to give opportunity to strain muscles.
>when I sell it very little of what I charge will be for my labor.
No, almost all of it would cover your labor.
What you are describing is winning the lottery, which isn't really useful since it is a rounding error of possible scenarios. A "Having a career is meaningless because you can just win the lotto instead" kind of scenario.
In reality you would be digging for ages in your yard to find a nugget of gold. If you went to a place with gold to dig, you would be a gold miner, and no, it's not easy money, go ask them.
Certainly. So would materials expenses and theft and insurance and so forth.
But the confusion is that somehow, money not spent on “salaries and compensation” doesn’t go to people. All of it goes to people.
Defense spending isn’t buying “defense”, it’s buying time and effort for people to focus on and produce defense related things. This is the root of the original post that defense spending is a jobs program.
22%. But operations also includes civilian salaries and procurement naturally includes the labor required to produce what was procured. I would assume that R&D also includes research grants and salaries.
It is also kind of handy that we get aircraft carriers out of it too.
Mind you, I'm a socialist, so like, I personally wish we could move a bunch of the "jobs program" stuff over so that instead of carriers, we get well-educated, fed, and cared-for children and good medical care for all, and stuff like that. And that if we want a certain number of aircraft carriers, we should just try to actually get that many carriers on purpose for the cost that building the carriers entails. Without also trying to do 10 million other things on top of it to the point that the carrier output is a side-effect.
But like, it's probably better than no carriers at all, which is how it's going for lots of other countries. So I guess that's something to hold on to.
> Over the years I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher. Can anyone here verify this?
Your question at the end suggests those blogs and articles didn’t include compelling evidence for the case they were making. If true, then it is worth reconsidering whether it makes sense to incorporate into your world view.
That’s because consumer inflation is subjective. You can choose which goods and data point represent personal experience.
As you well know the government uses “hedonic adjustment” which is when they say a car in 2025 is so much better that a car in 1980 that higher prices should be reduced to reflect that better good.
A different model is that you need A car to participate in society so even if it’s better we just raised to the cost to exist.
Good point. How do you gather information? I split my time about half each reading US news and news from other countries. There are a few people I find believable like Dr. Jeffrey Sachs and retired congressman Ron Paul (these two guys are quite different politically) and I will listen to each of them once or twice a month, just to occasionally get non-mainstream news viewpoints.
If you're truly curious I would say the best way to start is to get a basic understanding of economics and how our current system actually operates. It's also important to look up the data as it actually exists rather than consuming conclusions from commentators without investigating further.
For instance your initial post seems to imply that we aren't balancing our defense vs social spending and are spending way too much on the former. However, that doesn't align with our current outlays. If you check out the latest US Treasury report the outlays for the current fiscal year shows $1314bn for Social Security, $841bn for interest payments on the debt, $823bn for medicare, $805bn for health, and $758bn for defense. The primary driver of debt in the future will be the entitlement programs and interest.
Of course the unfortunate reality is that most people do not have the time to learn about everything and do their own research so we will always rely on others to some extent for our information. The danger is when your world view fills in the gaps of knowledge you lack combined with the facts you believe you know taken from someone else who may be mistaken, misleading, or outright lying.
Just my opinion (but I did work in the defense industry from 1974 to 1998), but I just don’t believe the published ~ 800 billion defense spending numbers. A few presidents ago, the chairman of the joint chiefs publicly said that 7 trillion in military spending is unaccounted for.
Also, I admit to getting much of my information from professor Dr. Jeffrey Sachs, an economist.
I took an online economics class from Wharton business school, specifically on the economics of globalization. Fascinating stuff.
Anecdotal, but as a hobby for the last 20 years, I enjoy comparing the coverage of major news and economics stories in USA vs. other countries.
> 7 trillion in military spending is unaccounted for
If someone gave me $100, and I handled it without keeping track, that's $100 not accounted for. But we do know that I was given $100, and the money went somewhere we just don't know where. But it doesn't necessarily mean that this was shadow money outside of the larger picture budgets, people still know I was given $100. Its not like now there's somehow $200 spent because I was given $100 and I failed to account for $100.
So thinking about the $800B defense budget, if they fail to properly track $150B of that budget, that's another $150B added to that pile of unaccounted for money. But its not an extra $150B that got spent, its still a part of that $800B.
> A few presidents ago, the chairman of the joint chiefs publicly said that 7 trillion in military spending is unaccounted for.
You're likely referring to the fact that the pentagon can't pass an audit even though there have been requirements going back to the 90s. That's more about tracking where the money they spent is going as opposed to the total quantity of money they are spending though, i.e. the $800bn is "accurate" but some portion of it may have vanished due to bad accounting, corruption, waste, fraud, etc...
Having said that any accounting for an entity the size of the US government is non-trivial. The numbers I stated above are not the final numbers. Firstly because it's YTD but also because of the complexity in the accounting. We have decades of trend lines and a lot of public data on tax receipts, bond auctions, and the like to know that defense spending isn't drastically different than what is being reported though. If you have any analysis that concludes otherwise I would enjoy reading it.
> I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher.
Do you mean the other way around? The EU headline inflation rate doesn't include costs of owning a home like the US' does (owner's equivalent rent), which, as you might have guessed if you have ever wanted to own a home, is a component that has been quite inflationary, at least as far as recent memory goes. Or maybe those blogs were talking about some point a long time ago when that component pulled the US figures down (e.g. during the last housing crash)? What specific details did they give?
This is actually quite interesting. I ran into Stefan Ingves on the street in Stockholm, the former Governor of the Swedish Riksbank, and asked him why the Swedish inflation calculations did not include housing prices.
The short answer is that they're waiting on a harmonised EU wide system for that will include housing in some measure, but that has been taking longer than expected and they didn't want to change the system in Sweden before the new system was finished...
Quite frustrating given the massive increase in housing prices since '08. Would probably have been much lower with a higher interest rate.
Exactly. Don't know about all of Europe, but I find the way inflation is calculated in the countries i lived here as bad faith since it intentionally omits housing costs.
So just like a commenter below said, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks. Everyone unanimously agreed the numbers are gamed in order to control public opinion.
I've also seen a lot of gaslighting from politicians with mental gymnastics on how the population is not poor but actually rich because "look how many (Asian made)washing machines you can buy with an average salary here today, while for previous generations this type of items was a luxury".
Yeah mate, my parent could barely afford a European made washing machine, but they could afford their own house at age 25-30, working jobs that required litte education. Must be all that avocado toast to blame.
Yes. I'm from Spain, and here housing rental costs are included in inflation... but they're a 4% of the index. Which is laughable, as most people are spending more like 30%-50% of their income on rent.
The rationale is that most people (read: people over 50 or 60) live in houses they own, those spend 0 on rental, so if you calculate the average expenditure on rental, it's low. And buying houses counts as an "investment" so it's not included.
"balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc."
Spending does not equal outcomes. There doesn't need to be a spending balance, but there should be an outcomes balance. We can see this with school funding. There are some schools that are underfunded and underperform, but there are also schools with adequate funding that underperform lower funded schools. The implication that you are making is that we could fix things just by cutting back military spending. However, we are also leaders in some of the areas you mention already, such as R&D. The Pentagon fails their audits frequently and should be trimmed down in areas that it makes sense. However, just shifting that money to education isn't going to make that much of an impact.
Had trouble following your core point. Do you have references regarding 900 bases with many bordering China. I have never seen such figures or that they border China.
Google Gemini 2.5 Pro just estimated 200 military bases close to China (I used “close” in my prompt, not very precise, so that number is likely including bases in the general area.)
This is not wrong but the term base is click baity but probably an accepted definition from the pentagon. It’s include all facilities no matter or large or small and even those that are part of another base but not on the main campus. It’s almost like a count of buildings.
I haven’t checked, but I would guess this number even includes things like NSA outposts (since NSA is part of DoD) and embassies (which are protected by Marines).
Hmmm let’s clear this up because the way you write is extremely click baity. I believe those higher numbers are less a military base and better thought of as a facility. They could be a small housing facility, radio station etc. it’s a valid number but I think base is probably not the right way to describe.
When you say China that is incredibly disingenuous. If we said Asia yeah sure and that is effectively Japan and Korea.
Now let’s think about it more in terms of major bases/complexes. We are looking at maybe 25 in and around Japan and 10 for Korea. Still not a small number but I think a very different mental picture than 900 bases mostly around China. Also worth nothing that’s probably around 80k people deployed in those two countries.
maybe I am wrong to do this, but I run Gemini 2.5 Pro in ‘research mode’, ask a question I am interested in, wait usually about 2 to 4 minutes and Gemini summarizes a large number of sources for me.
I think there is a lot of bias everywhere, and I thought that this sort of averages some of the noise away.
I think grandparent comments about what constitutes a military base vs. a facility are interesting. I was a defense contractor from 1974 to 1998, and it seemed like all the US bases I visited were very large, but some of the NATO bases I visited were much smaller. Sorry to be anecdotal here, just explaining my own experiences.
I've had too many lies told to me by all of these "AI" tools to trust anything I don't already know to be true without verifying the referenced sources myself. At that point, if I'm giving the information to anyone else, I might as well communicate the sources rather than an AI's impression of the sources. There's just no value add to me beyond identifying potential sources in "research mode".
I can't speak to this, but I suspect something is afoot.
I know my mom went to a university that she paid for with a part-time job while a student. Currently that university's tuition is 80,000 a year. When I looked at what inflation figures said for college education, it wasn't enough to account for that 10x+ increase.
> Currently that university's tuition is 80,000 a year.
University tuition is a known example of an extreme inflation outlier. The cause is also known: The availability of loan dollars and the laws preventing their discharge in bankruptcy.
Tuition figures are also misleading because almost nobody pays that number. The tuition number is the maximum possible amount someone could pay without financial assistance, but when you look at the numbers you would be surprised to see that often 80% or more of students have some financial assistance. At many universities now, students with families below certain income levels have tuition adjusted down to $0.
You can’t judge university prices by the number on the website any more.
Most US students don't go to selective private universities that charge $80,000 a year (and most students at those universities don't pay $80,000 a year). Only about a quarter of students go to private universities and most of those are not particularly selective. Most students go to state schools that are a lot cheaper and where tuition is subject to different economic forces.
You can't decide that official inflation figures are inaccurate based on a specific, outlier example, when the official figures are based on averages.
Also, the list prices for tuition and what the average student actually pays out of pocket in the end can be two very different figures after grants and scholarships come into play.
And yes, absolutely, $80k a year in tuition is a massive outlier. Average in-state university tuition is closer to $12k-13k/yr, before grants and scholarships. The extreme majority of US undergraduates aren't shelling out $80k/yr for tuition payments.
That's wild, I had no idea they had gotten that high. When I was in college (2012-2016), the most expensive places were in the $50k-60k range, which already was quite absurd. The fact that they've grown so much even in the past decade is mind-boggling.
I understand. I just didn't really have any other expenditures anywhere close to that high at the time; I've never purchased a car, and like most college students, I certainly never purchased a house back then. I hadn't paid much attention to tuition prices since graduating, so seeing the number now made the inflation feel much more visceral to me than comparing the prices I can recall of much less expensive things I purchasing to what they are now.
as far as college education prices go, there's no ceiling on education prices because there's no risk to lenders, they can lend as much as they want with no risk. As long as young people feel there isn't an alternative to a college education and risk to lenders is close to zero then there is no limit to what colleges can charge.
Inflation seeks to understand the change in value of a currency, not the change in value of a good or service. College being worth more (in the eyes of the customer), rather than the currency being worth less, is what accounts for the 10x increase.
I don't know how old your mom is, but it wasn't that long ago that people only went to college if they had good reason to, not because they were told they "had to" under the "A diamond is forever"-style marketing campaign. That shift in mindset enabled colleges to charge basically whatever they want. That is not a product of inflation.
People didn't need to go to college before the death of the middle class. A couple generations ago you could rent an apartment and have a decent life working at a restaurant or warehouse or factory. Now most entry level jobs pay poverty level wages.
People didn't need to go to college because nobody cared. Employers were able to look at qualities of the actual person, not some outside attribute bolted onto the side. What changed was Griggs vs. Duke, which outlawed effectively all filtering mechanisms except a college degree, forcing the hand of employers.
That still didn't mean the workers had to comply, though. What do you think would happen, with respect to employment, if nobody attained a college degree? Not much. "Welp, no more college graduates. I guess we'd better shut our business down." would be said by nobody. Hiring would carry on as usual (aside from the lines possibly being longer, there being no legal mechanism to cull applicants early). But colleges certainly took the opportunity to present that idea and the people bought it hook, line, and sinker.
That's not true though. We keep hearing about coding tests given to applicants in high tech, and those are still legal. The decision said that the test had to be reasonably related to the job, not that they couldn't be used.
A 1970 court case doesn't explain why my childhood friends' parents could afford to own 3 bedroom houses and have 1-2 kids while working at chain restaurants, distribution centers, and hospitality. This was in the 1990s. People cannot have this life now with the same jobs. Even with college degrees, it's barely attainable. People are doing the same amount of work but what would have been their wages are being diverted to the rich. To the point that they can barely afford to survive.
This has probably been suppressing prices for the last few decades. Inflation numbers would look even worse if the pay in those kinds of jobs has continued. People want lower prices for everything, no matter the cost to workers.
Ok. But we can look at the inflation rate that the US reports, and the inflation rate that the EU reports. Then compare the ratio of those to how the exchange rate changes.
I don't see how having financial problems would make this comparison invalid.
That might be an explanation for as to why the inflation figures are what they are, but the math described above wouldn't change. If one currency is quickly being devalued while another isn't, it is going to be obvious when you try to exchange those currencies.
> If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900.
I would grant them the benefit of the doubt if English wasn’t their native language, but they’d identified as a US citizen elsewhere in the thread and their name strongly implies native speakership.
In the US, this conversational construction in this context is most reasonably interpreted as the second sentence completing the thought in the first.
If a manager asks an employee “how many dents are on the bumber?” A response of “I think the total number is close to 900”, that would be in reference to just the dents on the bumper, not all over the car.
Also, elsewhere in the thread, they’ve acknowledged they simply made the number up (by just repeating what a GPT said).
The sentence starts with “If you look at a map of our military bases”, which refers to all US military bases, not just the ones bordering China. The second sentence refers to that totality of bases.
I’d grant that there is a bit of ambiguity, but insinuating an “insane claim” is jumping the gun on a misreading that should have been fairly obvious in light of the “insanity”.
