I mean no offense, but it's a bit surprising that someone on HN would not understand what's wrong with this statement. It takes a very basic understanding of math to know why the YoY says very little about rapidly changing inflation metrics. MoM is what you need to pay attention to.
Over the years I have read a few articles or blogs that make the argument that if government inflation figures in the US were calculated as they do in Europe, then our reported US inflation figures would be much higher. Can anyone here verify this?
Our main problems involve under the table unreported to the public military expenditures. If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900. Those costs are a bleeding hemorage to the middle class tax payer who aren’t getting a cut of military profiteering because they don’t own ‘defense’ stocks.
Consumer debt is almost as much of a worry as government debt.
Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
> Over the years I have read a few articles or blogs
Without linking the blogs or articles it’s hard to say much.
Inflation is a topic that attracts a lot of quackery. There are a lot of blogs and websites that go viral from time to time with claims that the “true” inflation number is dramatically higher.
There is a quick reality check you should run whenever you encounter these claims: Take the claimed inflation number over a period of time and calculate the net multiple. Then run a reality check on something like a $500,000 house or a $5 hamburger.
There’s one prolific website and author who claims the “true” inflation rate is some number like 11% going back decades. If you do the math, that means something purchased 50 years ago in 1975 would cost 185 times less. A $1,000,000 home today would have been $5,400 in 1975 and a $5 hamburger today would have been less than $0.03. Obviously these numbers don’t work, so you can discard the author’s claim.
Actual inflation numbers over long periods are very sensitive to small changes due to compounding. Even over a 10 year period. When you see someone claiming dramatically different results, run a quick math check.
Also be careful for the cherry pickers: They’ll identify one or two outlier year-over-year jumps (eggs during COVID, home prices during a housing rush, insurance prices in a city after a fire) and try to use those as their basis.
Secret defense spending would not and should not impact inflation numbers except in so far as it impacts the already measured consumer basket, the US does not have 900 military bases near China, etc. etc.
I’m driving, it’s difficult to put them on the same chart and normalize. But they are very similar. There are differences in methodology (housing, healthcare) but those generally add a small amount to US inflation chained index vs HICP.
American consumer debt is also a different beast in the US because households tend to counter inflation and higher prices by shifting over their monthly spending to credit cards. Most Europeans use credit only for certain goods and mostly pay the full amount off every month. This creates an elasticity in the US, where inflation leads to higher prices which slowly leads to higher household debt, which makes recessions more grave when they do appear. Europeans are instead quicker to move to cheaper stores and start buying cheaper goods in bulk.
> Eventually countries that don't spend most of their treasure on their military will win.
Being from Europe, I wish. But for now, it doesn't seem to be the case. Your military power basically allows you to bully Europe and many others, tell us what to buy and whom to buy it from, which is an enormous economic advantage. You just made our puny European leaders promise an enormous investment in the US defense industry in the moment where we would need to propel our own industry the most (it probably won't materialize, but still, we'll spend at least some of it because most of our leaders don't want to be in a bad standing with the US). You are also bullying us into signing contracts with inferior American suppliers rather than Huawei, among many other things. All of this happens mainly due to the US's disproportionate military power. Meanwhile, you can afford having a president who is borderline illiterate (and actually makes binding decisions) without the economy even meaningfully sinking (stocks at historical maximums).
So spending in the military seems to actually be a good choice, unfortunately.
The US and EU have reported broadly similar inflation numbers for the last five years or so, with the EU generally being a little lower. If your thing was true, you'd expect a vast gulf in prices to have opened up, but it doesn't really seem to have.
Anecdotally, I was in SF once or twice a year for a few years before the pandemic, and it felt like mostly similar prices to Dublin (an expensive European city). I've also been back a few times since the pandemic, and it now feels somewhat more expensive than Dublin, but not dramatically. Which is about what you'd expect if the official inflation figures were broadly correct. Obviously this is super-anecdotal, mind you.
The surge in services costs seems to be a bit of a surprise (?):
> Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022. Trade services margins rose 2%, coming amid ongoing developments in President Donald Trump’s tariff implementations.
> In addition, 30% of the increase in services came from a 3.8% increase in machinery and equipment wholesaling. Also, portfolio management fees surged 5.8% and airline passenger services prices rose 1%.
> The government on Tuesday reported a mild increase in consumer prices in July, though rising costs for services like dental care and airline tickets caused a measure of underlying inflation to post its largest gain in six months.
