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Larry Fink Referencing Data from ShadowStats re: Inflation on CNBC
Posted on 4/12/24 at 11:29 am
Posted on 4/12/24 at 11:29 am
I remember when the traditional finance baws on here used to bash those using Shadow Stats back when inflation was sky high and we were pointing out the real number was over 15% if we used historical calculations rather than the muted current CPI calc. Well not king overlord TradFi himself went on CNBC and referenced that data:
The CNBC panel cut right away from him when he said it too
quote:
Blackrocks’s Larry Fink: If inflation was measured like it was in the 1980’s with a heavier emphasis on food inflation, housing and interest rates inflation would be 12%.
The CNBC panel cut right away from him when he said it too
3
Posted on 4/13/24 at 12:17 pm to TigerTatorTots
For the uninformed, what are the key differences between the 1980 calc and current?
Posted on 4/13/24 at 2:04 pm to TigerTatorTots
True inflation is closer to 30%+
Posted on 4/13/24 at 2:52 pm to AllDayEveryDay
They took out food and energy costs for current CPI because it’s “too volatile.” It’s also been majorly affected by inflation.
Posted on 4/13/24 at 3:29 pm to Drizzt
The masses are being treated like idiots.
Posted on 4/13/24 at 3:56 pm to Drizzt
quote:
They took out food and energy costs for current CPI because it’s “too volatile.” It’s also been majorly affected by inflation.
It’s not really that. I read an article about it a while back, but can’t really remember the methodology. Essentially, the new formula de-emphasized many things people have to regularly buy to live in favor of things like electronics, computers and other things that are bought more infrequently. More to it than that, but the bottom line is that inflation would be much higher under the old formula.
Posted on 4/13/24 at 8:10 pm to SloaneRanger
quote:
Essentially, the new formula de-emphasized many things people have to regularly buy to live
You don’t think food and energy falls under things you have to regularly buy to live?
Posted on 4/13/24 at 8:47 pm to AllDayEveryDay
quote:
For the uninformed, what are the key differences between the 1980 calc and current?
A big one is in the Shelter category. They went from home values to OER, Owner's Equivalence of Rent (meaning: "what would this home rent for in this area"). Shelter is ~1/3 of CPI and there's already a Rent category, so essentially they are polling Rent twice. Rents move more slowly than real estate values (whether you're looking at home sales, property tax changes, etc) so the move to this was seen as a way to make home values (and thus the entire Shelter component) less volatile.
It also makes it less trustworthy. It's why the rapid increase in home values over the last decade were barely a nudge in CPI prior to COVID.
Another point is how they gauge food. It used to be a set basket of goods and they would update the prices over time. A problem with this was that they rarely updated the basket nor did they consider that consumers might change their buying habits as costs of certain things increased (example: if consumers moved from cupcakes to cookies because the price of cupcakes went too high, they weren't switching over to cookies for their calculations). The problem with their switch is that they now gauge thousands upon thousands of items with (as far as I can tell) absolutely no weighting based on how often consumers purchase them. This means the price of soft drinks (which most consumers purchase) carries the same weight as a bag of arugula (which isn't something people buy often).
It's estimated that if inflation were measured today the same way it was back in 1980, it would have been higher than what Volker was fighting back then.
Posted on 4/15/24 at 7:36 pm to Bard
That's what I was looking for, thanks Bard!
Posted on 4/15/24 at 9:29 pm to TigerTatorTots
quote:
Blackrocks’s Larry Fink
frick Larry Fink - he's a DEI/ESG/WEF hate-America POS.
Posted on 4/15/24 at 10:08 pm to AllDayEveryDay
quote:
For the uninformed, what are the key differences between the 1980 calc and current?
Way too many to count.
Some make sense, some don’t. For example, you cannot directly compare an “entry-level” pickup truck from 1980 since standard features and quality of said truck has improved significantly. Old CPI is a mess for that kind of thing. However, it did a better job measuring literal apples to apples.
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