Perhaps English is not your native language. It at best comes across that many of the 900 are surrounding China and at worst that the 900 is referring to China.
> > Our main problems involve under the table unreported to the public military expenditures. If you look at a map of our military bases, we have many bordering China.
“Many” could be dozens or hundreds or over half. It’s poorly phrased to the point of being meaningless.
Glad you read it that way. The OP wrote it with a narrative of China which is already perplexing since we are mostly talking about Korean and Japanese bases but framing it as around China. You could read it either way. It’s poorly worded and click baity.
American consumer debt is also a different beast in the US because households tend to counter inflation and higher prices by shifting over their monthly spending to credit cards. Most Europeans use credit only for certain goods and mostly pay the full amount off every month. This creates an elasticity in the US, where inflation leads to higher prices which slowly leads to higher household debt, which makes recessions more grave when they do appear. Europeans are instead quicker to move to cheaper stores and start buying cheaper goods in bulk.
> Eventually countries that don't spend most of their treasure on their military will win.
Being from Europe, I wish. But for now, it doesn't seem to be the case. Your military power basically allows you to bully Europe and many others, tell us what to buy and whom to buy it from, which is an enormous economic advantage. You just made our puny European leaders promise an enormous investment in the US defense industry in the moment where we would need to propel our own industry the most (it probably won't materialize, but still, we'll spend at least some of it because most of our leaders don't want to be in a bad standing with the US). You are also bullying us into signing contracts with inferior American suppliers rather than Huawei, among many other things. All of this happens mainly due to the US's disproportionate military power. Meanwhile, you can afford having a president who is borderline illiterate (and actually makes binding decisions) without the economy even meaningfully sinking (stocks at historical maximums).
So spending in the military seems to actually be a good choice, unfortunately.
>Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
Ask Ukraine how that worked out for them. While your at it, tell the Baltics they should focus on society and not the Russian world that is coming for them.
The US and EU have reported broadly similar inflation numbers for the last five years or so, with the EU generally being a little lower. If your thing was true, you'd expect a vast gulf in prices to have opened up, but it doesn't really seem to have.
Anecdotally, I was in SF once or twice a year for a few years before the pandemic, and it felt like mostly similar prices to Dublin (an expensive European city). I've also been back a few times since the pandemic, and it now feels somewhat more expensive than Dublin, but not dramatically. Which is about what you'd expect if the official inflation figures were broadly correct. Obviously this is super-anecdotal, mind you.
I’m driving, it’s difficult to put them on the same chart and normalize. But they are very similar. There are differences in methodology (housing, healthcare) but those generally add a small amount to US inflation chained index vs HICP.
What does debt have to do with the calculation of inflation?
It may impact inflation but you seem to be claiming debt is a component of inflation calculation, when inflation is little more than the change in prices.
Thanks for pointing out something: I didn’t mean that debt is a component of CPI.
Interest on 37 trillion in US government debt as well as huge consumer debt certainly is a long (and short term?) drag on the economy, but I accept your point that I don’t understand the correlation.
I have a simplistic way of thinking about the economy: I tend to view things as being healthy or unhealthy to the economic well being of all people in my country. In general, hiding information from the public is not healthy. Look, this is just my opinion, but I believe that our government is in the business of hiding information from the public; the government (both political parties) exists in its present form to protect and nurture the special interests who pay them off one way or another.
>> What does debt have to do with the calculation of inflation?
Debt isn't a component of inflation calculation but they are related. During Covid the US government increased the deficit (not debt, the derivative of debt) by a trillion dollars (no partisan stuff here, Trump did it first and then Biden). The infusion of money into the economy was one of the drivers of inflation between 2021 and 2025. You may ask, where did the money come from? I don't know. The government "borrowed" it, but from whom I don't know. Money "invested" does not necessarily get into the economy, but money invested in treasury bond gets spend by the government and definitely ends up in the economy.
I would love to have time (get paid?) to sit around and develop useful economic models. All I ever see is people offering simple cause and effect relationships (like I did above) without showing anything close to what I would consider a reasonable model of the economy.
Technically speaking, the deficit peaked in 2020, fell a hit in 2021, and then fell a lot more in 2022, and then rose a bit in 2023 and 2024. The deficit on 2025 Inauguration Day was way smaller than on 2021 in Inauguration Day, so I’m not sure it would be fair to claim that Biden increased the deficit. See the graph at https://fiscaldata.treasury.gov/americas-finance-guide/natio...
Downvotes on this are weird, it’s just basic math (the deficit bar in 2025 is way lower than the deficit bar in 2021). I get FoxNews thinking math is a liberal conspiracy, but not HN.
While true, there is another nuance missing here. The deficit was higher in 2020 & 2021 due to the Covid stimulus spending. Looking at 2017-2019 for Trump and 2022-2024 for Biden probably gives a fairer picture of what happened during both presidencies. It's basically been an upward trend since 2015, excluding the Covid outliers.
Yes, that’s why I prefaced my comment with “technically.” To claim Biden grew the deficit, you would have to explain that COVID was some sort of exception and then argue that it still grew in spirit (rather than technically).
Although without COVID Trump was definitely still on track to have significantly raised the deficit since it was falling in most years under Obama compared to 2008/2009 (before COVID he grew the deficit significantly with his first round of tax cuts, just like he just did with the big beautiful bill), and it isn’t clear that Biden would have diverged from Obama without COVID around.
It's a very difficult belief to have in the long run, because if the source of the "error" is always in one direction, it will compound to price level differences impossible to hide.
It's like the traditional view on GDP growth. Be a little slower than a similar country (say 0.5% a year) wait 20 years, and your formerly similar neighbor now sees your country as quite poor.
And yet many less-rich countries have better infrastructure and health outcomes than the US. It seems clear that chasing GDP without also considering what is happening to wealth distribution has socially hollowed the otherwise-rich US.
Secret defense spending would not and should not impact inflation numbers except in so far as it impacts the already measured consumer basket, the US does not have 900 military bases near China, etc. etc.
> Our main problems involve under the table unreported to the public military expenditures.
This is a common claim but I don't think it's supported. Defense spending is about 3.3% of GDP [0]. 15 years ago it was 4.9%, 40 years ago it was 6.45%, and it hit almost 10% in 1967 during peak spending in the Vietnam war. World War 2 made it around 35%. Also, what does unreported mean? Are you claiming that there is a significant amount of money being spent that isn't part of the reported military budget? How much? Defense spending was about 13% of the government budget in 2024 [1].
> If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900.
How much do those cost? I understand the claim is a lot, but how much? If you don't know, why pick this as an example?
> Those costs are a bleeding hemorage to the middle class tax payer who aren’t getting a cut of military profiteering because they don’t own ‘defense’ stocks.
Defense stocks have not performed better relative to the Dow Jones. Raytheon stock has increased 5-fold since 1985 while the Dow has increased 33-fold over the same period. If defense was easy money, you'd see hedge funds loading up on it year on year. These companies aren't valued that much. Raytheon is valued at 208B [2], which is less than McDonalds, Nestle, T-Mobile, AMD, Home Depot, and Costco individually.
> Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
I agree with this, but given that America only spends 13% of the budget on the department of defense, your own claim is claiming an American win. In 2021 the American Rescue Plan induced a giant amount of domestic welfare spending plans such as almost doubling the child tax credit. This was a tremendously expensive plan that cut child poverty in half, but people didn't feel strongly enough to successfully pressure politicians to keep it, which does seem pretty frustrating to me.
Also, I see you're using AI for sources below. Feed your comment into GPT 5 thinking and ask for an opinion, because it apparently thinks your inflation claim is completely reversed.
https://www.shadowstats.com/
Tl;Dr. The outlook has changed little. ShadowStats numbers show that the economy remains in a deepening downturn, intensified by ongoing Federal Reserve Rate Hikes. Headline inflation faces a near-term rebound, thanks to the continuing and broadly based excessive growth in the Money Supply and Systemic Liquidity, as triggered by the Fed. Separately, with the Debt Ceiling now eliminated by Congress and the Executive Branch, unfettered Federal Deficit Spending increasingly is adding fuel to the unfolding Inflation. The systemic Inflation is not driven by the Fed’s proclaimed overheating economy. Such an economy simply does not exist, at present.
Shadow stats is a crank blog with absolutely no validity. Choose your debunking source, but the owner of the blog literally just adds an amount to the official rate that he thinks represents the government error. There’s no calculation, there’s no “pre-1980 methodology”, just one dude’s vibes. If the rate has averaged 9% over the past 25 years, you’d be talking about over 750% inflation since 2000. You can buy any manner of new car today for $35k - could you buy a new car for $5k in 2000? Did a gallon of gas cost $0.40/gallon? Could you rent a modern $1,500 apartment for $200/month?
If he actually did the work of calculating using the earlier methodology, it could actually be interesting, but it probably wouldn't say what he thinks. But yeah, that site is BS.
Likely very specious. Inflation is an emergent property. CPI is measured by looking at consumer prices which is pretty transparent. The underlying causes may be obscured and, in fact, we see a lot of debate on the causes but that is irrelevant to actually measuring CPI.
The basket of goods that they base the inflation rate on is created by surveying people and asking what they spent their money on. It's intended to reflect how households actually spend money. Not sure how that would be called "cherry picking". How do you think they should do it?
Every time I've seen someone talk about "real" inflation or unemployment they're just applying a different view on the same BLS data. Metrics like CPI or PPI are derived via a formula to create an indicator. A benchmark that should be apples to apples over a period of time. It's not meant to be comprehensive. But the comprehensive data is all there too.
> Well, look at the history of removing things like living necessities and increasing things that have dropped in price like TVs.
There are many different measures of inflation. And they serve different purposes.
Core inflation, which I suspect is what you’re talking about when talking about removing “living necessities” is a measure used to try and understand long term stable inflation. Since oil and groceries tend to be extremely volatile, core inflation removes those items. No one is saying it’s the one holy measure of inflation. If you’re trying to understand how prices have changed for the consumer over a period of time it’s not a useful measure at all, so you don’t look at core inflation for that purpose.
You look at other measures.
Also, weights are indeed a complicated issue, but is it really surprising the weight of TVs may have increased over a period of time when owning a TV has gone from being a luxury to a necessity?
But anyways, if you don’t like the weights that are used, the underlying segment breakdown is available on the same webpage that contains the summarized calculated inflation figures. Feel free to look at the segment inflation itself.
Not really and none of the underlying data is hidden. Inflation can vary across regions and industries and durability. Things like food and energy are in a separate category because they can fluctuate very quickly based on exogenous factors (ie bird flu) outside the control of monetary policy. That doesn't mean policy makers ignore them. They scrutinize the data at every level. CPI, core CPI or PCE are just convenient indicators.
Are there inflation indicators that aren’t government controlled? Don’t think anything coming out of trump influenced bodies is worth the paper it’s on anymore
Nothing as complete or reliable (historically speaking) as the government numbers. Truth is they're just the best at doing it, or were.
> Are there inflation indicators that aren’t government controlled?
There have been research programs that collected the data themselves:
* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project
which became a hedge fund data provider
There are plenty of indicators, not like its an exact science. Can trust the government one to be always under-reported, the incentive is obvious. I'm a fan of gold prices for longer periods of time.
What you really need to understand about inflation, is that we've had particularly exceptionally low long-term inflation in America for the last 50 years, outside of stagflation in the '70s.
And this is all enabled by globalization and global trade. Globalization fundamentally provides arbitrage for two things. Labor costs, and environmental regulation.
Because there were a lot of poor desperate countries that would build your stuff for near slave labor conditions.
In particular, China of course. But China has now passed through its phase of poor desperation. It is now an urbanized economy. So of a lot of other poor desperate countries aren't quite as poor desperate.
Globalization is fundamentally enabled by the US Navy and US military supremacy guaranteeing shipping trade on the oceans.
This has not been the historical Norm. It's actually historical anomaly caused by the power vacuum of world war II, and secondarily by the fact that the Cold war was between the US and maritime power and Russia, who are effectively landlocked.
Some scholars term China as a continental power, especially cuz of their history of invasion like the Mongols, but unlike Russia, China has a very large coastline with a lot of ports that aren't locked in by Arctic ice.
They are a hybrid Continental and a maritime power, and based on their shipbuilding, their ambitions are to become a maritime power.
This combined with American lack of enthusiasm for maintaining this global order, likely means that globalization will come to an end.
And that means onshoring production back from China.
We'll see if this actually happens, but that is the trend long-term.
And that involves a huge amount of switching costs, which essentially is going to be inflation.
I'm certainly not going to sit here and say that Trump's economic policies are correct. Of course, the proper way to handle a transition of reonshoring our production from our previous 50 years of globalization would be gradual and controlled.
Not a bunch of stupid chaotic tariff policies.
But essentially what Trump is doing is in line with everything I've described.
> What you really need to understand about inflation, is that we've had particularly exceptionally low long-term inflation in America for the last 50 years, outside of stagflation in the '70s.
What you really need to understand is that we can, and we must absolutely, generally and non-exceptionally have low inflation at all times. There's absolutely no sane reason to have high inflation in a low-corruption financial system - none!
> Globalization... US Navy... US military... China hybrid... American lack of enthusiasm for guaranteeing shipping trade on the oceans.
A bunch of red herrings meaning nothing... It's not lack of enthusiasm, it's the overabundance of enthusiasm for tariffs and sanctions backed by the same US Navy & US Military to maintain a restricted trade regime which, not-accidentally, results in the US public being trapped in a monopolized and inflationary market.
> And that involves a huge amount of switching costs, which essentially is going to be inflation.
You mean, the population will bear the costs via the inflation tax, while the rich will be getting richer, because... historical norms should not be broken, especially this one?
Historically, messed up trade led to global wars, actually, it's either global trade or global wars, there's no middle ground. You failed to mention that important historical norm which is also one of the ways to make the rich richer.
The historical norms are something we should absolutely steer clear of, not use them as excuses for more nonsense in the future!
Do you think I'm advocating for inflation as an institution?
History is history. Maybe you think AI is going to herald in some era of non-inflation and free people from the control of the ultra rich.
It's pretty apparent to me that AI isn't going to do that. It's going to do very very very very very much the opposite.
I agree that disruption of trade leads to wars. Usually of very large scale but we haven't had one of those since the advent of nuclear weapons.
And people keep misinterpreting my comment that I believe Donald Trump has good policy. I absolutely don't. That's why I said the tariffs are insane. Theoretically what Donald Trump wants to do is bring manufacturing back to his white voters in the former middle class, and bring the US into an isolationist stance.
