I mean, these are crypto-crazed people with their alternate reality. Make a company, add the word "blockchain" in your mission statement, and join in the bandwagon/Golgafrinchan Ark Fleet Ship B?
Lots of people/businesses have a need to know if they’ll be able to meet their future expenditures with current savings. The issue is the generic basket of goods isn’t relevant for all people. For example, a condo with a reserve fund only really cares about construction costs in a single city. A retiree cares a lot about the price of nursing homes and in home care but may not even realize it.
I expect if you can help people/financial advisors understand their future expenditure needs there is a lot of value in it.
Yes, I agree it’s not as useful if you trust government sources.
I’m not that familiar with USA inflation but with Canadian inflation statistics, certain categories feel way off - such as housing. As someone who is considering buying a house their measure is useless.
>certain categories feel way off - such as housing. As someone who is considering buying a house their measure is useless.
Because it's based off "owners equivalent rent", not the sticker price of a house. The latter is somewhat problematic because a house is an investment, not an expenditure (unlike an apple or a doctor visit).
This is difficult for me to understand as there is no market price for what they are trying to estimate. They have a thousand knobs to guess at. It reads a bit like they are grouping people who’ve own their home for 50 years in with those who just bought - similar to how they calculate rent.
For example, they weight mortgage interest at less than utilities. For a new homeowner, mortgage interest is probably 5-10x utilities.
Regardless, they explicitly ignore the experience of a first time home buyer, who are pretty trapped into renting. A house is not just an investment, it’s a different experience owning versus renting.
When measuring the price index of natural gas should you average in contracts written 50 years ago but still active, regardless of whether that price is currently available on the market?
> Eating food grown yourself is a different experience than shopping at the supermarket. Should we factor farm land cost into the CPI?
If 70% of the population paid for a "gardening experience" like they do for gym memberships, etc then yeah I would expect that to be in CPI.
I think, you're missing the point. Houses are consumed over very long periods of time, which means the price at which you're purchasing your home today is going to affect your future cost of living for many, many years. Therefore, if we are trying to measure the current cost of living, current house prices are pretty much irrelevant.
How I interpret their methodology is they are trying to estimate the change in costs for existing owners. Is that correct?
What I feel is that mortgage payments have doubled in 10 years for new buyers. However, because new buyers are a small fraction of existing buyers this doesn't rapidly affect inflation as they calculate it.
Thanks for trying to explain it, I feel pretty dumb as I'm clearly missing something obvious.
Conceptually, it's useful to think of a house as an investment good that produces housing services (shelter, living space, etc.). These housing services are what you get when you rent a house. If you're a home owner, you don't pay rent explicitly, but it really is as if you had rented out your house to yourself and you were paying rent to yourself. Therefore the cost of housing services is best estimated through rent prices.
The other thing is the cost of the house itself, not the housing services. This includes the purchasing cost and the cost of repairs that you make periodically. The repairs are not a problem but the purchasing cost would need to be spread over the useful life of the house. If the house is bought on credit then the buyer will also incur funding costs (i.e. in the form of interest payments), but these can't be considered costs that are related to housing. They are separate. It's like if you buy a car on credit you'll pay more than if you paid for it with your savings, but that doesn't mean the car is more expensive.
CPI includes housing services and repairs. As far as I know, it doesn't include houses, probably because they're considered an investment good, while CPI is concerned with consumer goods. At any rate, mortgage payments are not a good estimate of how much houses cost. The reasons are interest, which is a different cost, and the fact that principal payments are arbitrary as they vary depending on things like mortgage length, and so on.
Anyway, I understand that many people feel strongly about CPI and inflation measurements, but while cost accounting is not rocket science it's not completely straightforward either, and most of the time criticism of CPI by layman people turns out to be misguided.
Thanks for your time. Renting looks like simpler to estimate, but it confuses me as well.
> Every month, the rental prices paid by the households in the sample are compared with the rental prices they paid the previous month
When rent control caps rent increases this becomes a lagging indicator. Why don't they try to estimate market rent?
This feels similar to my problem with the owner cost estimate. Consider a hypothetical about cars - in a world where everyone buys new cars with 8 years of financing, suddenly there is a car shortage (chips or whatever). The price of a new car doubles. As very few owners need to buy a new car every year, on average their costs are about the same as last year despite a 100% increase in the cost of a new car.
If it has a good enough UI, people will pay, just like anything else. Not everybody wants to build their own scripts around the data, even if its free.
Obviously this is not a billion dollar idea, but it sure could bring in some $ to pay for a full-time developer or two and still make a little profit.
> If it has a good enough UI, people will pay, just like anything else. Not everybody wants to build their own scripts around the data, even if its free.
Then a big corp comes up with their own offering and steamrolls you with their lower prices, integration with their existing products, and better engineering/sales staff. See for instance, mongodb and elasticsearch.
> That’s why we named 1729.com after Ramanujan’s number. Ramanujan made great contributions to India and to mathematics around the world. He was particularly renowned for his contribution to number theory, which underpins cryptography and hence crypto. And he represented something I’ve been thinking about for many years, which is how to use technology to help the dark talent in India and around the world rise as Ramanujan did. Thus the fourth task is to help identify those people and places where the best is outside the West, where the ascending world is surpassing the declining world.
$100k for a dev in India, Ukraine, or Venezuela, is more than enough incentive.
