{"id":26242,"date":"2017-09-29T19:39:42","date_gmt":"2017-09-30T00:39:42","guid":{"rendered":"http:\/\/olduvai.ca\/?p=26242"},"modified":"2017-09-29T19:39:42","modified_gmt":"2017-09-30T00:39:42","slug":"whats-the-matter-with-inflation","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=26242","title":{"rendered":"What\u2019s The Matter With\u00a0Inflation?"},"content":{"rendered":"

What\u2019s The Matter With\u00a0Inflation?<\/a><\/h3>\n
What\u2019s The Matter Kansas<\/del><\/a>\u00a0 inflation?<\/div>\n
\n

The divergence of official inflation as measured by the government versus inflation realized by the consumer and businesses has never been greater, in our opinion. \u00a0 Go ask anybody on the street in America and Europe if think \u201cdoing life or business\u201d\u00a0 is getting\u00a0 more expensive.\u00a0<\/del><\/p>\n

We have some thoughts on what is the matter with the inflation data:<\/p>\n

    \n
  1. Defining inflation<\/strong> \u2013 what is your definition of inflation?\u00a0 What are we trying to measure?\u00a0 The prices in a\u00a0 consumer basket of goods and services?\u00a0\u00a0 Wages?\u00a0 Asset prices?<\/li>\n
  2. Measurement problems<\/strong> \u2013 the official measurement procedures seem archaic given the advent of big data<\/a> in the past few years.\u00a0\u00a0 Even Bloomberg is out with a recent piece warning the Fed about low-balling inflation due to measurement errors.
    \n

    Low-Balling Inflation Puts the Fed at Risk<\/span><\/h3>\n

    Beware of any metric that doesn\u2019t fully reflect housing prices. <\/span><\/h4>\n

    The U.S. has an inflation problem. It has nothing to do with inflation being too high or too low. Unlike the raging inflation of the 1970s, it doesn\u2019t need to be solved with a lengthy and painful recession. Instead, it is a problem of measurement because the cost of housing \u2014 the single biggest expense for many Americans \u2014 isn\u2019t explicitly included in the inflation data.\u00a0<\/strong><\/p>\n

    \u2026Recent research from the Bank for International Settlements finds that the transmission mechanism for monetary policy has shifted. In their paper<\/a> \u201cMonetary Policy Transmission and Trade-Offs in the United States: Old and New,\u201d Boris Hofmann and Gert Peersman concluded that changes in monetary policy \u2014 rate hikes or rate cuts \u2014 are being filtered into the economy increasingly through housing prices and less so via businesses raising prices as in years past. So even though the Federal Reserve\u2019s policies are causing those prices to rise, they aren\u2019t registering in the form of higher overall inflation.<\/strong><\/p>\n

     <\/p>\n

    …click on the above link to read the rest of the article…<\/p>\n

     <\/li>\n<\/ol>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    What\u2019s The Matter With\u00a0Inflation? What\u2019s The Matter Kansas\u00a0 inflation? The divergence of official inflation as measured by the government versus inflation realized by the consumer and businesses has never been greater, in our opinion. \u00a0 Go ask anybody on the street in America and Europe if think \u201cdoing life or business\u201d\u00a0 is getting\u00a0 more expensive.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[172,303,15450,426,3650],"class_list":["post-26242","post","type-post","status-publish","format-standard","hentry","category-economics","tag-cpi","tag-fed","tag-global-macro-monitor","tag-inflation","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/26242","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=26242"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/26242\/revisions"}],"predecessor-version":[{"id":26243,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/26242\/revisions\/26243"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=26242"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=26242"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=26242"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}