Biden did not put troops on the ground in Ukraine. I believe bush II would have enthusiastically. Biden did not roll back the tarriffs Trump imposed in his first term either.
So generally the overall political trend in the United States is to be like this.
Ask the rest of your comment. You could ignore history if you want and hope for something different. But.... Well you should know the quote about history, and I don't want to have to repeat it:-)
> [Trump... Biden... ]
I've never mentioned either, nor do I assume what you think about them.
> So generally the overall political trend in the United States is to be like this.
The question I'm pondering isn't "what the trend is to be" but rather "why it has to change". Thinking about who and how could change it should wait, lest we end up putting the cart before the horse.
> You could ignore history if you want and hope for something different.
Being careful about not falling into the same traps as before isn't "ignoring history", it's learning from history, which is mostly the opposite of repeating it, because repeating the same thing with the same bad result is the definition of idiocy.
So that's kind of the point. The Democrats are basically going this direction too. The Republicans since world war I have been inherently isolationist.
> But essentially what Trump is doing is in line with everything I've described.
No. Trump's tariffs are too unfocused to accomplish any goal besides increasing American inflation from what I've read.
Trump's tariffs on raw materials, metals, etc make no sense whatsoever.
Motivating the creation of new mines or refining facilities should have been done through subsidies, possibly combined with promise of future tariffs.
And, obviously, Trump's tariffs on raw materials raise the cost of construction & composite products, which will likely push manufacturing out of the U.S.
I didn't say it would be effective. My point is that it is thematically aligned. I agree that it is counterproductive assuming that was what his goal is.
Our military budget remains a comically bad allocation of funds. If we're going to be isolationist and we are, we should cut our number of carrier groups in half and throw all of that money into subsidies.
>Globalization is fundamentally enabled by the US Navy and US military supremacy guaranteeing shipping trade on the oceans.
>This has not been the historical Norm. It's actually historical anomaly caused by the power vacuum of world war II, and secondarily by the fact that the Cold war was between the US and maritime power and Russia, who are effectively landlocked.
>This combined with American lack of enthusiasm for maintaining this global order, likely means that globalization will come to an end.
Oh here friend, I think you forget to add a citation to all that, here's your citation so people know where the idea come from (not you): https://en.wikipedia.org/wiki/Peter_Zeihan
I like a lot of wood Zion says especially since it provokes thought. He is a hot take internet guy.
Do I really think China is going to disappear over demographics? I think if you would gone back to the 1980s he would have looked at the Japanese demographics and said the same thing.
Japan is still around and it's doing fine.
Are we going to see privateers and one eyed captains pirating international trade like he once predicted? Not in the age of carriers.
But what navies can do is they can harass ships: board them, inspect them, delay them. Arbitrarily close shopping lanes and force them to take other routes (China could do this to make their exports preferable to say Vietnams).
Zeihan parrots a lot of other geopolitical thought and international relations thought. The general question post cold war was when the US will go isolationist. I believe largely that did not happen because US industrials wanted offshore production for cheap labor. So the US maintained its global focus.
With China, and Xi in particular, doing the things that they are doing to him in capitalism in China, that is forcing a reevaluation of companies have their production.
Sure. You could move it to Vietnam or Malaysia or Thailand or various countries like that, but that still places them within the Chinese military sphere.
When you consider that we have a country like Mexico south of our border which is extremely productive, more productive than practically any other country. We currently have our production outsourced to any degree, why not move our production to Mexico?
Most of our natural resources, especially with the discovery of shale oil in The Dakotas is sourceable from the northern hemisphere.
But we'll see what happens
I don't trust any government numbers regardless of who the president is. There will always be pressure to fudge the numbers to make who ever is running things look good.
There use to be a billion prices project out of MIT that got shutdown years ago because it show higher inflation than what the rulers at the Fed wanted to show. I believe its funding was pulled or something like that.
Do you have any evidence it was shut down by the Fed? I looked briefly at the BPP numbers and they aren't that far off the CPI. There were even a few times it was lower than the CPI. There was a 2 year period that BPP was noticeably higher but it eventually converged.
https://thebillionpricesproject.com/datasets/
What’s crazy is that of all the fudgeable numbers in economics, consumer inflation is the one they should try to be the most honest about. It’s something that consumers can more or less directly observe, so having an official number that’s much below people’s “wallet meter” is doing nothing but erode trust in government. In fact, given that a steady inflation rate actually leads to bigger and bigger price increases, most people are going to feel worse about it at a visceral level. If the government wanted to build credibility with the public, they’d come up with a metric that better aligns with people’s actual economic situations. But then that might lead to people demanding higher wages, so I guess it’s a nonstarter in America.
> of all the fudgeable numbers in economics, consumer inflation is the one they should try to be the most honest about.
A lot of government liabilities are tied to CPI, so there's a strong incentive on the part of the government to under-report inflation.
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Honesty would require admitting that the parties are different. They are not the same, they have different values, and we can see that by who gains and loses power in the party. Which actions are unacceptable, and which actions are rewarded.
The difference is stark!
He is just lying. His edit shows that he isn’t actually focused on both sides but is trying to muddy the waters to blame specifically democrats.
He couldn’t even keep the mask on for two statements
You assume a lot my boy
I did not, I called a spade a spade
"We have no political system at all, we have a sort of corporate party with two wings, both financed by the national security state..." -Gore Vidal
All the other stuff, all the heady discourses, all the piety about the downtrodden, be then the minorities from one side, or the poor rural white man from the other, it is just a fucking smoking mirror, just tools to have loyal soldiers to their cause.
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> EDIT: The democrat brigade is busy downvoting me to deny reality. Poor children!
Per the guidelines (https://news.ycombinator.com/newsguidelines.html)
Please don't post insinuations about astroturfing, shilling, brigading, foreign agents, and the like
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HN Guidelines
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Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
Gold.
The purchasing power of Gold has been remarkably consistent over the long term.
That is, if you convert the gold to dollars, how many eggs could you buy?
To learn more, read up on the work of Keith Weiner of Monetary Metals, or listen to the early episodes of his podcast “The Gold Exchange”.
The problem with gold is that it's price fluctuates just like any other commodity. The practical uses of gold accounts for only ~8% of gold mined, while half is for vanity (jewelry, a luxury product) and the rest for speculation and reserves. Similar to fiat, most of the value in gold is in people believing it has value.
That's exactly why gold is a useful proxy. The price of gold is pretty much purely a function of how much money speculators have in their pockets. If inflation is high, it means there are more dollars that can go into gold speculation, driving up the nominal cost of gold. If the cost of gold is going down, it means the dollar is strong by comparison.
If you used a proxy that had a significant utility in its own right, like say oil or steel, the price would be a function of how efficiently it can be produced and how strong the economy at large is to demand its consumption.
I assume you never tried looking at the price of gold in the 80s and 90s?
i.e. it declined in nominal rates and collapsed by almost 4x if adjusted by CPI
I don't see how that conflicts with my point. The period from Jan 1978 to Jan 1982 was a momentary spike, peaking January 1980, which was nearly 3 times the long term average from 1971 to 2008. If you set that as your baseline, everything looks like a massive decline, but really the average was quite stable from 1982 to 2004. Note that the period of the spike in gold price (1978 to 1982) was a period of extremely high inflation.
> but really the average was quite stable from 1982 to 2004
It was falling at a stable pace for 20 years in nominal terms. I don’t see how can someone see anything else looking at the price chart.
And inflation was still 4-5% through the 80s and didn’t fall to 2% until 2000. So it was a horrible asset to hold.
Just buying government bonds in the 80s and 90s was a much better idea.
> Similar to fiat, most of the value in gold is in people believing it has value.
Much moreso, really, because the value of money is kinda sticky; it's really difficult for it to change _quickly_ because a lot of stuff is essentially priced months or years in advance. Even the pretty dramatic inflation in developed world countries in '21-'23 would not be particularly exciting price action for gold, which really can swing quite dramatically in a short period of time.
This misses the point that you can establish the purchasing power of gold very easily vs a basket of common groceries or consumer goods.
vanity (jewelry, a luxury product)
Jewelry traditionally functioned as a rough store of value because it's easy to sell quickly (albeit at a steep discount), and it makes a remarkably reliable Veblen good, as a glance at the Oval Office will demonstrate.
So there was no inflation whatsoever between 1980 and 2000. In fact there was slight deflation since the price of gold actually declined?
It’s easy to make data to fit your narrative when you ignore everything that conflicts with it..
The price of gold is not immediately responsive to goods inflation, it can be lagging or leading and the correlation can also fluctuate. Long term it's been good at tracking money supply but short term it doesn't necessarily give you a timely signal.
Lagging by 10-20 years like between 1980 - 2002 when it declined even in nominal terms despite consumer prices more than doubling?
If you bought in 1980 you would have had to wait until 2024 to break even when adjusted by CPI…
Over a time frame of multiple decades, it's been volatile but overall kept pace with money supply. Timing is always tricky, even with SP500 which has given higher return.
Maybe "good at" was stretching it, but there are things that lagged forever, such as a retail savings account and Japanese government bonds. It's tracked CPI better than silver.
Due to obvious reason only the period after Bretton Woods counts.
So 55 years. 1980 and 2001 was almost half of that and the real price of gold declined by 4-5x. If you take out the spike in the late it’s still almost 2x or so compared to the 70s (very volatile period).
This wasn’t lag. M2 supply grew continuously and increased by >3x during he two decades while even the nominal price of gold declined.
After the gold standard was abandoned it became a highly speculative volatile asset.
I asked perplexity and there are a few independent calculations (ShadowStats, Truflation, Billion Prices) that put the rate at about 10%
https://www.perplexity.ai/search/what-is-the-us-inflation-ra...
> ShadowStats
Just no:
> Responding to prior criticisms made by economist James Hamilton, John Williams explained in a private phone call that Shadowstats does not actually recalculate BLS data, rather, the Shadowstats CPI merely adds a constant to the officially reported numbers.[28]
* https://en.wikipedia.org/wiki/Shadowstats.com#Negative
* https://old.reddit.com/r/badeconomics/comments/3zik5t/shadow...* https://www.fullstackeconomics.com/p/no-the-real-inflation-r...
> Truflation
* https://old.reddit.com/r/AskEconomics/comments/1beg6db/how_r...
> Billion Prices
They actually published code so other folks could recreate:
* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project
I briefly scanned the BPP data and it was pretty close to the official CPI. The BPP is usually a bit higher, and for a short time noticeably higher, but they generally converge.
https://thebillionpricesproject.com/datasets/
truflation has inflation at 2% right now, not 10%
https://truflation.com/marketplace/us-inflation-rate
If you actually stop and think about it for a couple seconds, you should realize immediately that a “secret” inflation rate of 10% is impossible. You can lie about that for a month or two, but 10% annual inflation means prices double every 7 years, which is obviously not what we observe.
> prices double every 7 years, which is obviously not what we observe.
It’s not? The first two things that came to mind to check are almost exactly doubled:
Case-Schiller for Seattle metro area for example is almost exactly double: https://fred.stlouisfed.org/series/SEXRNSA/
Price of eggs is almost exactly double: https://fred.stlouisfed.org/series/APU0000708111
It may not be what you observe, but frankly, prices doubling at a 7-year rate sounds a lot like what's actually happening.
We're losing 10% of our money annually. That's absolutely insane.
Oh no someone is getting fired again. This poor soul forgot that telling the truth is forbidden
The problem the admin has is that economists at the BLS by and large aren't scared of getting fired. That work experience is gold in the private sector - most of them can easily get a job in finance and 3x-4x their comp.
I'm not being sarcastic when I say it probably looks great on an economist's resume to say they were fired by the Trump admin.
You'd just open the interview with that - go straight to salary neg
What happens when no-one wants to hire them in fear of retributions from the Trump government?
Please tell us what happened in this imaginary scenario of yours, I'm curious
Maybe these are the numbers after they were fudged to save a job?
With a d———- there is no nuance. You don’t get credit for fudging them and making them less bad, you save your job by releasing a positive number, the more positive the better. Truth be damned
https://archive.is/JmMFk
Updated version of the story:
https://archive.is/xzohV
So if you tax imported raw materials, intermediary goods, and other inputs, then producer prices go up... who would have known!
Not necessarily!
If you implement a tiered tax credit on gross regenue earned for wages paid, that decreases exponentially from the lowest-paid worker percentile to the highest, then producers could offset the tax on imported materials by paying an increased share of the revenue to their lowest-paid workers rather than raising prices. The government wins because household buying power and taxes paid increase, the household wins because buying power increases are decoupled from price increases, and shareholders win because wage increases shift the domestic demand outward (rightward), compensating for downward shift along the demand curve from price increases.
Setting the refund rate to (the target inflation rate minus the current inflation rate) times a constant defined by the Fed alongside the reserve rate also provides the Fed a long-term lever of financial incentive: for firms to increase wages paid rather than profits paid, when the Fed raises the constant to combat price inflation, and to increase profits paid rather than wages paid when the Fed lowers the constant to combat price stagnation. It also offers a control against layoffs for profit by specifying such that reduction in workforce in each percentile reduces the target inflation rate in the above equation; a layoff of the entire lowest-paid percentile to avoid lowering prices would result in a significant tax penalty charged at the next higher percentile’s rates, unless prices were so stagnant (or decreasing!) that the Fed’s target had been adjusted to allow it.
That this isn’t coded into today’s U.S. monetary policy is certainly true; but it merely requires an act of Congress to resolve. It’s important not to take for granted that what we’re used to is therefore what must be.
that's not even close to what the government did. Less taxes for the rich and more for the workers won't help inflation
Oh, sure, tax the rich! Specifically, I would start with break up the untaxable trusts and corporate holdings exemptions, and cancel the real estate “unrented properties” tax rebate so that they’re forced to lease at market rates or otherwise sell dormant property holdings. But that’s not going to have any effect on inflation, so I’m not going to discuss that further it in this inflation-focused post.
If you tax corporations directly, they’ll just raise prices to pass the tax on to workers — but if you don’t tax corporate profits properly, they’ll just raise prices to consume all worker income and suffocate the dual competitors of entrepreneurs and of quality of life gains by households — so you have to tax corporations in a way that charges them extra revenue tax when their profits go up faster than their wages, neutralized only by paying workers more and maintain or lower prices. That’s what this proposes: either they help the Fed meet inflation targets by raising wages rather than prices, or they see their profits reduced in a way that can’t be charged to workers — as doing so would raise prices and thus inflation, which would further amplify their tax against their profits, resulting in a death spiral for their corporation between shrinking demand and growing overhead. (And, in times of deflation, the opposite: they are compelled by threat of reduces profits to raise prices rather than wages, just as they do today exclusively, until inflation stabilizes at the Fed target of whatever percent.)
