To reiterate, the Feds have a number of tricks to hide the football in inflation, and probably have even more that I miss because they're sneaky about it.
1. Hedonic Adjustment: This is when the price changes are adjusted to reflect real (or, importantly, fictive) increases in quality or product enjoyability. It's a technique invented and most suited for electronics, where there was and is massive improvement each year.
2. Government-set Prices: The components of the CPI include markets, like healthcare, where the government has a large say in the prevailing prices. By refusing to change Medicare and Medicaid rates, the government can hold elements constant or increase them less.
3. Consumer Basket Substitutions: When prices for some goods increase, the basket they use to measure CPI is reweighted to substitute cheaper goods for more expensive. This is invalid because goods are rarely true substitutes, but exist as preference substitutes.
This is a little harder to explain, but if you like pork and only switch to chicken when pork is too expensive, you have experienced a degradation in your subjective quality of life. The *bundle of goods* American consumers really consume is non-arbitrary.
True costless substitution is only valid in industrial inputs, where different oils are treated as perfectly interchangeable inputs, different carb sources are just building materials, etc. There can be real substitution only caring about cost. But consumer value is subjective.
4. Cost of Housing: Owner's Equivalent Rent, aka voodoo. This is a measure of the hypothetical rent the owner would have to pay if renting. Instead of using YoY home price increases and YoY same-unit rents, weighted by home ownership %, they use this hypothetical number.
Let me put it to you this way: How often are rental and sale Zestimates off? And that's with all the resources of Zillow behind it, and Zillow has all the revenue sharing of the whole MLS services funding that. Huge amounts of ML go into it.
It still can't account for factors.
OER fails because of the calculation problem: prices are a fast heuristic to measure true value because they have huge incentives to correct mispricings, so they have bounded wrongness. We are not good at calculating hypothetical situations and values.
This problem is much, much worse when you calculate OER by doing a survey of homeowners (which they do, they literally ask people how much they think rent in their area is). People *consistently* underprice rents for the same reasons Boomers think candy should be a quarter.
Our emotional memory of our home price is built when we actually cared about these things, which is when we bought them. The less it matters to us, the less the average person will bother keeping their idea of market rent or market price accurate (they won't, ask Boomers prices).
The CPI print for June says YoY shelter was 5.5%. In Manhattan, 23.1% own and the rest rent. If we take a 10% drop in YoY closed sale prices and a 36.9% increase in rents, we get a ownership weighted increase of 22.4% in cost of shelter.
If we could do that for every market and weight by population, we would have a true and traditional cost of shelter index. OER is a new method of calculation that fundamentally and systematically underestates housing cost inflation, which gets pegged to close to 0% by design.
5. Shrinkflation, Classic and Hidden: Classic shrinkflation is when product sizes go down or become less substantial. It's relatively easy to catch size decreases if they care to (they don't). Watering down is hardy, but you can measure by active ingredients or headliners.
What we are seeing, new to this economic depression, is Hidden Shrinkflation. This operates by quality fade. Every product has a QA process which determines what products are rejected or accepted. Products that receive less QA or pass lower bars are graded accordingly.
How does this operate in practice? For a branded product, the best grades will end up in their flagship brand. Slightly less high end, but still high end, is often resold to Costco under the Kirkland brand. The middling cuts go to a middle market brand. Below that, store brand.
Below that, you get factory rejects sold at their factory outlet as "funny vegetables" or other similar products. Or they get industrially reprocessed - dog food veggies, product bag textiles. The worst stuff is discarded. What happens with QA fade? Everything moves down a step.
What would be rejected is processed, what would be processed is sold as store brand and sometimes literally rots on the shelf (don't eat dog food, kids). Everything seems to go bad faster or break more often than it should. That's because QA costs money through reject rate.
6. Direct Intervention Analysis: The BLS has discretion to factor out "outlier events", discounting massive one time, temporary shifts in price.
Good thing we don't hear anything about that lately. Eheheheh.
