Reply to Big Mac inflation index is better than CPI

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Reply to "Big Mac inflation index is better than CPI"

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Correct.  Look at the work of John Williams at shadowstats.com.  He runs the inflation numbers using the government’s own methodology that was used pre-1980.  This shows that in 2022, inflation actually peaked at around 17%, not 9% as we’ve been told.

Following the massive inflation of the 1970s, the government statisticians got together and determined that, “You know what?  It turns out we’ve been calculating inflation all wrong and that the true numbers are actually lower!  Isn’t that great news?!”  Among the changes they have made since then are that home prices are no longer used in calculating the CPI.  Now they use a nonsense metric called “owner’s equivalent rent,” which is basically just a survey question where they call random homeowners and ask how much they think they could rent their house for if they decided to do so.  [b]This was ostensibly done to remove the investment component of housing and focus only on the shelter cost, but the true reason was to be able to manipulate the numbers — imagine in the modern, data-driven world collecting information in this manner.[/b]

So, yes, basically just double the CPI and that will give you a more accurate assessment of the true inflation rate. And if you are shocked that the government would behave in this manner, wait until you hear about what’s going on in today’s “booming job market.”[/quote]

:roll:

This is an obviously economically sound reason. The investment value of real estate is investment, not consumption. Imagine in the modern, data-driven world *not* collecting data in this manner.[/quote]

I’m the PP. Of course the concept of separating investment from shelter cost is valid, but their methodology is deliberately flawed — you’re telling me there’s no better way to determine the change in shelter cost than the nonsense process I described above? Use the change in rents instead of home prices then. Or any other number of ways that this could be done.

Even before the rise of the tech behemoths, twenty years ago, Walmart used to order extra strawberry Pop Tarts in advance of snowstorms because their data showed that people gravitated especially to that flavor during very cold weather.  But the government can’t figure out a better way to determine the change in shelter cost than asking homeowners - who don’t rent out their house and may not have been in the rental market for decades - how much they think they could charge to rent out their house? Yeah, sure.  They do that because it’s a closed data source that can’t be checked and gives them lots of potentially erroneous information that they can use to manipulate the numbers as they see fit.[/quote]

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