> While financial markets have priced in an interest rate cut from the Federal Reserve next month, rising services inflation and the expectation tariffs could still significantly boost goods prices left some economists doubtful of a resumption in policy easing in the absence of labor market deterioration.
When it comes to (Fed) policy, the other thing they look at besides inflation/PCE is employment, which appears to be softening (see recent revisions which caused recent Trump-BLS turmoil).
That's what tariffs do though. If you have a product that competes with another that now costs more due to tariffs, you're now free to raise your prices as well, in order to maximize profit. Your product may not have a tariff, but it does have greedy shareholders that see that they can now raise their earnings because competitors suddenly aren't so competitive anymore.
Try going on a shareholder earnings call. They're free. It's company executives trying to impress shareholders. It's the only place I've ever heard people brag about how much they've raised their prices.
The problem the admin has is that economists at the BLS by and large aren't scared of getting fired. That work experience is gold in the private sector - most of them can easily get a job in finance and 3x-4x their comp.
Are there inflation indicators that aren’t government controlled? Don’t think anything coming out of trump influenced bodies is worth the paper it’s on anymore
What you really need to understand about inflation, is that we've had particularly exceptionally low long-term inflation in America for the last 50 years, outside of stagflation in the '70s.
And this is all enabled by globalization and global trade. Globalization fundamentally provides arbitrage for two things. Labor costs, and environmental regulation.
Because there were a lot of poor desperate countries that would build your stuff for near slave labor conditions.
In particular, China of course. But China has now passed through its phase of poor desperation. It is now an urbanized economy. So of a lot of other poor desperate countries aren't quite as poor desperate.
Globalization is fundamentally enabled by the US Navy and US military supremacy guaranteeing shipping trade on the oceans.
This has not been the historical Norm. It's actually historical anomaly caused by the power vacuum of world war II, and secondarily by the fact that the Cold war was between the US and maritime power and Russia, who are effectively landlocked.
Some scholars term China as a continental power, especially cuz of their history of invasion like the Mongols, but unlike Russia, China has a very large coastline with a lot of ports that aren't locked in by Arctic ice.
They are a hybrid Continental and a maritime power, and based on their shipbuilding, their ambitions are to become a maritime power.
This combined with American lack of enthusiasm for maintaining this global order, likely means that globalization will come to an end.
And that means onshoring production back from China.
We'll see if this actually happens, but that is the trend long-term.
And that involves a huge amount of switching costs, which essentially is going to be inflation.
I'm certainly not going to sit here and say that Trump's economic policies are correct. Of course, the proper way to handle a transition of reonshoring our production from our previous 50 years of globalization would be gradual and controlled.
Not a bunch of stupid chaotic tariff policies.
But essentially what Trump is doing is in line with everything I've described.
> What you really need to understand about inflation, is that we've had particularly exceptionally low long-term inflation in America for the last 50 years, outside of stagflation in the '70s.
What you really need to understand is that we can, and we must absolutely, generally and non-exceptionally have low inflation at all times. There's absolutely no sane reason to have high inflation in a low-corruption financial system - none!
> Globalization... US Navy... US military... China hybrid... American lack of enthusiasm for guaranteeing shipping trade on the oceans.
A bunch of red herrings meaning nothing... It's not lack of enthusiasm, it's the overabundance of enthusiasm for tariffs and sanctions backed by the same US Navy & US Military to maintain a restricted trade regime which, not-accidentally, results in the US public being trapped in a monopolized and inflationary market.
> And that involves a huge amount of switching costs, which essentially is going to be inflation.
You mean, the population will bear the costs via the inflation tax, while the rich will be getting richer, because... historical norms should not be broken, especially this one?
Historically, messed up trade led to global wars, actually, it's either global trade or global wars, there's no middle ground. You failed to mention that important historical norm which is also one of the ways to make the rich richer.
The historical norms are something we should absolutely steer clear of, not use them as excuses for more nonsense in the future!
I don't trust any government numbers regardless of who the president is. There will always be pressure to fudge the numbers to make who ever is running things look good.
There use to be a billion prices project out of MIT that got shutdown years ago because it show higher inflation than what the rulers at the Fed wanted to show. I believe its funding was pulled or something like that.
Frankly, I haven't seen a single country where I spent any significant amount of time, where official inflation numbers were not seeing as a complete joke by the common folks.
And my experience usually matched it.
There's plenty of space to hide reality when building a price index.
Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
We can also do the same with housing: Capture prices as the average of a basket of cities. In reality, some cities will have absurd price increases while others are in decadence. The average prices increase of a disputed locality like NYC metro area will probably be masked by the fact that houses in BeltRustAssEnd, MI are becoming increasingly cheap. But, for the real person, what the fuck matters if BeltRustAssEnd houses are cheap as bananas? Who can get a job there?
And of course, a single number cannot capture the subtleties of reality like the fact that while it is great that 80" TVs are now so cheap that they can be bought by the commoner, this fact means fucking nothing if having a roof over your head in a place where you don't need to spend most of your live commuting is becoming increasingly too expensive for a lot of the same folks. Too bad the commoner is just a paycheck away from being in the streets as he cannot pay for a house! He now has a TV that not even Queen Elisabeth could have just a few years ago!
This is the the Producers Price Index. It tracks wholesale prices which are far less affected by locality. It also doesn't measure housing prices at all.
The PPI is not a measure of consumer inflation. It's a leading indicator for it.
> Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
I don't know how this works in other countries, but in the US the weights do not change month to month like this. If consumers keep making this choice over a period of years the index will eventually get reweighted, but reweighting only happens once every few years.
(Of course, if you were an official put in charge specifically to cook the books you could just reweight on a monthly basis like you describe, which is something that might well happen now...)
In Norway our food prices has gone up by more than 4 in one month while we are destroying any capacity for local production while we have protectionism that would make Trump blush.
It still baffles me that he has convinced so many of his followers that he's going to lower grocery prices by raising prices. It almost doesn't even make grammatical sense, let alone any practical sense.
Before someone decides to try and explaining to me that tariffs will bring back work to the US and help our economy, I just need to say that is orthogonal to the point of inflation. It's possible that the tariffs will be a net good. I don't think they will but at least that's something that's on the table, but they will absolutely not lead to lower prices. If it were cheaper to manufacture goods in the US then we'd already be manufacturing goods in the US.
When I was about 20 I started listening to Sean Hannity, and while I no longer agree with anything he says, I do appreciate the glimpse I got into his way of thinking. I mention this because...
I can't tell you how many times I've heard the idea that success in free market capitalism comes from offering goods and services to customers with the right balance between quality and price, and that good quality and price is assured because of competition in the market.
But now I see that the true path to success is to first gain favor from those who already have wealth and power, and then use their wealth and power to reduce or eliminate competition.
Perhaps I'm misunderstanding the comments, but I find the comments here to be fairly disconnected from the rah rah VC world. Plenty of criticism about those systems around here, and perhaps more pointed and accurate than other places.
The domain name here isn't really driving the comments or content that I can tell.
Another thing to watch for is the BLS import prices which show prices excluding tariffs. If these remain flat for July as they did for June, it would be another data point suggesting tariffs induced inflation.
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[ 2.7 ms ] story [ 91.7 ms ] threadhttps://archive.is/xzohV
Only economists, policy makers, investors and people blabbing on the internet do care about stats.
Ordinary people just look at price tags; that's all they need.
Straight to jail.
Inflation to low?
Believe it or not, straight to jail.
Our main problems involve under the table unreported to the public military expenditures. If you look at a map of our military bases, we have many bordering China. I think our total number is close to 900. Those costs are a bleeding hemorage to the middle class tax payer who aren’t getting a cut of military profiteering because they don’t own ‘defense’ stocks.
Consumer debt is almost as much of a worry as government debt.
Eventually countries that don't spend most of their treasure on their military will win. There has to be a balance between true defense spending and healthy spending like feeding and educating children, infrastructure, R&D that helps society, etc.
Without linking the blogs or articles it’s hard to say much.
Inflation is a topic that attracts a lot of quackery. There are a lot of blogs and websites that go viral from time to time with claims that the “true” inflation number is dramatically higher.
There is a quick reality check you should run whenever you encounter these claims: Take the claimed inflation number over a period of time and calculate the net multiple. Then run a reality check on something like a $500,000 house or a $5 hamburger.
There’s one prolific website and author who claims the “true” inflation rate is some number like 11% going back decades. If you do the math, that means something purchased 50 years ago in 1975 would cost 185 times less. A $1,000,000 home today would have been $5,400 in 1975 and a $5 hamburger today would have been less than $0.03. Obviously these numbers don’t work, so you can discard the author’s claim.
Actual inflation numbers over long periods are very sensitive to small changes due to compounding. Even over a 10 year period. When you see someone claiming dramatically different results, run a quick math check.
