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0 sats \ 4 replies \ @carlosfandango 20 Oct 2023 \ parent \ on: Big Mac went from $0.50 to $8 and lost 40% of its size from 1980-2020. bitcoin
This headline is taken from Vivek4real on X. Feel free to check out the source photograph.
The Big Mac Index was designed as an indicator of over/under valuation of international currency using the principle of Purchasing Power Parity. It’s a poor indication of inflation through time. Bitcoin does not fix Big Macs..
If the country of origin is held constant, why isn't it a decent approximation to inflation? I mean, obviously there's a bunch of issues with using any single number, including the official CPI number. But if you wanted a single number, and you were comparing prices in the US over 40 years, and technology and production efficiencies generally conspire to drive prices down, then what's the issue w/ using BMI as a coarse inflation metric?
I'm not trying to nitpick you here, I'm trying to figure out if there's something obvious that I have no conception of. Because I don't see why this is worse than anything else as an inflation metric, and in some sense it seems better than a lot of things I can think of.
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Any nitpicking appreciated. As a composite of a broad range of inputs it provides a useful number and certainly better than any ‘official’ number. With regard to inflation through time; the opaque nature of its components, manipulation from central authority and the changing formulation means it isn’t really comparable to previous years. There is some interesting deeper dives about it being a lagging indicator of inflation and potentially a predictor but im not as well read on that. Worth noting it’s only marginally better at being comparable to other countries in the same year - which was the actual function of the index on the first place.
Interesting thoughts
re McDonalds processes being deflationary. My sense is they probably haven’t changed that much since implementation.
Gives me fast food for thought.
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re McDonalds processes being deflationary. My sense is they probably haven’t changed that much since implementation.
I was kind of talking out of my ass there, but the idea is that if there's one thing we know about McDonalds, it's that they are hell-bent on wringing every fraction of a cent out of every part of every process and every supply chain; and the nature of the thing being a public company means there's no place to hide. It seems as pure an example of true best-effort by a motivated agent to combine across a massive number of inputs as you could possibly find. Insofar as tech plays a role in most of those processes, from raising cattle to shipping to logistics, it tends towards deflationary.
That was my logic, at least.
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And a reasonable one. I won’t post anymore - perhaps save it for the saloon. The OP is a bot / assmilker and adds nothing of value so I don’t see why we should.
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