This all works because, in the U.S., the uncontrolled component of inflation is the growth in profits minus the growth in wages. You can’t specify a wage floor or companies will just lay people off or raise prices, and you can’t impose a simple tax on corporate profits or companies will just lay people off or raise prices. The only way to prevent that is to tax (growth in profits – growth in wages – inflation target), which in an excess-inflation climate such as today — combined with the classic U.S. revenue-scaled tax rate schedules — would cost corporations who don’t invest excessive profit growth back into their workforce more than the simple cost of the wage increases would have.
(The R&D exemption that Amazon abuses would, as previously discussed, need to be restricted to less than 100% of research costs; use the same profit tiering schedules as above so that R&D for a billion-dollar gross-profit before-deductions company is capped at one half of the annual inflation rate — once you’re making that much, you don’t need the exemption to grow.)
(Offshore labor would need to be estimated at the federal minimum wage rate adjusted for currency strength/weakness to the country hosting that labor, unless explicitly documented otherwise through worker counts and wages, which would significantly worsen the value of offshoring: offshoring-to-cheap-labor companies would be at a significant disadvantage for growth taxation versus those that simply paid the costs of domestic investment, training, and wages.)
Georgism as a way to tax wealth in a sensible pro-growth fashion is probably the ideal that we'll never achieve
Instead we get rhetoric, middle class taxes, and upper class tax breaks
I’ll read up on it, thanks!
Huge plus one
You can read the actual BLS PPI release here: https://www.bls.gov/news.release/pdf/ppi.pdf
Another thing to watch for is the BLS import prices which show prices excluding tariffs. If these remain flat for July as they did for June, it would be another data point suggesting tariffs induced inflation.
Wholesale prices for fresh and dry vegetables rose a whopping 38.9% month over month. Source: 5th row in the following table. https://www.bls.gov/news.release/ppi.t02.htm
The surge in services costs seems to be a bit of a surprise (?):
> Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022. Trade services margins rose 2%, coming amid ongoing developments in President Donald Trump’s tariff implementations.
> In addition, 30% of the increase in services came from a 3.8% increase in machinery and equipment wholesaling. Also, portfolio management fees surged 5.8% and airline passenger services prices rose 1%.
* https://www.cnbc.com/2025/08/14/ppi-inflation-report-july-20...
> The government on Tuesday reported a mild increase in consumer prices in July, though rising costs for services like dental care and airline tickets caused a measure of underlying inflation to post its largest gain in six months.
> While financial markets have priced in an interest rate cut from the Federal Reserve next month, rising services inflation and the expectation tariffs could still significantly boost goods prices left some economists doubtful of a resumption in policy easing in the absence of labor market deterioration.
* https://www.reuters.com/world/us/us-producer-prices-accelera...
When it comes to (Fed) policy, the other thing they look at besides inflation/PCE is employment, which appears to be softening (see recent revisions which caused recent Trump-BLS turmoil).
The US risk for stagflation seems to be growing:
* https://www.investopedia.com/terms/s/stagflation.asp
* https://en.wikipedia.org/wiki/Stagflation
* https://paulkrugman.substack.com/p/its-beginning-to-smell-a-... (check out the music video link at the end)
The current policies seem almost designed for that. Choke real growth with unpredictable tariffs and print lots of money.
It's been clear for years that the actual the majority of people are experiencing is well above the reported numbers.
Whatever the problem is, it's everything but unicorn funding. We can be sure of that on this forum.
Perhaps I'm misunderstanding the comments, but I find the comments here to be fairly disconnected from the rah rah VC world. Plenty of criticism about those systems around here, and perhaps more pointed and accurate than other places.
The domain name here isn't really driving the comments or content that I can tell.
When I was about 20 I started listening to Sean Hannity, and while I no longer agree with anything he says, I do appreciate the glimpse I got into his way of thinking. I mention this because...
I can't tell you how many times I've heard the idea that success in free market capitalism comes from offering goods and services to customers with the right balance between quality and price, and that good quality and price is assured because of competition in the market.
But now I see that the true path to success is to first gain favor from those who already have wealth and power, and then use their wealth and power to reduce or eliminate competition.
If you can see why the former narrative is inherently appealing to the rich, you should also be able to see why
> But now I see that the true path to success is to first gain favor from those who already have wealth and power, and then use their wealth and power to reduce or eliminate competition.
is attractive to the disaffected (as Nietzsche wrote on). narratives that say the whole thing is rigged are going to be appealing because they offer a non-intrinsic explanation for underperformance.
I see what you mean, but I believe that's more so directed towards the massive scale businesses. Companies that get measured in billions and not millions.
At a smaller scale (the majority of business, but maybe not the majority of revenue), that existing wealth and power is often much smaller and eliminating competition is much less feasible.
Like a local coffee shop, for example. Or a small industry specific software company.
Maybe they matter less in the grand scheme, but they're still a big part of things.
But I do agree with the idea that VC subsidized services to then grip the market and wring them later seem counter productive to a "free market".
I can think of a lot of people who have got on by gaining favour of those who have wealth and power, the Altmans, Musks etc have done some of that. I'm not sure about the wealth and power to eliminate competition though. Tesla, OpenAI etc have competition but mostly out execute it. Or did in the Tesla case.
The government is the one entity with a monopoly on violence. Concerns of regulatory capture, pork, and rent-seeking stem from this one fact.
Yes, you can certainly get wealthy by being corrupt in legal ways.
2.8% doesn’t seem that crazy to me? Don’t we target like 2-2.5?
The Fed targets 2% at PCE (consumer) whereas this is PPI (wholesale/producer). Not always 1 to 1 but in general you expect PPI to be a leading indicator for what's coming for PCE. Part of the attention is for sure people being vigilant to see the earliest effects of the tariffs and... here they are pretty unambiguously.
The more significant concern it seems to me is the rate of increase. Nearly a full percentage point in a month seems like a lot, but I'm no expert.
The question is, is that full percentage point in a month a trend, or is it a fluctuation? You can't tell much by one month in isolation, or even one month compared to the previous month.
It's concerning. It's hard to say much more than that yet.
I think you mostly nailed it. I suspected this was going to happen to with this recent filing season having most companies recognize tariffs and already state they are mostly getting passed on.
That is the rise from one year ago in the "less-volatile PPI metric that excludes food, energy and trade services". This month was a 0.6% rise. So some people might think about how more months of 0.6% rise would cause the yearly one to increase gradually, up to 7.2% eventually if there are 12x 0.6% months. That would be pretty high.
And then headline figure PPI was even higher at 0.9% for the month, 3.3% year.
0.6% of monthly inflation wouldn't be 7.2% you can't multiply like that.
So the real number would be 1.006^12=7.44%
And over 7% inflation is a bit more than 'pretty high' that's getting really scary if there's no clear outside reason for it
Which of course there is a clear outside reason for it.
Of course...dang it!
0.9% monthly annualizes to 11.3%
A 0.9% month-over-month increase is significant.
In November 2024, inflation was at 2.7%. Inflation for the whole year was 2.9%.
The public was so incensed that they threw out the government.
We all know Trump voters didn't give two shits about the price of eggs. That's not why they vote for him.
I'm less concerned with Trump voters (more or less the same people keep voting for him), and more with why ~10 million people didn't vote for his opponent (who had voted for her predecessor).
I don't believe it had anything to do with the price of eggs, either. That was presented as the primary reason, and it's so clearly wrong that it makes me suspicious.
https://assets.aseannow.com/forum/uploads/monthly_2024_11/Vo...
That graph is wrong. According to Wiki [0], Harris got 75m votes in 2024, Trump 77m.
[0] - https://en.wikipedia.org/wiki/United_States_presidential_ele...
If eggs were about inflation, why did the price drop back down?
Eggs are still up 200% per dozen near me.
Egg production is seasonal, there's way more supply during summer.
They are voting for chaos, because the establishment in the Republican and Democratic parties simply do not care about the everyday people.
As an environmentalist, I essentially have no party, and so while I hate Donald Trump, I understand exactly why he was voted into office.
One is selling off our national parks/forests, removing protections for marine sanctuaries, but you essentially have no party?
The Democrats have functionally done nothing about global warming in the last thirty years except released even more CO2 in hot air paying lip service
Yes, one is worse than the other. But in terms of real environmental policy, they are functionally the same.
It’s the change/rise that is high, not the value itself.
> The producer price index increased 0.9% from a month earlier, the largest advance since consumer inflation peaked in June 2022, according to a Bureau of Labor Statistics report out Thursday
2% "over the long run":
* https://www.federalreserve.gov/economy-at-a-glance-inflation...
* https://www.richmondfed.org/publications/research/econ_focus...
That is 40% over the target.
According to the Federal Reserve, for many years, inflation in the United States has run below the 2 percent goal. higher prices for essential items, such as food, gasoline, and shelter, add to the burdens faced by many families, especially those struggling with lost jobs and incomes. At the same time, inflation that is too low can weaken the economy. When inflation runs well below its desired level, households and businesses will come to expect this over time, pushing expectations for inflation in the future below the Federal Reserve’s longer-run inflation goal. This can pull actual inflation even lower, resulting in a cycle of ever-lower inflation and inflation expectations.
The fed argues that, If inflation expectations fall, interest rates would decline too. In turn, there would be less room to cut interest rates to boost employment during an economic downturn.
this economics explanation feels like gaslighting every time i hear the fed mention it. the reserve literally pushed negative rates and quantitative easing for so long that people came to expect prosperity as a feature of the economic framework of the nation, and now that we have rampant inflation that cannot be controlled by normal means (prime rate) the fed somehow wants us all to understand its our fault for enjoying affordable burger meat.
Gasoline prices are not higher. Above $4 was commonplace across the country 20 years ago. Now that only exists in high tax states and large metros. Gas is cheap in the US.
20 years ago (ie mid 2000s) was a unique time of extremely high gas prices with 2008 being the all time high both adjusted for inflation and absolute. Adjusted for inflation, oil is currently higher than any point between 1990 and 2004, and in absolute terms since 2022 its been higher than any point outside of the 2006-2014 period.
It’s really not https://fred.stlouisfed.org/series/APU000074714
This is only the nominal price, I can’t find the inflation adjusted graph, but I assume it’s clear that if the nominal price now is the same as several other periods over 10 years ago, then the gas today is cheaper over inflation adjusted dollar
it really is
https://www.macrotrends.net/1369/crude-oil-price-history-cha...
Note 10 years ago is 2015. The period over 10 years ago is the period of extremely high prices under discussion(mid 2000s to 2014)
It's our fault for voting in people that can't manage a budget.
Eh don’t fully blame the fed. Ultimately it’s a constellation of external forces that drives the fed to lower the rates for so long.
Part of those external forces involves consumers in a major way.
The target is 2%, not 2-2.5.
Being off by 40% is cause for alarm in almost any circumstance.
that 0.8% difference is probably in the area of 100 billion dollars — nearly $300 per American in a single month!
I mean no offense, but it's a bit surprising that someone on HN would not understand what's wrong with this statement. It takes a very basic understanding of math to know why the YoY says very little about rapidly changing inflation metrics. MoM is what you need to pay attention to.
Frankly, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks. And my experience usually matched it.
There's plenty of space to hide reality when building a price index.
Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
We can also do the same with housing: Capture prices as the average of a basket of cities. In reality, some cities will have absurd price increases while others are in decadence. The average prices increase of a disputed locality like NYC metro area will probably be masked by the fact that houses in BeltRustAssEnd, MI are becoming increasingly cheap. But, for the real person, what the fuck matters if BeltRustAssEnd houses are cheap as bananas? Who can get a job there?
And of course, a single number cannot capture the subtleties of reality like the fact that while it is great that 80" TVs are now so cheap that they can be bought by the commoner, this fact means fucking nothing if having a roof over your head in a place where you don't need to spend most of your live commuting is becoming increasingly too expensive for a lot of the same folks. Too bad the commoner is just a paycheck away from being in the streets as he cannot pay for a house! He now has a TV that not even Queen Elisabeth could have just a few years ago!
Yeah. Most people should build their own inflation index. It's not hard whence you realize the biggest expenditures are usually 1) mortgage/rent, and 2) food. I wouldn't be surprised that given the rate hiking in recent years going along with higher food price, some people see dramatic "inflation".
Ofc one can always say that No this is not the academic way to define inflation, but who cares?
In 2022 I scraped the current prices for things I bought on amazon the year before, and got a 7% increase.
Unfortunately amazon stopped providing order reports recently...
``` $ inflation -y 2021 -f items.csv 86 successful items, 30 failed items 2256.76 total 2021 2427.62 total now +170.86 (+7%) difference ```
That's a pretty neat idea. Do the price aggregation sites (eg. camelcamecamel) do anything like that?
Providing financial reports could be a great sideline for them. Are you listening, Camel?!
> Frankly, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks.
The public in general can be really bad at perceiving the truth. I might take note of people's feelings to go and recheck something but I would not trust peoples feelings with stuff like this to make any sort of conclusion.
Verifiable metrics* are the only way to get any sort of objective handle on this.
* Edit: I replied below that I should have said verifiable metrics and context with discussion. Verifiable metrics are necessary but not sufficient.
Let's unpack this. The real, objective reality of people living their lives is not the Truth.
But, instead a single index based on what is basically a bunch of arbitrary choices of a bunch of bureaucrats, subject to all kind of agendas and political/economical/social pressure, and based on an simulacrum of science that stands upon a bunch of questionable premises and unfalseable propositions is Truth.
The pythagorean cult of number has been a disgrace for the human race.
> The real, objective reality of people living their lives is not the Truth.
People usually aren't objective though even when looking around at their own lives. When evaluating inflation in groceries they'll point to a few things that have had some pretty massive spikes (beef, eggs, soda) and ignore a lot of the other things in their shopping cart that hasn't had anywhere near as much inflation (grains, pastas, lunchmeats, pork, lots of vegetables, potatoes, lots of fresh fruit, etc).
It can be pretty difficult for most people to actually be objective when looking at the world. Tons of people let emotions dominate what they see.
I'm not arguing the BLS price index numbers are entirely perfect measures of reality, but the number of times I've had people tell me things like eating out is 10x more expensive than it was a few years ago is quite high. Is that an objective reality?
