Comments by "looseycanon" (@looseycanon) on "Are Governments’ Inflation Data Reliable? - VisualEconomik EN" video.

  1. There's a bigger problem here. Not all goods have the same inflation as others and there are goods, which will always be bought. Take housing (which some nations don't bring in to account when measuring inflation), energy, transportation, Internet access, meat, vegetables, cooking oil, cheese... A lot of the things in your traditional CPI are consumer goods and services, like computers, cars, vacations... Really things, which only a small fraction of society buys on a regular basis. So what I'd do, is I'd create a CPI variant, which would measure the highest costs of basic necessities to ascertain basic costs of living. As for not taking technological innovation in to account, I think it should not be taken in to account. Why? Two reasons. One. Because, while there is the argument for including it to make the measure more precise, including it would shift the reported number to higher income bracket in the society, suddenly, you'd not be overestimating for people, who can afford to buy more efficient stuff outright or through help of reasonably interested loans, thus lowering one, sometimes very substantial part of CPI, you'd be underestimating inflation for those, who can't afford these capital expenses. That is the first problem. The second is unpredictability of technological change. Say a well off family would buy a new, more efficient fridge. That is demonstration of what was shown in the video. Consumption of electricity is lowered and inflation on that particular good/service should be lower. However, that assumes no other change had occurred! Say said family was family of gamers and graphics card in one of the gaming rigs owned by the family had died or gone so obsolete, it is no longer relevant for modern titles, so the family replaces this graphics card with a 3090 TI. Graphics cards are the most power hungry parts of a computer, meaning that due to effectively maintenance, whatever savings in terms of energy could be partially offset due to technological innovation, all be it in a different field. Now some might argue, that you need to measure taking only one change in to consideration, as to measure the effect. However, that argument falls on it's face, because of the time horizon that's measured by inflation, which typically is a year. What we really need is whole set of statistical information to evaluate the situation and take the right action. For instance, to take a more targeted action to reduce inflation in particular component of CPI, not just utilize the blunt instrument of monetary policy.
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