Also be careful for the cherry pickers: They’ll identify one or two outlier year-over-year jumps (eggs during COVID, home prices during a housing rush, insurance prices in a city after a fire) and try to use those as their basis.
Just not a very good comment in my view.
https://fred.stlouisfed.org/series/CP0000EZ19M086NEST#
https://fred.stlouisfed.org/series/SUUR0000SA0
I’m driving, it’s difficult to put them on the same chart and normalize. But they are very similar. There are differences in methodology (housing, healthcare) but those generally add a small amount to US inflation chained index vs HICP.
Being from Europe, I wish. But for now, it doesn't seem to be the case. Your military power basically allows you to bully Europe and many others, tell us what to buy and whom to buy it from, which is an enormous economic advantage. You just made our puny European leaders promise an enormous investment in the US defense industry in the moment where we would need to propel our own industry the most (it probably won't materialize, but still, we'll spend at least some of it because most of our leaders don't want to be in a bad standing with the US). You are also bullying us into signing contracts with inferior American suppliers rather than Huawei, among many other things. All of this happens mainly due to the US's disproportionate military power. Meanwhile, you can afford having a president who is borderline illiterate (and actually makes binding decisions) without the economy even meaningfully sinking (stocks at historical maximums).
So spending in the military seems to actually be a good choice, unfortunately.
Anecdotally, I was in SF once or twice a year for a few years before the pandemic, and it felt like mostly similar prices to Dublin (an expensive European city). I've also been back a few times since the pandemic, and it now feels somewhat more expensive than Dublin, but not dramatically. Which is about what you'd expect if the official inflation figures were broadly correct. Obviously this is super-anecdotal, mind you.
> Services inflation provided much of the push higher, moving 1.1% higher in July for the largest gain also since March 2022. Trade services margins rose 2%, coming amid ongoing developments in President Donald Trump’s tariff implementations.
> In addition, 30% of the increase in services came from a 3.8% increase in machinery and equipment wholesaling. Also, portfolio management fees surged 5.8% and airline passenger services prices rose 1%.
* https://www.cnbc.com/2025/08/14/ppi-inflation-report-july-20...
> The government on Tuesday reported a mild increase in consumer prices in July, though rising costs for services like dental care and airline tickets caused a measure of underlying inflation to post its largest gain in six months.
> While financial markets have priced in an interest rate cut from the Federal Reserve next month, rising services inflation and the expectation tariffs could still significantly boost goods prices left some economists doubtful of a resumption in policy easing in the absence of labor market deterioration.
* https://www.reuters.com/world/us/us-producer-prices-accelera...
When it comes to (Fed) policy, the other thing they look at besides inflation/PCE is employment, which appears to be softening (see recent revisions which caused recent Trump-BLS turmoil).
The US risk for stagflation seems to be growing:
* https://www.investopedia.com/terms/s/stagflation.asp
* https://en.wikipedia.org/wiki/Stagflation
* https://paulkrugman.substack.com/p/its-beginning-to-smell-a-... (check out the music video link at the end)
Try going on a shareholder earnings call. They're free. It's company executives trying to impress shareholders. It's the only place I've ever heard people brag about how much they've raised their prices.
And since this is super low qualy, there should be an additional markup of 30-50%
The purchasing power of Gold has been remarkably consistent over the long term.
That is, if you convert the gold to dollars, how many eggs could you buy?
To learn more, read up on the work of Keith Weiner of Monetary Metals, or listen to the early episodes of his podcast “The Gold Exchange”.
https://www.perplexity.ai/search/what-is-the-us-inflation-ra...
And this is all enabled by globalization and global trade. Globalization fundamentally provides arbitrage for two things. Labor costs, and environmental regulation.
Because there were a lot of poor desperate countries that would build your stuff for near slave labor conditions.
In particular, China of course. But China has now passed through its phase of poor desperation. It is now an urbanized economy. So of a lot of other poor desperate countries aren't quite as poor desperate.
Globalization is fundamentally enabled by the US Navy and US military supremacy guaranteeing shipping trade on the oceans.
This has not been the historical Norm. It's actually historical anomaly caused by the power vacuum of world war II, and secondarily by the fact that the Cold war was between the US and maritime power and Russia, who are effectively landlocked.
Some scholars term China as a continental power, especially cuz of their history of invasion like the Mongols, but unlike Russia, China has a very large coastline with a lot of ports that aren't locked in by Arctic ice.