Yes, economic metrics can be reductive. E.g. believing GDP is a measure of well being is a common reductive mistake. However, the public are often wildly incorrect. I should have been more precise and said that in order to have a productive analysis and make good policy you need objective metrics and context with discussion.
Let's see if this fits.
>The public in general can be really bad at perceiving the truth. I might take note of people's feelings to go and recheck something but I would not trust peoples feelings with stuff like this to make any sort of conclusion.
Good advice for non-inflationary times as well.
But either way sometimes I'm only interested in what effect it has on the general public more than anything else.
I have no metrics other than real-time experience against what has been published over the last 55 years and how it correlates anecdotally, so please don't take what I say as serious fortune-telling, when it's nothing but ancient history ;)
Five years ago even seems like it's gone and almost forgotten.
This week at Walmart, where they have better data if not better economists than thou, they rolled back some sensitive stuff I've been watching for about 10 years or more. First of all there had been great hesitation for over a year to raise anything more than they had in earlier years (it was already up a lot), but you could tell there was internal pressure building as other retailers could hesitate no more. They've got to be able to have a decent markup in the face of constantly rising costs, or why even bother. So earlier this year the cumulative price increases over 5 years finally reached a full 50%. I can only imagine there are some Walmart leaders who never wanted it to happen just because they are patriotic Americans and it's not right, others who hesitated as much as they could because of "optics". That's a fairly sobering line to cross when prices had remained absolutely stable for many years since launch, as designed. But 50 full percent it did reach, and that was the stuff they were trying to hold back most on.
Not like the 300% or more gradual increase over 10 years on many non-bargain items more often sharing eye-level shelf space. These are not a growing category because Walmart is moving upscale, no it's because so many people having upscale habits can't afford upscale prices any more, when not too long ago they could easily.
That 50% increase over 5 years on selected bargain program items? Just rolled back to when it equaled only a 33% increase, real quick this week. This is back in line with the prices before the latest rise. Probably hoping it works since people still seemed to be buying OK at those prices before, not much differently than last year, or they wouldn't have dared raise them in 2025 at all.
No rollbacks on the +300% items at this time though.
I don't want to consider tariff-sensitive items either, or those competitive with Amazon, that would be a whole different equation. But this particular "Walmart Rollback" is not like the rest, and I've seen them all since they built their first non-rural store to begin with in my city decades ago.
This time it's not the kind of over-competitive tactic they were famous for using, when they were building bigger stores than ever and "monopolized" that terminology for marketing. Now it's a quiet rollback in response to fewer shoppers, spending less on bargain items where there is no remaining competition. After holding off on price rises for so long, nominally catching up with inflation was not nearly intended to determine the point at which consumers couldn't take it any more, but you've got to face it when things stop flying off the shelf. If you weren't paying attention they don't want everybody to remember that the prices were that much higher a few weeks ago, it was embarrassing. Yes, they needed the money, but it's not going to do any good if there's not enough people able to purchase.
Also this week, a local pawn shop temporarily not loaning money or purchasing almost any items except for gold, because "people just aren't buying or redeeming other merchandise any more".
Just so happens that 10% per year over 5 years adds up to about 50%. Walmart wouldn't have jacked prices that high if it wasn't undeniably needed finally based on all the data they have.
I've noticed this for a while, I remember what it felt like when Nixon was getting ready for his recession, and he was absolutely as non-crooked as he could get. And I well remember how it felt when it reached a conservatively government-reported 10% per year. At the beginning I was actually in what they call "fintech" today, first modem in town, woo hoo. People now look back on it like it was a relatively difficult blip in time, but I assure you it was a slow-motion dumpster fire that outlasted Reagan.
Sooner or later, people can't afford anything any more anyway, consumers crater and interest rates skyrocket along with inflation since there's no carrot remaining and it's going to take a big stick to beat whatever's left out of a dead horse. Then off to the glue factory for the spent carcasses after that. Economic statistics can only apply to the cash flow that continues to occur, resulting in 100% survivor bias. Only those who have extremely good fortune and are relatively unscathed can judge when the devastation "ends", and "recovery" begins. That's the only financial signal that you've got, consumers would never notice on their own since no recovery ever has a realistic enough "upturn" for prices to actually come down or the lost purchasing power of the dollar to recover. At all.
When prices come down like they did at Walmart this week, anybody think that's a sign of recovery? After rising uncontrollably more so earlier this year than last, in order to catch up with the ongoing inflation that they previously hoped was slowing? When an increasing rate is so undeniable now that some non-positive indications eventually escape from BLS when it's already long structured to prevent downturns in sentiment? Which has really turned out to work when it papered over minor financial downturns, and when a little one snuck through they called it a "great" recession when it was a non-event by comparison to the real thing, and people believed it. Meanwhile it's no co-incidence that BLS looks to be slated for extreme cuts to transparency from here.
It's a familiar sign that financial malfeasance of Nixonian proportions is already underway. Lickety-split.
No. It's more like the elites don't GaF about the ordinary people, and then there is no trust between the two.
Fortunately (or unfortunately) the world is not nearly as nefarious or conspiratorial as people with shorter sticks tend to make it out to be.
No, it is not. They simple don't care to cover up anymore so we don't need to invent tin hats anymore.
> Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
I don't know how this works in other countries, but in the US the weights do not change month to month like this. If consumers keep making this choice over a period of years the index will eventually get reweighted, but reweighting only happens once every few years.
(Of course, if you were an official put in charge specifically to cook the books you could just reweight on a monthly basis like you describe, which is something that might well happen now...)
This is the the Producers Price Index. It tracks wholesale prices which are far less affected by locality. It also doesn't measure housing prices at all.
The PPI is not a measure of consumer inflation. It's a leading indicator for it.
sure, but are there any alternatives? To make data backed decisions you need to measure something, even if not perfect it gives you some sort of relative direction for the things measured. Not perfect but better than no data at all
And still this administration is pushing for rate cuts.
This is what happens when the same item now has a %20 tariff on it.
Then they use an alternative which will raise the price less than 20%.
And this is after they massaged the numbers, to avoid getting fired?
Now we only get to hear if inflation is "Aladeen" or "Aladeen"
Employment aladeen, inflation aladeen. Chances of stagflation looking very aladeen indeed.
It makes our macro forecasting a bit less dimensional...
:(…:)…:(
I think it's more like "No Sir we won't be able to lower the rate right now, look at this number" moment.
Inflation too high?
Straight to jail.
Inflation to low?
Believe it or not, straight to jail.
More like the Epstein Massage
I don't think any existing numbers were officially changed, just that the head of BLS was fired.
Yes, for THAT head of the BLS. It is super clear to the next head of the BLS that they deliver the number the president likes or they will be fired.
So, just like in Venezuela, that number will be delivered.
Picturing a future political cartoon of hobo-looking guys sitting around a winter fire burning in an old oil drum — one guy is holding up a newspaper (wut?) and saying to the rest, "Hey guys, it's fine because it says here that the employment numbers reported are the best ever!"
You mean like this one?
http://emilysquotes.com/wp-content/uploads/2014/09/EmilysQuo...
Timeless, ha ha.
wanna bet? i will take a bet that inflation will not return to normal (ie. sub 2.1) in the next report
Sure it will. BLS guy will publish that number regardless.
That said, I also think there is a good chance of that because we will be in a recession by then from the tariffs.
Indeed, a gentleman's bet.
They fired the head of the BLS because they didn't like the numbers. Explicitly. You kinda have to conclude they're going to cook the books. Like they're doing everywhere else.
Apparently, they've decided to go with "just not report the numbers."
(Source: https://www.foxbusiness.com/politics/trumps-bls-pick-could-p...).
I still like the quote, "Reality has a well-known liberal bias."
> I still like the quote, "Reality has a well-known liberal bias."
— https://en.wikipedia.org/wiki/Stephen_Colbert_at_the_2006_Wh...
That interview was unfortunately timed (taped before nomination, broadcast afterward). My takeaway was that they are not trying "just not report the numbers" _yet_.
Do you think his position has changed since that interview?
In the end, it won't matter.
Only economists, policy makers, investors and people blabbing on the internet do care about stats.
Ordinary people just look at price tags; that's all they need.
The challenge with that idea is that investors and business people depend on these numbers being solid for investment decisions like "building a new factory" or "investing in GPUs."
Without solid numbers I wouldn't be surprised to see a shift to "assuming the worst case" and much more conservative and lower investment.
I fall into all four categories, which identity am I allowed to require that we not kill our economy with inflation?
It's nice to have agreed-upon, citable facts though, even if only so that voters know who's full of crap during a debate. When the next R candidate says that Trump handled inflation beautifully, it's important to be able to point to an authoritative source that shows that that claim is BS.
The majority of R voters don't care about authoritative sources. In fact, authority when it comes to information is a negative in their view, based on all available evidence (ie elections over the past few decades). We're well past the point that debates matter.
> The majority of R voters don't care about authoritative sources.
Hence the joke: https://m.youtube.com/watch?v=2X93u3anTco&t=98s
Debates may not matter to R voters. There are enough independent voters to matter, though.
R voters say you can't trust mainstream media and then cheer when this administration fills it's ranks with mainstream media people from FOX, including the head of defense, top D.C. Prosecutors, etc.
Yes, it *would be* nice to have well-informed voters and intelligent and well-argued discussions.
But we'll never live in a place like that. We're stuck in the Facebook/Twitter/WhatsApp world.
Democracy is a circus managed by the monkey cage.
> Yes, it would be nice to have well-informed voters and intelligent and well-argued discussions.
"Feelings don't care about (your) facts." — not Ben Shapiro, https://www.amazon.com/Facts-Dont-Care-about-Feelings/dp/194...
"You don’t bring facts to a feelings fight." — Cole Christie, https://www.in8create.com/blog/herding-squirrels-ep-03-w-col...
Tarrif's will do that...
In Norway our food prices has gone up by more than 4 in one month while we are destroying any capacity for local production while we have protectionism that would make Trump blush.
How is that not newsworthy, but this is?
It's probably newsworthy, but this is an American website and Norway isn't exactly on the same level as the US. I wouldn't expect the same level of attention, at least internationally.
Norway has a population half that of New York City.
In the USA, food prices are non-core inflation and most volatile indeed.
Food prices go up because of random weather events (or locus or disease). USA beef prices are skyrocketing because of some new disease for example.
Anyone who says that a monthly food price change is an underlying indicator of overall inflation is simply lying to you.
Four what, cats, pesos or quesos?
america/trump obsession
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It still baffles me that he has convinced so many of his followers that he's going to lower grocery prices by raising prices. It almost doesn't even make grammatical sense, let alone any practical sense.
Before someone decides to try and explaining to me that tariffs will bring back work to the US and help our economy, I just need to say that is orthogonal to the point of inflation. It's possible that the tariffs will be a net good. I don't think they will but at least that's something that's on the table, but they will absolutely not lead to lower prices. If it were cheaper to manufacture goods in the US then we'd already be manufacturing goods in the US.
Tariffs need to be higher to bring back manufacturing back to the US.
Most companies are looking for countries other than China with no tariffs and bringing it back to US is not even a consideration.
Plus, by the time you can start manufacturing in the US it would take at least 1-3 years to get a factory ready. Then, you have a new president and these might go away. Too much risk to make rash decisions on moving manufacturing.
And to build new factories you need things like steele, etc. Lots of which now have... high tariffs on them.
The policy is not intended to bring back manufacturing, or it would be tuned to enable/encourage the inputs needed for bringing back manufacturing.
But tariffs sure have encourage a lot of people to meet with the president and make 'special' deals with him to get themselves/their interests exemptions.
You're forgetting that a lot of tariffs didn't kick in until August 1, and aren't included in this. So it's likely that we'll be seeing inflation far higher in the future. I'm guessing we're going to over 20% YoY, and even that may be a lowball.
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Are you suggesting that this is the fault of the people who said tariff's are a bad idea?
>weren't we suppose to be staring at empty shelves, house arrest, fire and brimstone / dogs and cats living together by now?
What are you even talking about?
Everything everywhere since late 2015 or so.
During Trump's first term there were still adults in the room, mostly keeping him from doing anything completely crazy. This time they have all been replaced by toadies and yes men. It's a completely different time.
> 100% due to Trump's illegal tariffs
This is false on its face. Inflation has been a problem for years.
Inflation was on its way down in 2024. It has now reversed course and going back up again. This is not a random occurrence.
So nothing to do with interest rates Jerome Powell or any decisions at the fed? Nothing to do with any other spending?
Trump has been president for fewer than 9 months.
Tariffs went into effect ~4 months ago. 2 months after that, inflation started to pick up.
Interest rates have remained unchanged since January 2025.
100% the cause
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> I dont think it’s the tariffs. I really think the entire category of merchants looked at each other and figured it was fine to raise prices.
Those statements aren't contradictory. Pricing in non-commodity goods is always a human phenomenon, driven ultimately by the idea that a business can 'get away with it' without losing too many customers to competitors.
Tariffs, on the other hand, provide a good reason/excuse to raise prices. Affected firms see their cost structures blown up, so they have to raise prices at least somewhat. Unaffected firms see that their competitors are raising / must raise prices, so they know that they can raise their own prices in the now less-competitive market. That's how and why tariffs work: they give domestic firms protection to have profits in excess of what they would have under a free trade counterfactual.
Any argument that tariffs don't raise prices is a very long-term one, relying on the idea that it will be easy to open new firms and expand domestic production to ultimately return to a competitive market. This has nearly no effect on short-term pricing, and it's why the least-damaging changes to tariff policies are long-run and well-telegraphed plans, slowly implemented.
That's what tariffs do though. If you have a product that competes with another that now costs more due to tariffs, you're now free to raise your prices as well, in order to maximize profit. Your product may not have a tariff, but it does have greedy shareholders that see that they can now raise their earnings because competitors suddenly aren't so competitive anymore.
Try going on a shareholder earnings call. They're free. It's company executives trying to impress shareholders. It's the only place I've ever heard people brag about how much they've raised their prices.
We’re talking about a lot of domestic goods here. Why’s the BLT more expensive? It’s literally just bacon, lettuce and tomato.
Scams are scams, man. This is not economics, it’s human nature. Tariffs did not make the price of your BLT go up, it’s greed.
>Tariffs did not make the price of your BLT go up, it’s greed.
What do you want to do about it, Stalin? Use the power of the state to legislate away human greed? Imprison these greedy people? Impose price controls (which have a long, storied history of not working and only leading to shortages and queues)?