It's hard to know how much they've adjusted with this technical method, because the details are proprietary. Assume, however, the worst, and that the magnitude is similar to other adjustments listed.
In conclusion, these statements do not represent the views of my employer, a bulge bracket bank, nor do they constitute investment advice. They are legally not statements of expertise, they are personal opinions.
I'm shitposting, lads.
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Modern art, post-modern art, and meta-modern art all emerge from grappling with the question of the role of art once it's no longer needed for the role of literal representation.
This led to some weird places.
What is kitsch? Kitsch is a lot of things, but fundamentally, kitsch is rooted in the attempt to depict representationally and conventionally in the post-photographic age. It's Kinkade making simple landscapes. It's a Chinese woman sculpting photorealistic Greek nudes.
It doesn't say or do anything *new*. Nor is it necessary. It feels hollow because it is hollow, it's attempting to capture a spark which is now obsolete.
The original push for greater realism in technique came unbidden, as the natural growth of improving art representationally.
Had a very interesting conversation with @Bob_Somebody021, someone who should, like many here, have a professorial job in a more meritocratic world. I'd like to talk about national formation and dissolution with regards to integrative and disintegrative forces.
What is a nation? A nation is a large grouping of persons that believes itself to be united as one tribe. The substrate of the nation is the pre-national group(s). They believe themselves to be united because they imagine themselves so through a common culture.
The cost of binding different groups together into a nation depends on the genetic and cultural distance between the groups. Because we can't (usually) easily assess genetic mixes on first glance, culture is the main method by which we assess shared group identity.
I've talked about the course of American elite history before, but I haven't talked about one of the most significant ethnic contributions to the American population.
What happened with the Ellis Islanders and what did they do?
I'll tell you. The Machine and the Mob.
The Ellis Island machine really begins as the Irish machine, and the Irish are a kind of Ellis Island forerunner. Machine politics was an adaptation of the politics of British rule over Ireland. Elites would manage the population using baronial officers, each covering a barony.
The officer would keep track of popular concerns, whip the vote, intimidate rival voters, and distribute the Lord's largesse. This system was adapted to create "wards" inside of cities, each managed by a ward boss.
I've promised for a bit that I'd talk about Quakers and other things, so here you go.
Quakers: A Taxation Tale,
Or - The Wonders of Cavalier Finance
But first, a potted history of Albion's seed and the migratory groups to early America. There are four main groups that moved to America: The Puritans, Cavaliers, Quakers, and Scots-Irish.
The Puritans usually get the most press, but they all deserve discussion.
The Puritans and Cavaliers have their roots in the War of the Roses, which set the stage for their eventual ethnogenesis. The faction and House of Lancashire, which effectively won the war through its Tudor branch, would become the Puritans.
The claimed shooter, Thomas Crooks, is a ghost. Nobody knew him well at his school, the Feds have wiped him from public records search, and I could only find a landline anyways. No email or socials. With the email, you can crossreference to even anon socials, but...
Just this.
Most people just aren't that careful. Even I'm not that careful, and I know what I'm looking for.
I murked this guy just to dunk on him on Twitter. Your typical normie has a massive electronic paper trail.
If he was ostensibly a disaffected lib or leftist, people like that are totally bold with their identities, hence why pro-Pal dossiers are so easy to put together. Same goes for normiecon Facebook boomer Qposting.
I suppose now is a decent time to go over some content from a previous space I did with @hope_pead, in thread form. Why can be the Maccabees not be integrated? Because the Maccabees are the cause of the fracture, and focusing on that too much raises some questions.
Is there Hanukkah? Yes, there is Hanukkah. But if we are all honest with ourselves, Hanukkah is a minor holiday, not studied in depth, only elevated to give Jews a "I can't believe it's not Christmas!" celebration during the "Holiday Season".
Merry Crossmas.
But the problem comes down to who the Maccabees were and what they did. The point of the book was that the Maccabees had to set aside the observance of the *rules* of God to serve God's higher will and purpose by liberating Israel. This is a powerful idea.