CPI is broken
677 sats \ 24 comments \ @BitcoinIsTheFuture 27 Mar econ
Why does everything feel so unaffordable?
According to the pre-1983 CPI calculation method, inflation is nearly TRIPLE what current CPI data says.
If you used pre-1983 CPI, inflation peaked at 18% in November 2022 and currently stands at a whopping 8%.
Under this method, housing inflation more than DOUBLED since 2020 alone.
Even in August 2023, this CPI inflation method would've put inflation at 12%.
Perhaps this is why there is such a large gap between headlines and reality.
Are our inflation formulas off?
It's also worth noting we are building on YEARS of elevated inflation.
The purchasing power of a Dollar is down over 20% since 2020.
Affordability is unlikely to improve anytime in the near future.
Let’s help others find the Bitcoin escape valve!
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318 sats \ 7 replies \ @endothermicdev 27 Mar
I think everyone should monitor their expenses for a time and try calculating their own CPI. It's a pretty fraught measurement even for the well intentioned, but ultimately it matters most how your own spending is affected. I first calculated my family's CPI in early 2020 and came up with ~7% while the official number was an insanely low 2% I believe. I think the 7% figure was still roughly accurate the last time I tried this, though I'm sure it would have been higher in the '21 - '22 period. Regardless, it's an easy statistic to figure for yourself if you take your biggest monthly expenses and compare them to a period a year ago (assuming you have some financial records.)
I use this when evaluating major investment decisions, before assuming any new debt or making major purchases, etc.. Leaving that calculation to a bureaucratic agency which could care less about your well being just feels a bit irresponsible. Also, everyone's personal circumstance is so different that one generic index falls short of being very useful.
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63 sats \ 6 replies \ @BitcoinIsTheFuture OP 27 Mar
Great idea I think that makes a lot of sense! Thank do out grocery shopping and my wife is shocked when she has to run in and grab something
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47 sats \ 2 replies \ @Undisciplined 27 Mar
One important thing, if you're going to do this test, is that you can't change your habits based on price.
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21 sats \ 1 reply \ @BitcoinIsTheFuture OP 27 Mar
In practice that makes it hard, but you’re right if you do a true test!
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0 sats \ 0 replies \ @Undisciplined 27 Mar
I guess you don't actually need to keep the same consumption bundle, but you need to get the prices for the stuff you bought in the first month.
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5 sats \ 2 replies \ @endothermicdev 27 Mar
Yeah, I noticed grocery expenses went up drastically, but (for me) that adjustment is moderated quite a lot by shelter due to a low fixed rate mortgage. I can imagine the numbers would be much more volatile if renting or with an adjustable rate mortgage.
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42 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar
Same we refinanced twice during COVID and got 2.25% on a 15 year. Sorry you guys can blame me for inflation as the Bitcoin rabbit hole taught me they just make up that money they loaned me…
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0 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar
Not to mention that Ice Cream is now considered a super food!
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47 sats \ 2 replies \ @Undisciplined 27 Mar
Technically, there's no "right way" to calculate inflation. Price level is only ever going to be an imperfect proxy, no matter how we measure it.
There are multiple official CPI values, too. Is that the one that excludes pretty much everything regular people spend their money on (food, shelter, energy, transportation)? If so, then it's no wonder the pre-83 method feels more accurate.
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21 sats \ 1 reply \ @BitcoinIsTheFuture OP 27 Mar
But there are a lot of “wrong ways” to calculate CPI 😂
Imagine the year is 2033. A Hershey's bar costs $39, the average home costs $2.7M, US Debt has crested $90T, and you're wondering why you didn't just buy more Bitcoin when it was under $100K.
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5 sats \ 0 replies \ @Undisciplined 27 Mar
There's nothing but wrong ways to calculate CPI. There are just more and less relatable estimates.
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5 sats \ 2 replies \ @grayruby 27 Mar
It has been broken for many years. Maybe never worked.
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50 sats \ 1 reply \ @BitcoinIsTheFuture OP 27 Mar
Works for them (government) perfectly, but not for us!
The US dollar has lost 25% of its purchasing power since January 2020.
Every $1 you had is now worth $0.75 of goods.
Insane.
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5 sats \ 0 replies \ @grayruby 27 Mar
Ain't that the truth!
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5 sats \ 2 replies \ @piecover 27 Mar
It was always broken since it's inception
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0 sats \ 1 reply \ @BitcoinIsTheFuture OP 27 Mar
Can’t agree with that!
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0 sats \ 0 replies \ @piecover 28 Mar
Good
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5 sats \ 1 reply \ @kepford 27 Mar
CPI is not broken. Working perfectly as designed. A tool to justify their actions.
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0 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar
This!
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5 sats \ 1 reply \ @Bitcoin_Bootcamp 27 Mar
Because it is unaffordable ? Look Back in History ...
Translation: In 1970, you could buy a new Mustang with 1/4 of your average annual salary of $9,870. Is that still possible today?
No, thanks to the government and its money printing press.
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0 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar
Spot on. I saw this last night when we went out for pizza! A slice was 15 cents, now $6.50!
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0 sats \ 2 replies \ @Fabs 27 Mar
A can of beans used to cost a steady € 1.00 at the local supermarket, yesterday I saw that the price has been changed to €1.25! €1.25!!
That's a whopping %25 on that product alone! Fucking beans! The same is true for the dog food I buy: from €3.99 to €4.25!! A fucking tray of biological cocktail tomatoes: €4-fucking-euros! Inflation is declining? Sub-double digits? Fuck that! Ain't no way.
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15 sats \ 1 reply \ @Fabs 27 Mar
I'm no picky eater and pretty much thrive on the basics like pasta, rice, beans, yoghurt and oats, or in other words: i'm absolutely no expensive eater, and I really try my best to keep it somewhat affordable, but at this pace... I mean even the fucking basics are rising like crazy...
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0 sats \ 0 replies \ @BitcoinIsTheFuture OP 27 Mar
This is literally why I Bitcoin to opt out of this clown world pricing!
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