We build economic policy around human nature, not otherwise. Humans will always seek to maximize profit at all costs. If you lock out foreign suppliers from competing using tariffs, local suppliers will reason that they can charge more and will rightly do so. And tariffs in one area end up affecting so many other areas in unforeseen ways. That's how tariffs on chemical fertilizer might end up affecting the price of something as mundane as bacon, lettuce, and tomato.
That's why free markets are important. They give buyers options, and sellers then have to lower their prices reasonably to be chosen/picked from that sea of options.
If you want lower prices, remove tariffs and trade restrictions.
> What do you want to do about it, Stalin? Use the power of the state to legislate away human greed? Imprison these greedy people? Impose price controls
Fair enough
But in the same spirit, I will just murder you. What are you gonna do? Police human nature?
What are the odds that you lose your life in the process?
A lot of domestic goods can be affected by the tariff war US is waging. We are a part of a global economy. Additionally, ICE raids are adding to the issue.
Even for products made in the US if other things increase the cost of running a business those costs will get passed on to the buyer. It takes LABOR to get bacon, lettuce and tomato....have you heard about ICE raids and crops getting wasted because people are not showing up to work? That will affect prices as less produce = higher prices as demand increases.
If equipment gets more expensive, then cost of produce gets more expensive. I work for a manufacturing company...under Trump our cost has been spiking due to insane tariffs....those costs are passed to people who make equipment and to farmers, then to YOU.
Business is always "greedy", but it's true that it took some external events to make them realize they could get away with higher prices because consumers had gotten lazy about comparison shopping and alternatives. Good on you for boycotting increases by eating simply.
Because business is not a single monolith, and because it is greedy, it kills the naive idea that "businesses raise prices because they can".
Any gouging price increase is a gaping hole for a competitor (businesses are greedy and therefore will take money from other businesses) to come in and steal business. This is something that is obvious to people who have been on the business side and mostly opaque to people who have only ever been on the consumer side.
I'll hold my breath for the fast food chain that lowers its prices to better compete with the chains that raised theirs.
We have plenty of examples, with documentation and receipts, of businesses participating in price fixing, collusion, and other cooperative behaviors that result in higher prices for consumers and reduced competition between businesses.
You are naively assuming that all businesses express greed in the same way. Some of them realize they can make quite a lot of money with a lot less work by working together to raise prices. Not all markets are easy for a newcomer to break into, competition is far from guaranteed if the established players are cooperating.
>We have plenty of examples
The issue isn't that we have plenty of examples (which is actually a handful, people always go to the same 2 or 3 cases, but I digress), it's that we have orders of magnitude more counter-examples that are ignored.
It's important to not build your world view on headlines, because headlines are headlines because they are outliers. It's not news when companies competitively adjust prices, it happens thousands of times a day all over the economy. If there was an "undercut on price" button in business meetings, you wouldn't even be able to read the text on it it would be so worn out.
There's more than 2 or 3 here for you to review: https://en.wikipedia.org/wiki/List_of_price_fixing_cases
Your worldview is incredibly naive if it doesn't include substantial collusion and cooperation among the capital class.
Fast food chains are giant corporations. Where you would see the difference is in the mom and pop shop, who can now undercut the big chain and probably has better quality food.
Mom & Pop shops aren't present at most highway exits like the big chains, and would need to become unbelievably, impossibly successful locally to generate enough capital to expand widely. They can't effectively compete with major chains. It's not a meaningful expression of the other poster's point.
It’s the tariffs. You’re assuming that everyone will raise the price and have the same goals. Some businesses will see it as an opportunity to undercut and gain market share.
After all, total profit = sales margin * sales volume. You can increase your profit by increasing your volume because you kept your prices unchanged while your competitors decided to increase prices.
Tariffs don't affect products that are produced locally.
Tariffs affect local product prices in a lot of ways.
1) They reduce competitive pressure so local producers can raise prices without losing market share (that is the actual point)
2) They increase local demand for production capacity and labor in general, driving up costs even in sectors that are completely unaffected by the tariffs themselves
McDonald's was never sourcing chicken for their chicken nuggets from outside the country.
Tariffs raise the price in tangential ways. Tariffs on Chinese steel means US chicken wire producers switch to more expensive US sources. Increased demand for US sources make it even more expensive. Farmers buy the more expensive chicken wire, passing the added expense to McDonalds, which passes it on to you.
Yeah, but that does not really matter; everyone else that imported meat (or feed ) now competes for McDonalds suppliers, which means higher prices.
You can also expect to pay more for labor itself, because every bit of industry that you bring back (or scale up, at least) with tariffs competes with the essentially fixed labor pool, and there was not a lot of slack (unemployment) to start with.
This is true if and only if those products have no imported inputs, and if tariffs aren't causing general inflation which is forcing up wages of the people making them via cost-of-living increases.
Ultimately, unless you're an autarky (in which case tariffs are in any case irrelevant), high tariffs should be expected to lead to broad price increases, even for goods which are not directly imported.
Not even remotely true.
Wrong.
it works as long as all businesses are working together to fix prices, all it takes is one to undercut the other and reap the reward then it's every person/business for itself. I don't really care because, like you, my thought is go ahead and raise prices all you want I just won't be buying.
Goods are priced by what sellers can get away with, and when you have tariffs on your competitors, you can get away with more.
Yes, stop going to McDonalds altogether and cook at home. For $6 I can get a pack of 4 pack of artisanal and locally made sausages and dip them in mustard for literally the same value, far more food, and 1000x better taste. Stop supporting these poisonous companies.
You are right. An entire category of merchants (made in USA) looked at others (importers) who now need to pay increase prices due an import tax and figured it was fine to raise prices. Those greedy businesses who figured that you can raise prices just below the import tariffs and make consumers pay. Oh wait, what were you saying about tariffs?
This was happening for years before the tariffs.
Just because something is happening for years doesn't mean there cannot be extra incentive to make it worse today. But you just handwaved tariffs away. and did the inflation go up by 0.9% in a month in those years?
Do you not want to appropriate accountability to anyone that isn’t sitting around in a top hat and monocle?
WE are shitty greedy people. Shitty greedy people will use tariffs and become shittier and greedier. So yes, you are right, tariffs will make it worse.
This society lacks civil sense, moral sense, ethical sense, communal sense, common sense, from top hat to bottom bare feet.
This only gets fixed together.
Honestly? Thats faaaar too cheap for an animal product.
And since this is super low qualy, there should be an additional markup of 30-50%
You don't think it is the one thing being wielded as a personal enrichment device by a giant man child that cheats at golf is the cause? Well okay good luck with that.
No. The price creep has been happening for years even under Biden. As someone mentioned, tariffs were just an excuse to accelerate it. The things in your grocery store are domestic goods.
We can look for mythical technical explanations as to what’s happening, but all things used to explain anything in our society is just to describe the state of your fellow man. Your fellow man is greedy. There.
Why get mad about people selling things for more than you will pay? Just don't buy it and move on.
Because it’s getting bad. I’ve dealt with overpriced pizza where they try to save money on the sauce and cheese. They are beginning to nickel and dime customers the way banks and the tech industry engineer margins and fees.
I called some of these places and had to tell them to stop scamming customers. Fuck that, I’m buying a pizza oven.
I think it’s a combination of a number of things:
I’m always shocked at how many economics experts there are on a tech forum!
This one isn’t surprising at all though. It’s a technical subject with everyday relevance and lots of material to learn about it.
Unless you’re implying special credentials should be required to comment.
Yeah this stuff is not expert-only level economics, this is pretty basic.
Is anti-intellectualism really the look you're going for?
That’s funny, I’m looking for intellectual honesty. And honestly admitting no one here really has any fucking clue about global trade, economic effects, and policy would be a good start.
Nah.. “I’m an intellectual, I read tech blogs and listen to NPR… I’ve never made anything outside of a computer program, but listen to my opinion on tariffs that happens to align with all my media sources!”
Over the years I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher. Can anyone here verify this?
Our main problems involve under the table unreported to the public military expenditures. If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900. Those costs are a bleeding hemorage to the middle class tax payer who aren’t getting a cut of military profiteering because they don’t own ‘defense’ stocks.
Consumer debt is almost as much of a worry as government debt.
Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
> Over the years I have read a few articles or blogs
Without linking the blogs or articles it’s hard to say much.
Inflation is a topic that attracts a lot of quackery. There are a lot of blogs and websites that go viral from time to time with claims that the “true” inflation number is dramatically higher.
There is a quick reality check you should run whenever you encounter these claims: Take the claimed inflation number over a period of time and calculate the net multiple. Then run a reality check on something like a $500,000 house or a $5 hamburger.
There’s one prolific website and author who claims the “true” inflation rate is some number like 11% going back decades. If you do the math, that means something purchased 50 years ago in 1975 would cost 185 times less. A $1,000,000 home today would have been $5,400 in 1975 and a $5 hamburger today would have been less than $0.03. Obviously these numbers don’t work, so you can discard the author’s claim.
Actual inflation numbers over long periods are very sensitive to small changes due to compounding. Even over a 10 year period. When you see someone claiming dramatically different results, run a quick math check.
Also be careful for the cherry pickers: They’ll identify one or two outlier year-over-year jumps (eggs during COVID, home prices during a housing rush, insurance prices in a city after a fire) and try to use those as their basis.
At the risk of defending quackery, most claims about inflation being inaccurate involve the changes made to CPI estimations in 1996. I'll go as far as to say I've never heard any claim that is inaccurate going back to the 1970s.
Still, if the "real" inflation rate was ~10% starting in 1996 then a $5 burger today supposedly cost ~$0.30 in 1996.
A lot of soda vending machines will sell a 20oz bottle of soda for ~$2.50. Were soda vending machines selling bottles of soda for $0.15 back then? No.
I distinctly remember McDonald's regular hamburgers costing around $0.30-0.40 in the mid '90s which costs around $4 now.
McDonald's regular hamburgers don't cost anywhere near $4 for most people. A hamburger at the McDonald's down the street from me costs $1.59. A cheeseburger costs $1.79. A double cheeseburger costs $2.79. A Quarter Pounder w/Cheese meal today is ~$8 today, in the 90s it was ~$3.
I remember you could get two cheeseburgers for a dollar in the late 90s, so ~$0.50. The inflation rate for something to go from $0.50 to $1.79 that's a 4.5% inflation rate, still quite a way off from people's arguments of 10%. And for the QPC meal comparison, that's ~3.3%. Higher than 2% for sure, but its also a single restaurant comparison on a single item here where its highest cost component (beef patty) has experienced overall higher rates of inflation compared to most other things. A restaurant that many people feel has gone up in price more than expectations of the rest of prices.
Link for the $3 90's price for a QPC: https://wealthgang.com/mcdonalds-prices-throughout-the-years...
Guys and Dolls has 15 cent hot dogs advertised in one of the shots.
Gas station hot dogs are about $1.50 now.
Which is less than I’d have expected it to be, to be honest.
For a good to go from ~$0.15 to ~$1.50 from 1930 to 2025, the annual inflation rate would be...
...about 2.45% per year. And I'd probably take a 2025 hotdog over a 1930 hotdog, there's been a lot of food safety regulations passed since.
Good response. I might suggest not using housing because so many people treat it like an investment, which means its value goes up faster than inflation (if it's a good investment). But otherwise I totally agree with you.
> its value goes up
Its price goes up. "Price is what you pay, value is what you get"; houses do not increase in value over time.
The defence budget is America's job program. Very little of the money that is defense spending ends up in defense shareholder pockets. The overwhemling vast majority goes to propping up America's (now) anemic industrial base. Remember that virtually all defense dollars are constrained to only be spent on American made things and services. And most of money sent to the big contractors goes to the gazillion sub-contractors they use.
This is why the defense budget is never cut. By anyone red or blue. It's a funnel of money that can be pointed at any location in the US and give a bunch of decent full benefits jobs.
The US defense budget, as a percentage of GDP, has been cut a huge amount! https://data.worldbank.org/indicator/ms.mil.xpnd.gd.zs?locat...
If you don't think it makes sense to scale it by GDP (though I do), then in real terms it has gone through cycles since 1965, with definite periods of decrease, even though the overall trend is upward: https://www.johnstonsarchive.net/policy/edgraph.html
I believe less than a quarter of the defense budget is for salaries and compensations.
All spending everywhere is essentially “salaries and compensation”. It’s not like you get to the end of the supply chain and suddenly are paying God. Money always goes to people.
I don't agree. If I dig a hole in my yard and find a huge chunk of gold, when I sell it very little of what I charge will be for my labor.
Also, even if you're right, the "salaries and compensation" of anyone outside the U.S. are effectively NOT that, since the thing in question is whether defense spending is mostly a jobs program.
> when I sell it very little of what I charge will be for my labor.
That's debatable. Without the labor input the product doesn't exist as far as the market knows. However, if you want to discount the labor portion, which is an equally valid take, it remains that what was said was “salaries and compensation”. Any compensation you receive for giving up the gold in your possession was already recognized. As said earlier, the exchanged value doesn't go to God, it goes to people.
> since the thing in question is whether defense spending is mostly a jobs program.
You can certainly play a game of semantics here, but generally "job" in this type of context refers to any kind of economic role, not necessarily direct labor. "It is my job to provide gold to the world" doesn't imply that you are the one doing the actual extraction. The significance of "job programs" is in offering opportunity to derive an income, not to give opportunity to strain muscles.
>when I sell it very little of what I charge will be for my labor.
No, almost all of it would cover your labor.
What you are describing is winning the lottery, which isn't really useful since it is a rounding error of possible scenarios. A "Having a career is meaningless because you can just win the lotto instead" kind of scenario.
In reality you would be digging for ages in your yard to find a nugget of gold. If you went to a place with gold to dig, you would be a gold miner, and no, it's not easy money, go ask them.
Profit would fall into an entirely different category then "salaries and compensation"
Certainly. So would materials expenses and theft and insurance and so forth.
But the confusion is that somehow, money not spent on “salaries and compensation” doesn’t go to people. All of it goes to people.
Defense spending isn’t buying “defense”, it’s buying time and effort for people to focus on and produce defense related things. This is the root of the original post that defense spending is a jobs program.
But when you get to the end of the supply chain the US gov has very little control of who is getting that money.
It’s not an obvious stimulus for US citizens, and in fact taking resources that would benefit other US ventures.
Well, really at rock bottom all payments go into land rent.
