Thread by @Molson_Hart

Can I get some constructive criticism on the following prediction of inflation?

The below graph is a popular way of showing that overall CPI has been muted (2.25% between 1991 and 2021), but certain categories of goods have seen big increases in prices.

1/n

I like to think about it in terms of the following categories:

- stuff that can be outsourced (toys, clothing)
- stuff that is made cheaper by tech (new cars, software, tvs)
- subsidized or interfered with by government (college textbooks/tuition & hospital/medical care)

2/n

If you look at the categories that have seen the biggest price increases, it's all stuff that gov't is involved in:

- housing (FHA loans)
- education (sallie mae
- healthcare (I don't know how this works admittedly).

3/n

Each of these has an equivalent that isn't messed with by government and with the exception of healthcare, they're growing in price faster than CPI:

- rents
- independent private day schools
- plastic surgery

4/n

So basically, what I'm saying is that we're definitely getting inflation and I would argue that that inflation is mostly been kept in check by technological progress (mostly software) and outsourcing (1.4 billion Chinese people coming online for example).

5/n

The reason why I'm talking about this is that I am disturbed by how much money the US gov't is injecting into the system. Especially considering how we have, at the same time, restricted our capacity to spend it (no gatherings => no new clothes, no restaurants etc.). 6/n

So, I think, as soon as we open up, there is going to be massive pent up demand which is going to result in us finally seeing inflation.

I'm also really worried that we won't be able to control it as it will be politically impossible to.

7/7