Victor Davis Hanson wrote in a no-data review Independent Institute :
Inflation is just a structure
We used to know what inflation is, its harmful effects in past civilizations, and how to fight it. The danger of worthless currency is the main content of classical literature from Aristophanes to Procopius. The terrible fact is not only that we are destroying the value of our money – the explosive prices of gasoline, food, appliances, wood, electricity, and housing even overwhelm Joe Biden’s power machine – but we are also constructing pseudo-economics to prove nothingness Doctrine is correct.
Now, we have witnessed a multi-trillion-dollar struggle, competing for more than 30 trillion dollars in debt to build “infrastructure,” the term has expanded to include almost anything but Roads and bridges. Farm workers pay $5 per gallon for gasoline commuting to the field, small contractors do plywood renovation work at $80 each, or young couples who are always a month behind the soaring price for a new home?
What does he mean by “pure construction”?I think what he is referring to is the following Definition of structure:
Social constructivism is a theory of knowledge in sociology and communication theory that examines the development of the understanding of the world’s co-construction that forms the basis of shared assumptions about reality. The central idea of the theory is that meaning develops in harmony with others, rather than within each individual.
Well, who am I to criticize this argument? ——I only studied one sociology course in university. But it sounds like he is saying that “inflation” is what he and his friends are talking about. Nevertheless, I can discuss inflation as a technical term from the perspective of an economist.
[As an side, I think Dr. Hanson is a bit behind the time…I price 4’x8′-1/2″ at about $48 at Home Depot, and EIA lists a gallon (all grades) at $3.15/gallon as of 7/19 — maybe Palo Alto is a bit pricier.]
Inflation is an increase in the price level.More specifically, let phosphorusTon Is the price level (defined on a basket of commodities). Then inflation is the percentage growth rate of that price level,
PITon ≡ [((Pt–Pt-1)/Pt-1)-1]x100%.
What did this structure look like in the United States in two and a half years?Below I show the month-on-month annualized inflation rate (for monthly frequency data, I use the calculation PITon ≡ [(Pt/Pt-1)12-1]x100%.
figure 1: CPI from all cities (blue), from personal consumption expenditure (PCE) deflator (black), chain CPI, NSA (brown), sticky price CPI (green) and 16% average CPI adjusted month-on-month Inflation (red). The author calculated the seasonally adjusted chain CPI by applying the arithmetic seasonal adjustment procedure to the monthly logarithmic difference of the nsa chain CPI. Source: BLS, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Cleveland, through FRED, and the author’s calculations.
In the long term:
figure 2: CPI from all cities (blue), from personal consumption expenditure (PCE) deflator (black), chain CPI, NSA (brown), sticky price CPI (green) and 16% average CPI adjusted month-on-month Inflation (red). The author calculated the seasonally adjusted chain CPI by applying the arithmetic seasonal adjustment procedure to the monthly logarithmic difference of the nsa chain CPI. Source: BLS, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Cleveland, through FRED, and the author’s calculations.
For those who can’t explain the growth rate, here is a CPI-based chart of the purchasing power of US cities spending one dollar.
image 3: The purchasing power of the average consumer in US cities in US dollars, 1982-84=100, on a logarithmic scale (blue). This is the FRED series CUUR0000SA0R. Source: Fred.
It is not difficult to see that the decline in the purchasing power of currencies last year was not particularly noticeable.
Finally, because some conspiracy theories are not attached, any right-wing argument is incomplete. I showed an alternative price index (and corresponding inflation rate) based on online data from the billion-price project (in Jim), and from an enlightening introduce go through Alberto Cavallo At Harvard Business School. The blue line is the BLS series and the red PriceStats.
source: Cavallo (June 2021).
source: Cavallo (June 2021).
In other words, in terms of actual price developments facing “people”, CPI does not seem to be far from now. (at this Presentation in June 2021, He pointed out that although the CPI may underestimate inflation in 2020, it may Exaggeration 2021. )
By the way, I don’t always disagree with Hansen.This is his Last appeared in EcobrowserIn a novel way, maybe he should “stay in his driveway”.As for the independent college, here is Last time the organization’s comments appeared in Ecobrowser.