Sounds interesting but I'm having a hard time wrapping my mind around that. Would you care to elaborate?
That is only for people in the DoD.
Almost nothing that the DoD uses is made by the DoD. It's pretty much all 3rd party contractors, and those contractors handle paying their employees.
https://usafacts.org/answers/how-much-does-the-us-spend-on-d...
22%. But operations also includes civilian salaries and procurement naturally includes the labor required to produce what was procured. I would assume that R&D also includes research grants and salaries.
the current number is around 12.5% of the federal budget (2025 Administration budget, discretionary & non-discretionary).
The companies that build and supply things for the military have to pay salaries and compensation, too.
Presumably that's only for DoD employees and people serving in the armed forces? It doesn't include defense contractor salaries.
they're not burning the money, it all goes into someone's pocket
It is also kind of handy that we get aircraft carriers out of it too.
Mind you, I'm a socialist, so like, I personally wish we could move a bunch of the "jobs program" stuff over so that instead of carriers, we get well-educated, fed, and cared-for children and good medical care for all, and stuff like that. And that if we want a certain number of aircraft carriers, we should just try to actually get that many carriers on purpose for the cost that building the carriers entails. Without also trying to do 10 million other things on top of it to the point that the carrier output is a side-effect.
But like, it's probably better than no carriers at all, which is how it's going for lots of other countries. So I guess that's something to hold on to.
> Over the years I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher. Can anyone here verify this?
Your question at the end suggests those blogs and articles didn’t include compelling evidence for the case they were making. If true, then it is worth reconsidering whether it makes sense to incorporate into your world view.
That’s because consumer inflation is subjective. You can choose which goods and data point represent personal experience.
As you well know the government uses “hedonic adjustment” which is when they say a car in 2025 is so much better that a car in 1980 that higher prices should be reduced to reflect that better good.
A different model is that you need A car to participate in society so even if it’s better we just raised to the cost to exist.
Good point. How do you gather information? I split my time about half each reading US news and news from other countries. There are a few people I find believable like Dr. Jeffrey Sachs and retired congressman Ron Paul (these two guys are quite different politically) and I will listen to each of them once or twice a month, just to occasionally get non-mainstream news viewpoints.
If you're truly curious I would say the best way to start is to get a basic understanding of economics and how our current system actually operates. It's also important to look up the data as it actually exists rather than consuming conclusions from commentators without investigating further.
For instance your initial post seems to imply that we aren't balancing our defense vs social spending and are spending way too much on the former. However, that doesn't align with our current outlays. If you check out the latest US Treasury report the outlays for the current fiscal year shows $1314bn for Social Security, $841bn for interest payments on the debt, $823bn for medicare, $805bn for health, and $758bn for defense. The primary driver of debt in the future will be the entitlement programs and interest.
Of course the unfortunate reality is that most people do not have the time to learn about everything and do their own research so we will always rely on others to some extent for our information. The danger is when your world view fills in the gaps of knowledge you lack combined with the facts you believe you know taken from someone else who may be mistaken, misleading, or outright lying.
Just my opinion (but I did work in the defense industry from 1974 to 1998), but I just don’t believe the published ~ 800 billion defense spending numbers. A few presidents ago, the chairman of the joint chiefs publicly said that 7 trillion in military spending is unaccounted for.
Also, I admit to getting much of my information from professor Dr. Jeffrey Sachs, an economist.
I took an online economics class from Wharton business school, specifically on the economics of globalization. Fascinating stuff.
Anecdotal, but as a hobby for the last 20 years, I enjoy comparing the coverage of major news and economics stories in USA vs. other countries.
> 7 trillion in military spending is unaccounted for
If someone gave me $100, and I handled it without keeping track, that's $100 not accounted for. But we do know that I was given $100, and the money went somewhere we just don't know where. But it doesn't necessarily mean that this was shadow money outside of the larger picture budgets, people still know I was given $100. Its not like now there's somehow $200 spent because I was given $100 and I failed to account for $100.
So thinking about the $800B defense budget, if they fail to properly track $150B of that budget, that's another $150B added to that pile of unaccounted for money. But its not an extra $150B that got spent, its still a part of that $800B.
> A few presidents ago, the chairman of the joint chiefs publicly said that 7 trillion in military spending is unaccounted for.
You're likely referring to the fact that the pentagon can't pass an audit even though there have been requirements going back to the 90s. That's more about tracking where the money they spent is going as opposed to the total quantity of money they are spending though, i.e. the $800bn is "accurate" but some portion of it may have vanished due to bad accounting, corruption, waste, fraud, etc...
Having said that any accounting for an entity the size of the US government is non-trivial. The numbers I stated above are not the final numbers. Firstly because it's YTD but also because of the complexity in the accounting. We have decades of trend lines and a lot of public data on tax receipts, bond auctions, and the like to know that defense spending isn't drastically different than what is being reported though. If you have any analysis that concludes otherwise I would enjoy reading it.
> I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher.
Do you mean the other way around? The EU headline inflation rate doesn't include costs of owning a home like the US' does (owner's equivalent rent), which, as you might have guessed if you have ever wanted to own a home, is a component that has been quite inflationary, at least as far as recent memory goes. Or maybe those blogs were talking about some point a long time ago when that component pulled the US figures down (e.g. during the last housing crash)? What specific details did they give?
This is actually quite interesting. I ran into Stefan Ingves on the street in Stockholm, the former Governor of the Swedish Riksbank, and asked him why the Swedish inflation calculations did not include housing prices.
The short answer is that they're waiting on a harmonised EU wide system for that will include housing in some measure, but that has been taking longer than expected and they didn't want to change the system in Sweden before the new system was finished...
Quite frustrating given the massive increase in housing prices since '08. Would probably have been much lower with a higher interest rate.
Exactly. Don't know about all of Europe, but I find the way inflation is calculated in the countries i lived here as bad faith since it intentionally omits housing costs.
So just like a commenter below said, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks. Everyone unanimously agreed the numbers are gamed in order to control public opinion.
I've also seen a lot of gaslighting from politicians with mental gymnastics on how the population is not poor but actually rich because "look how many (Asian made)washing machines you can buy with an average salary here today, while for previous generations this type of items was a luxury".
Yeah mate, my parent could barely afford a European made washing machine, but they could afford their own house at age 25-30, working jobs that required litte education. Must be all that avocado toast to blame.
Yes. I'm from Spain, and here housing rental costs are included in inflation... but they're a 4% of the index. Which is laughable, as most people are spending more like 30%-50% of their income on rent.
The rationale is that most people (read: people over 50 or 60) live in houses they own, those spend 0 on rental, so if you calculate the average expenditure on rental, it's low. And buying houses counts as an "investment" so it's not included.
So basically what you say: totally gamed.
US vs Europe inflation https://www.bls.gov/opub/mlr/2006/05/art3full.pdf
"balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc."
Spending does not equal outcomes. There doesn't need to be a spending balance, but there should be an outcomes balance. We can see this with school funding. There are some schools that are underfunded and underperform, but there are also schools with adequate funding that underperform lower funded schools. The implication that you are making is that we could fix things just by cutting back military spending. However, we are also leaders in some of the areas you mention already, such as R&D. The Pentagon fails their audits frequently and should be trimmed down in areas that it makes sense. However, just shifting that money to education isn't going to make that much of an impact.
Had trouble following your core point. Do you have references regarding 900 bases with many bordering China. I have never seen such figures or that they border China.
Google Gemini 2.5 Pro just estimated 200 military bases close to China (I used “close” in my prompt, not very precise, so that number is likely including bases in the general area.)
Gemini estimated 750 to 800 total military bases.
Al Jazeera reports around 750 US military bases, across the world but concentrated in Europe, Japan and South Korea, and the Middle East. Not quite bordering China. https://www.aljazeera.com/news/2021/9/10/infographic-us-mili...
This is not wrong but the term base is click baity but probably an accepted definition from the pentagon. It’s include all facilities no matter or large or small and even those that are part of another base but not on the main campus. It’s almost like a count of buildings.
I haven’t checked, but I would guess this number even includes things like NSA outposts (since NSA is part of DoD) and embassies (which are protected by Marines).
Hmmm let’s clear this up because the way you write is extremely click baity. I believe those higher numbers are less a military base and better thought of as a facility. They could be a small housing facility, radio station etc. it’s a valid number but I think base is probably not the right way to describe.
When you say China that is incredibly disingenuous. If we said Asia yeah sure and that is effectively Japan and Korea.
Now let’s think about it more in terms of major bases/complexes. We are looking at maybe 25 in and around Japan and 10 for Korea. Still not a small number but I think a very different mental picture than 900 bases mostly around China. Also worth nothing that’s probably around 80k people deployed in those two countries.
So no, no sources.
Why would you think those are good sources for a question like this?
maybe I am wrong to do this, but I run Gemini 2.5 Pro in ‘research mode’, ask a question I am interested in, wait usually about 2 to 4 minutes and Gemini summarizes a large number of sources for me.
I think there is a lot of bias everywhere, and I thought that this sort of averages some of the noise away.
I think grandparent comments about what constitutes a military base vs. a facility are interesting. I was a defense contractor from 1974 to 1998, and it seemed like all the US bases I visited were very large, but some of the NATO bases I visited were much smaller. Sorry to be anecdotal here, just explaining my own experiences.
I've had too many lies told to me by all of these "AI" tools to trust anything I don't already know to be true without verifying the referenced sources myself. At that point, if I'm giving the information to anyone else, I might as well communicate the sources rather than an AI's impression of the sources. There's just no value add to me beyond identifying potential sources in "research mode".
This is not useful.
I can't speak to this, but I suspect something is afoot.
I know my mom went to a university that she paid for with a part-time job while a student. Currently that university's tuition is 80,000 a year. When I looked at what inflation figures said for college education, it wasn't enough to account for that 10x+ increase.
> Currently that university's tuition is 80,000 a year.
University tuition is a known example of an extreme inflation outlier. The cause is also known: The availability of loan dollars and the laws preventing their discharge in bankruptcy.
Tuition figures are also misleading because almost nobody pays that number. The tuition number is the maximum possible amount someone could pay without financial assistance, but when you look at the numbers you would be surprised to see that often 80% or more of students have some financial assistance. At many universities now, students with families below certain income levels have tuition adjusted down to $0.
You can’t judge university prices by the number on the website any more.
My point is that it's part of the standard basket and the rate they allegedly calculated for its growth didn't match up to lived experience.
Most US students don't go to selective private universities that charge $80,000 a year (and most students at those universities don't pay $80,000 a year). Only about a quarter of students go to private universities and most of those are not particularly selective. Most students go to state schools that are a lot cheaper and where tuition is subject to different economic forces.
You can't decide that official inflation figures are inaccurate based on a specific, outlier example, when the official figures are based on averages.
Also, the list prices for tuition and what the average student actually pays out of pocket in the end can be two very different figures after grants and scholarships come into play.
And yes, absolutely, $80k a year in tuition is a massive outlier. Average in-state university tuition is closer to $12k-13k/yr, before grants and scholarships. The extreme majority of US undergraduates aren't shelling out $80k/yr for tuition payments.
That's wild, I had no idea they had gotten that high. When I was in college (2012-2016), the most expensive places were in the $50k-60k range, which already was quite absurd. The fact that they've grown so much even in the past decade is mind-boggling.
You entered college over a decade ago. We’ve had a lot of inflation in that time.
From an inflation adjusted perspective, I’d actually rather pay $80K now than to have had to pay $60K in 2016 when you graduated.
You also probably know that most students don’t pay full price due to sliding scales.
I understand. I just didn't really have any other expenditures anywhere close to that high at the time; I've never purchased a car, and like most college students, I certainly never purchased a house back then. I hadn't paid much attention to tuition prices since graduating, so seeing the number now made the inflation feel much more visceral to me than comparing the prices I can recall of much less expensive things I purchasing to what they are now.
$80k is basically $60k in 2012 dollars
as far as college education prices go, there's no ceiling on education prices because there's no risk to lenders, they can lend as much as they want with no risk. As long as young people feel there isn't an alternative to a college education and risk to lenders is close to zero then there is no limit to what colleges can charge.
Many more people want to go to university now yet we haven't increased the supply of quality universities.
I suspect this is also bimodal as well. The top universities can charge this, but the bottom probably are struggling to survive.
Inflation seeks to understand the change in value of a currency, not the change in value of a good or service. College being worth more (in the eyes of the customer), rather than the currency being worth less, is what accounts for the 10x increase.
I don't know how old your mom is, but it wasn't that long ago that people only went to college if they had good reason to, not because they were told they "had to" under the "A diamond is forever"-style marketing campaign. That shift in mindset enabled colleges to charge basically whatever they want. That is not a product of inflation.
People didn't need to go to college before the death of the middle class. A couple generations ago you could rent an apartment and have a decent life working at a restaurant or warehouse or factory. Now most entry level jobs pay poverty level wages.
People didn't need to go to college because nobody cared. Employers were able to look at qualities of the actual person, not some outside attribute bolted onto the side. What changed was Griggs vs. Duke, which outlawed effectively all filtering mechanisms except a college degree, forcing the hand of employers.
That still didn't mean the workers had to comply, though. What do you think would happen, with respect to employment, if nobody attained a college degree? Not much. "Welp, no more college graduates. I guess we'd better shut our business down." would be said by nobody. Hiring would carry on as usual (aside from the lines possibly being longer, there being no legal mechanism to cull applicants early). But colleges certainly took the opportunity to present that idea and the people bought it hook, line, and sinker.
That's not true though. We keep hearing about coding tests given to applicants in high tech, and those are still legal. The decision said that the test had to be reasonably related to the job, not that they couldn't be used.
A 1970 court case doesn't explain why my childhood friends' parents could afford to own 3 bedroom houses and have 1-2 kids while working at chain restaurants, distribution centers, and hospitality. This was in the 1990s. People cannot have this life now with the same jobs. Even with college degrees, it's barely attainable. People are doing the same amount of work but what would have been their wages are being diverted to the rich. To the point that they can barely afford to survive.
This has probably been suppressing prices for the last few decades. Inflation numbers would look even worse if the pay in those kinds of jobs has continued. People want lower prices for everything, no matter the cost to workers.
> People want lower prices for everything,
Water is wet
If the US dollar was being devalued faster than reported, and the Euro wasn't, wouldn't that be visible in the exchange rate?
I think Europe has worse financial problems than we do.
Ok. But we can look at the inflation rate that the US reports, and the inflation rate that the EU reports. Then compare the ratio of those to how the exchange rate changes.
