Just got out of the funniest meeting with Stat Can's leadership about inflation.
Who wants the deets and what I learned? I promise you'll laugh, but only to hide the pain. π
Quick thread. π§΅π
Who wants the deets and what I learned? I promise you'll laugh, but only to hide the pain. π
Quick thread. π§΅π
2/ First off, they don't understand how CPI influences the Bank of Canada.
They said the BoC uses various measures when making rate decisions.
The BoC says rates are low because CPI is low.
This is the BoC's website if you're confused about what they do.
They said the BoC uses various measures when making rate decisions.
The BoC says rates are low because CPI is low.
This is the BoC's website if you're confused about what they do.
3/ The BoC uses CPI as a report card on how it's doing, and the person doing the grading thinks it's just for fun.
More bluntly put, bad research producing high inflation that says inflation is lower than everyone feels... they don't think it has consequences. LOL!
More bluntly put, bad research producing high inflation that says inflation is lower than everyone feels... they don't think it has consequences. LOL!
4/ Second, one person in managment said the BoC is focused on the $100 billion in savings, which is really the issue. That's what's driving home prices.
Their reaction when I explained 40% of households have negative savings, and 90% of the savings are the top 20% of households.
Their reaction when I explained 40% of households have negative savings, and 90% of the savings are the top 20% of households.
5/ Bruh, it's YOUR point and YOUR data.
Next up, I pointed out their increase in frequency for CPI basket reweighting makes no sense.
Why is the census done every 5 years? Because doing every year would change it too fast to measure the progress, and it's useless data.
Next up, I pointed out their increase in frequency for CPI basket reweighting makes no sense.
Why is the census done every 5 years? Because doing every year would change it too fast to measure the progress, and it's useless data.
6/ Here's the issue. Spending follows a business cycle, that often runs a decade. Some years you'll spend $50/month on hand santizer. Some years you won't need to.
That demand increases prices and shrinks prices when it falls.
That demand increases prices and shrinks prices when it falls.
7/ If you increase the basket weight in a year when it's high, when prices fall you AMPLIFY the decline. This brings CPI lower.
What they're doing is moving closer to a stock market-like model, because they think your spending changes annually. It doesn't.
What they're doing is moving closer to a stock market-like model, because they think your spending changes annually. It doesn't.
8/Their response: "Europe does it this way."
Well, fuck. Clearly, Europe, where people riot because they keep saying inflation is nothing but their cost of living is rising, has it figured out.
We'll be the next Greece because of someone's romantic view of the EU.
Well, fuck. Clearly, Europe, where people riot because they keep saying inflation is nothing but their cost of living is rising, has it figured out.
We'll be the next Greece because of someone's romantic view of the EU.
9/ Their next point: If there was a problem with CPI, we would hear complaints from people like the banks.
Uh... the banks LITERALLY call it fakeflation now. π
This is how we manage monetary policy. π€·ββοΈ
Uh... the banks LITERALLY call it fakeflation now. π
This is how we manage monetary policy. π€·ββοΈ
10/ They said if interests rates rise, the only impact would be his mom would receive more from her pension.
Literally, every central bank says low rates funnel money to the rich and cause inequality, but they need them to bring CPI up. ICYMI.
Literally, every central bank says low rates funnel money to the rich and cause inequality, but they need them to bring CPI up. ICYMI.
https://twitter.com/StephenPunwasi/status/1489064561378578432?s=20&t=-R7HAHrdGRW7r4nlX_6TNQ
11/ I met with two management groups at Stat Can this week.
- One largely under 40
- one was upper management and Boomers
One said they're huge fans of our work and read it almost daily.
The other explained CPI needs to be like Europe. Can you guess which was which?
<end>
- One largely under 40
- one was upper management and Boomers
One said they're huge fans of our work and read it almost daily.
The other explained CPI needs to be like Europe. Can you guess which was which?
<end>
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