They are a hybrid Continental and a maritime power, and based on their shipbuilding, their ambitions are to become a maritime power.
This combined with American lack of enthusiasm for maintaining this global order, likely means that globalization will come to an end.
And that means onshoring production back from China.
We'll see if this actually happens, but that is the trend long-term.
And that involves a huge amount of switching costs, which essentially is going to be inflation.
I'm certainly not going to sit here and say that Trump's economic policies are correct. Of course, the proper way to handle a transition of reonshoring our production from our previous 50 years of globalization would be gradual and controlled.
Not a bunch of stupid chaotic tariff policies.
But essentially what Trump is doing is in line with everything I've described.
What you really need to understand is that we can, and we must absolutely, generally and non-exceptionally have low inflation at all times. There's absolutely no sane reason to have high inflation in a low-corruption financial system - none!
> Globalization... US Navy... US military... China hybrid... American lack of enthusiasm for guaranteeing shipping trade on the oceans.
A bunch of red herrings meaning nothing... It's not lack of enthusiasm, it's the overabundance of enthusiasm for tariffs and sanctions backed by the same US Navy & US Military to maintain a restricted trade regime which, not-accidentally, results in the US public being trapped in a monopolized and inflationary market.
> And that involves a huge amount of switching costs, which essentially is going to be inflation.
You mean, the population will bear the costs via the inflation tax, while the rich will be getting richer, because... historical norms should not be broken, especially this one?
Historically, messed up trade led to global wars, actually, it's either global trade or global wars, there's no middle ground. You failed to mention that important historical norm which is also one of the ways to make the rich richer.
The historical norms are something we should absolutely steer clear of, not use them as excuses for more nonsense in the future!
There have been research programs that collected the data themselves:
* https://en.wikipedia.org/wiki/MIT_Billion_Prices_project
There use to be a billion prices project out of MIT that got shutdown years ago because it show higher inflation than what the rulers at the Fed wanted to show. I believe its funding was pulled or something like that.
There's plenty of space to hide reality when building a price index.
Price index do not capture the reality of most people cost of living. They don't capture the family that have to buy margarine instead of butter, because butter became too expensive, while margarine became cheaper, Weight both items as the same, and voilá! no inflation, increases in the price of butter were cancelled by cheaper margarine, fuck you if you prefer butter.
We can also do the same with housing: Capture prices as the average of a basket of cities. In reality, some cities will have absurd price increases while others are in decadence. The average prices increase of a disputed locality like NYC metro area will probably be masked by the fact that houses in BeltRustAssEnd, MI are becoming increasingly cheap. But, for the real person, what the fuck matters if BeltRustAssEnd houses are cheap as bananas? Who can get a job there?
And of course, a single number cannot capture the subtleties of reality like the fact that while it is great that 80" TVs are now so cheap that they can be bought by the commoner, this fact means fucking nothing if having a roof over your head in a place where you don't need to spend most of your live commuting is becoming increasingly too expensive for a lot of the same folks. Too bad the commoner is just a paycheck away from being in the streets as he cannot pay for a house! He now has a TV that not even Queen Elisabeth could have just a few years ago!
The PPI is not a measure of consumer inflation. It's a leading indicator for it.
I don't know how this works in other countries, but in the US the weights do not change month to month like this. If consumers keep making this choice over a period of years the index will eventually get reweighted, but reweighting only happens once every few years.
(Of course, if you were an official put in charge specifically to cook the books you could just reweight on a monthly basis like you describe, which is something that might well happen now...)
How is that not newsworthy, but this is?
This is false on its face. Inflation has been a problem for years.
Before someone decides to try and explaining to me that tariffs will bring back work to the US and help our economy, I just need to say that is orthogonal to the point of inflation. It's possible that the tariffs will be a net good. I don't think they will but at least that's something that's on the table, but they will absolutely not lead to lower prices. If it were cheaper to manufacture goods in the US then we'd already be manufacturing goods in the US.
I can't tell you how many times I've heard the idea that success in free market capitalism comes from offering goods and services to customers with the right balance between quality and price, and that good quality and price is assured because of competition in the market.
But now I see that the true path to success is to first gain favor from those who already have wealth and power, and then use their wealth and power to reduce or eliminate competition.
The domain name here isn't really driving the comments or content that I can tell.
Another thing to watch for is the BLS import prices which show prices excluding tariffs. If these remain flat for July as they did for June, it would be another data point suggesting tariffs induced inflation.