I don't see how having financial problems would make this comparison invalid.
That might be an explanation for as to why the inflation figures are what they are, but the math described above wouldn't change. If one currency is quickly being devalued while another isn't, it is going to be obvious when you try to exchange those currencies.
Who is we?
I am a US citizen
Europe != EU != Eurozone.
When you make insane claims like “the US has 900 military bases close to China”, you discredit yourself and your entire body of work.
Please quote me correctly. I said:
“” If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900.””
I intended to say 900 in the entire world, but I corrected that in a comment to 750-900.
They didn't say that. Your reading comprehension is poor.
> If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900.
I would grant them the benefit of the doubt if English wasn’t their native language, but they’d identified as a US citizen elsewhere in the thread and their name strongly implies native speakership.
In the US, this conversational construction in this context is most reasonably interpreted as the second sentence completing the thought in the first.
If a manager asks an employee “how many dents are on the bumber?” A response of “I think the total number is close to 900”, that would be in reference to just the dents on the bumper, not all over the car.
Also, elsewhere in the thread, they’ve acknowledged they simply made the number up (by just repeating what a GPT said).
The sentence starts with “If you look at a map of our military bases”, which refers to all US military bases, not just the ones bordering China. The second sentence refers to that totality of bases.
I’d grant that there is a bit of ambiguity, but insinuating an “insane claim” is jumping the gun on a misreading that should have been fairly obvious in light of the “insanity”.
No, I asked Gemini 2.5 Pro in ‘deep research’ mode to give me an estimate.
Perhaps English is not your native language. It at best comes across that many of the 900 are surrounding China and at worst that the 900 is referring to China.
> > Our main problems involve under the table unreported to the public military expenditures. If you look at a map of our military bases, we have many bordering China.
“Many” could be dozens or hundreds or over half. It’s poorly phrased to the point of being meaningless.
> > I think our total number is close to 900.
Total in the world.
Glad you read it that way. The OP wrote it with a narrative of China which is already perplexing since we are mostly talking about Korean and Japanese bases but framing it as around China. You could read it either way. It’s poorly worded and click baity.
American consumer debt is also a different beast in the US because households tend to counter inflation and higher prices by shifting over their monthly spending to credit cards. Most Europeans use credit only for certain goods and mostly pay the full amount off every month. This creates an elasticity in the US, where inflation leads to higher prices which slowly leads to higher household debt, which makes recessions more grave when they do appear. Europeans are instead quicker to move to cheaper stores and start buying cheaper goods in bulk.
> Eventually countries that don't spend most of their treasure on their military will win.
Stipulating that they don't get eaten by their bigger neighbors. We're going to miss the Pax Americana.
We will miss the US Navy keeping most shipping routes open and safe.
> Eventually countries that don't spend most of their treasure on their military will win.
Being from Europe, I wish. But for now, it doesn't seem to be the case. Your military power basically allows you to bully Europe and many others, tell us what to buy and whom to buy it from, which is an enormous economic advantage. You just made our puny European leaders promise an enormous investment in the US defense industry in the moment where we would need to propel our own industry the most (it probably won't materialize, but still, we'll spend at least some of it because most of our leaders don't want to be in a bad standing with the US). You are also bullying us into signing contracts with inferior American suppliers rather than Huawei, among many other things. All of this happens mainly due to the US's disproportionate military power. Meanwhile, you can afford having a president who is borderline illiterate (and actually makes binding decisions) without the economy even meaningfully sinking (stocks at historical maximums).
So spending in the military seems to actually be a good choice, unfortunately.
>Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
Ask Ukraine how that worked out for them. While your at it, tell the Baltics they should focus on society and not the Russian world that is coming for them.
The US and EU have reported broadly similar inflation numbers for the last five years or so, with the EU generally being a little lower. If your thing was true, you'd expect a vast gulf in prices to have opened up, but it doesn't really seem to have.
Anecdotally, I was in SF once or twice a year for a few years before the pandemic, and it felt like mostly similar prices to Dublin (an expensive European city). I've also been back a few times since the pandemic, and it now feels somewhat more expensive than Dublin, but not dramatically. Which is about what you'd expect if the official inflation figures were broadly correct. Obviously this is super-anecdotal, mind you.
Fred has the data:
https://fred.stlouisfed.org/series/CP0000EZ19M086NEST#
https://fred.stlouisfed.org/series/SUUR0000SA0
I’m driving, it’s difficult to put them on the same chart and normalize. But they are very similar. There are differences in methodology (housing, healthcare) but those generally add a small amount to US inflation chained index vs HICP.
You read and post on HN while driving?
Put your phone it down before you kill someone. You’re taking an indefensible risk.
Please don’t use your phone while driving.
What does debt have to do with the calculation of inflation?
It may impact inflation but you seem to be claiming debt is a component of inflation calculation, when inflation is little more than the change in prices.
Thanks for pointing out something: I didn’t mean that debt is a component of CPI.
Interest on 37 trillion in US government debt as well as huge consumer debt certainly is a long (and short term?) drag on the economy, but I accept your point that I don’t understand the correlation.
I have a simplistic way of thinking about the economy: I tend to view things as being healthy or unhealthy to the economic well being of all people in my country. In general, hiding information from the public is not healthy. Look, this is just my opinion, but I believe that our government is in the business of hiding information from the public; the government (both political parties) exists in its present form to protect and nurture the special interests who pay them off one way or another.
>> What does debt have to do with the calculation of inflation?
Debt isn't a component of inflation calculation but they are related. During Covid the US government increased the deficit (not debt, the derivative of debt) by a trillion dollars (no partisan stuff here, Trump did it first and then Biden). The infusion of money into the economy was one of the drivers of inflation between 2021 and 2025. You may ask, where did the money come from? I don't know. The government "borrowed" it, but from whom I don't know. Money "invested" does not necessarily get into the economy, but money invested in treasury bond gets spend by the government and definitely ends up in the economy.
I would love to have time (get paid?) to sit around and develop useful economic models. All I ever see is people offering simple cause and effect relationships (like I did above) without showing anything close to what I would consider a reasonable model of the economy.
Technically speaking, the deficit peaked in 2020, fell a hit in 2021, and then fell a lot more in 2022, and then rose a bit in 2023 and 2024. The deficit on 2025 Inauguration Day was way smaller than on 2021 in Inauguration Day, so I’m not sure it would be fair to claim that Biden increased the deficit. See the graph at https://fiscaldata.treasury.gov/americas-finance-guide/natio...
Downvotes on this are weird, it’s just basic math (the deficit bar in 2025 is way lower than the deficit bar in 2021). I get FoxNews thinking math is a liberal conspiracy, but not HN.
While true, there is another nuance missing here. The deficit was higher in 2020 & 2021 due to the Covid stimulus spending. Looking at 2017-2019 for Trump and 2022-2024 for Biden probably gives a fairer picture of what happened during both presidencies. It's basically been an upward trend since 2015, excluding the Covid outliers.
Yes, that’s why I prefaced my comment with “technically.” To claim Biden grew the deficit, you would have to explain that COVID was some sort of exception and then argue that it still grew in spirit (rather than technically).
Although without COVID Trump was definitely still on track to have significantly raised the deficit since it was falling in most years under Obama compared to 2008/2009 (before COVID he grew the deficit significantly with his first round of tax cuts, just like he just did with the big beautiful bill), and it isn’t clear that Biden would have diverged from Obama without COVID around.
It's a very difficult belief to have in the long run, because if the source of the "error" is always in one direction, it will compound to price level differences impossible to hide.
It's like the traditional view on GDP growth. Be a little slower than a similar country (say 0.5% a year) wait 20 years, and your formerly similar neighbor now sees your country as quite poor.
And yet many less-rich countries have better infrastructure and health outcomes than the US. It seems clear that chasing GDP without also considering what is happening to wealth distribution has socially hollowed the otherwise-rich US.
> Eventually countries that don't spend most of their treasure on their military will win.
Win what exactly?
Secret defense spending would not and should not impact inflation numbers except in so far as it impacts the already measured consumer basket, the US does not have 900 military bases near China, etc. etc.
Just not a very good comment in my view.
It's like 3% of GDP. Not that big of a deal.
> Our main problems involve under the table unreported to the public military expenditures.
This is a common claim but I don't think it's supported. Defense spending is about 3.3% of GDP [0]. 15 years ago it was 4.9%, 40 years ago it was 6.45%, and it hit almost 10% in 1967 during peak spending in the Vietnam war. World War 2 made it around 35%. Also, what does unreported mean? Are you claiming that there is a significant amount of money being spent that isn't part of the reported military budget? How much? Defense spending was about 13% of the government budget in 2024 [1].
> If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900.
How much do those cost? I understand the claim is a lot, but how much? If you don't know, why pick this as an example?
> Those costs are a bleeding hemorage to the middle class tax payer who aren’t getting a cut of military profiteering because they don’t own ‘defense’ stocks.
Defense stocks have not performed better relative to the Dow Jones. Raytheon stock has increased 5-fold since 1985 while the Dow has increased 33-fold over the same period. If defense was easy money, you'd see hedge funds loading up on it year on year. These companies aren't valued that much. Raytheon is valued at 208B [2], which is less than McDonalds, Nestle, T-Mobile, AMD, Home Depot, and Costco individually.
> Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
I agree with this, but given that America only spends 13% of the budget on the department of defense, your own claim is claiming an American win. In 2021 the American Rescue Plan induced a giant amount of domestic welfare spending plans such as almost doubling the child tax credit. This was a tremendously expensive plan that cut child poverty in half, but people didn't feel strongly enough to successfully pressure politicians to keep it, which does seem pretty frustrating to me.
Also, I see you're using AI for sources below. Feed your comment into GPT 5 thinking and ask for an opinion, because it apparently thinks your inflation claim is completely reversed.
[0] https://www.macrotrends.net/global-metrics/countries/usa/uni...
[1] https://fiscaldata.treasury.gov/americas-finance-guide/feder...
[2] https://companiesmarketcap.com/
The Pentagon’s informal name for those bases is “the Noose.”
Defense stocks are shit to own, you only make money by buying up politicians and landing large contracts.
In other words, comparatively little of their profits are returned to shareholders. Insiders are making money, but the rest of us are shut out?
It means that the infamous military industrial complex does not exist in its fabled money printing form.
Turns out, the US government is very demanding and stingy with its money for what it ultimately gets.
[dead]
https://www.shadowstats.com/ Tl;Dr. The outlook has changed little. ShadowStats numbers show that the economy remains in a deepening downturn, intensified by ongoing Federal Reserve Rate Hikes. Headline inflation faces a near-term rebound, thanks to the continuing and broadly based excessive growth in the Money Supply and Systemic Liquidity, as triggered by the Fed. Separately, with the Debt Ceiling now eliminated by Congress and the Executive Branch, unfettered Federal Deficit Spending increasingly is adding fuel to the unfolding Inflation. The systemic Inflation is not driven by the Fed’s proclaimed overheating economy. Such an economy simply does not exist, at present.
Shadow stats is a crank blog with absolutely no validity. Choose your debunking source, but the owner of the blog literally just adds an amount to the official rate that he thinks represents the government error. There’s no calculation, there’s no “pre-1980 methodology”, just one dude’s vibes. If the rate has averaged 9% over the past 25 years, you’d be talking about over 750% inflation since 2000. You can buy any manner of new car today for $35k - could you buy a new car for $5k in 2000? Did a gallon of gas cost $0.40/gallon? Could you rent a modern $1,500 apartment for $200/month?
https://www.fullstackeconomics.com/p/no-the-real-inflation-r...
If he actually did the work of calculating using the earlier methodology, it could actually be interesting, but it probably wouldn't say what he thinks. But yeah, that site is BS.
Likely very specious. Inflation is an emergent property. CPI is measured by looking at consumer prices which is pretty transparent. The underlying causes may be obscured and, in fact, we see a lot of debate on the causes but that is irrelevant to actually measuring CPI.
Well, look at the history of removing things like living necessities and increasing things that have dropped in price like TVs.
Calculation of CPI is deranged by the cherry picking of what they measure.
The basket of goods that they base the inflation rate on is created by surveying people and asking what they spent their money on. It's intended to reflect how households actually spend money. Not sure how that would be called "cherry picking". How do you think they should do it?
> The basket of goods that they base the inflation rate on is created by surveying people and asking what they spent their money on.
What mechanism was that done through? The census or Walmart data?
I don't think anyone has seen a staffed table outside a retail store labeled "CPI Survey". This feels like an important question.
The methodology and data is all publicly available. Just go to bls.gov.
https://www.bls.gov/opub/hom/cpi/
Every time I've seen someone talk about "real" inflation or unemployment they're just applying a different view on the same BLS data. Metrics like CPI or PPI are derived via a formula to create an indicator. A benchmark that should be apples to apples over a period of time. It's not meant to be comprehensive. But the comprehensive data is all there too.
> Well, look at the history of removing things like living necessities and increasing things that have dropped in price like TVs.
There are many different measures of inflation. And they serve different purposes.
Core inflation, which I suspect is what you’re talking about when talking about removing “living necessities” is a measure used to try and understand long term stable inflation. Since oil and groceries tend to be extremely volatile, core inflation removes those items. No one is saying it’s the one holy measure of inflation. If you’re trying to understand how prices have changed for the consumer over a period of time it’s not a useful measure at all, so you don’t look at core inflation for that purpose.
You look at other measures.
Also, weights are indeed a complicated issue, but is it really surprising the weight of TVs may have increased over a period of time when owning a TV has gone from being a luxury to a necessity?
But anyways, if you don’t like the weights that are used, the underlying segment breakdown is available on the same webpage that contains the summarized calculated inflation figures. Feel free to look at the segment inflation itself.
What living necessities have been removed that you think should still be there?
The dataset inclusions are publicly available: https://www.bls.gov/cpi/additional-resources/entry-level-ite...
Here is an article by the St Louis Fed that describes at least 5 inflation measures and what the point of each one is.
https://www.stlouisfed.org/on-the-economy/2024/may/measuring...
Note, for example, only 2 of them even intend to measure price changes for individuals (CPI and PCEPI).
Not really and none of the underlying data is hidden. Inflation can vary across regions and industries and durability. Things like food and energy are in a separate category because they can fluctuate very quickly based on exogenous factors (ie bird flu) outside the control of monetary policy. That doesn't mean policy makers ignore them. They scrutinize the data at every level. CPI, core CPI or PCE are just convenient indicators.