Agree that measuring inflation is complex and expensive. It also glosses over devices getting new features and networks improving latency and bandwidth.

Unfortunately alternative measures are worse. Gold increased in price 37% in the last year. What does that tell me about the price of groceries? Housing prices depend on government committees approving what can be built where. We have no idea what a free market would produce.

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smallmancontrov 4 hours ago | parent [-]

No, CPI does not gloss over improvements in quality. CPI gets diligent hedonic adjustments. Good news is always welcome, it seems. By contrast, BLS usually doesn't even try to track enshittification. This compounds, and that's another reason why CPI is a poor measure. Not to mention the recent statistical fuckery with trimmed means or the less recent fuckery around excluding energy costs during bouts of energy inflation. How much proof do you need that CPI is a political quantity not a measure of the economy?

Hypothetical YIMBY parallel universes have no place in an inflation discussion. If NIMBYs inflated the price of houses and you want a house, it's inflation that is relevant to you, end of story. As for the volatility of gold, yeah, that disqualifies gold from being a good measure on short timescales. Fortunately, we have a good short-timescale inflation measure: CPI. But gold compounds correctly whereas CPI does not. In the short run, volatility is everything, in the long run, compounding is everything. Don't use gold to figure out how much inflation happened last year and don't use CPI to figure out how much inflation happened last decade.

Reminder: I presented gold and housing as dirty hacks. The correct methodology is to construct a basket of things you care about and track them. If the dirty hacks have dirty hack problems, well, such is the nature of dirty hacks.

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3 hours ago | parent | next [-]

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cheriot 3 hours ago | parent | prev [-]

Then what number would you use instead? A "correct methodology" that's not done is useless.

Complaining about CPI to defend using nominal values poorly is not improving the article's analysis.

	▲	smallmancontrov 3 hours ago \| parent [-]
		Housing and gold, to be used when the timescale is more than a few years. CPI is fine if the timescale is under a few years, because that is not enough time for its sins to compound. You posted an incorrect interpretation of the FRED real wages line. All I owe the discussion is an explanation of why I believe your interpretation was incorrect. Which I gave. The fact that I went above and beyond to provide and defend both a theoretical alternative and practical alternatives is a nice extra. Your complaints that the practical alternatives aren't simultaneously perfect and easy is praise by faint damnation. Perfect and easy aren't the ways of this world. No, they only have to be better than CPI on long timescales to be good alternatives -- but the CPI methodology places that bar very low and both gold and housing clear it easily.