Shadowstats is complete garbage. Their "alternative measurement" of prices is to take the BLS numbers and add 3.5% to it. That is it. See "The [$175] subscription price of hyperinflation-predicting ShadowStats hasn't changed in 8 years"[0] from 2015. In 2024 it is still $175, so make that 17 years.
It is not a very good argument that their subscription service has not increased in price in 17 years. Many online services have kept their price but the number of users have increased a lot.
The important thing about ShadowStats is that they show different methods of calculation price inflation.
Calculating inflation from prices is not easy since people tend to consume more chicken or pork of beef is getting more expensive. If you still only consume beef the price index do not show your personal reality, and this reality is different for all people.
In aggregate everything that is produced get consumed over time, so the total prices paid is always connected to the total amount of money available.
> Inflation can be seen as just the increase in money supply or an increase in prices.
Not quite. Price measures the values of the items being exchanged on both sides of the transaction. If you buy my widget for $1 today, and tomorrow you buy another for $2, that could mean:
1. The value of the currency has decreased.
2. The value of the widget has increased.
3. Some combination of both.
Inflation is only concerned with #1 and we attempt to suss out only the currency component by observing the change in price over a wide range of items frequently transacted for currency, which in practice typically means watching consumer purchases. If you see a general rise in price across all of what you are watching, it is quite likely that the change is a result of the change in value of the currency. If only one good in a basket goes up in price in those observations, it is likely that it is said good that became more valuable, not that the currency became less valuable.
IMF: Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Milton Friedman (famous Economists)
“Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
My take is that if more money is produced they will chase the same amount of good until the prices increase enough to accommodate the new money.
Carl Barks described inflation in the best way in his 1950 Donald Duck classic: "A Financial Fable"
rssoconnor|2 years ago
If you want an actual alternative to BLS numbers, there is the https://thebillionpricesproject.com/ from MIT.
[0] https://theweek.com/speedreads/449820/subscription-price-hyp...
kennethh|2 years ago
Calculating inflation from prices is not easy since people tend to consume more chicken or pork of beef is getting more expensive. If you still only consume beef the price index do not show your personal reality, and this reality is different for all people. In aggregate everything that is produced get consumed over time, so the total prices paid is always connected to the total amount of money available.
randomdata|2 years ago
Not quite. Price measures the values of the items being exchanged on both sides of the transaction. If you buy my widget for $1 today, and tomorrow you buy another for $2, that could mean:
1. The value of the currency has decreased.
2. The value of the widget has increased.
3. Some combination of both.
Inflation is only concerned with #1 and we attempt to suss out only the currency component by observing the change in price over a wide range of items frequently transacted for currency, which in practice typically means watching consumer purchases. If you see a general rise in price across all of what you are watching, it is quite likely that the change is a result of the change in value of the currency. If only one good in a basket goes up in price in those observations, it is likely that it is said good that became more valuable, not that the currency became less valuable.
kennethh|2 years ago
IMF: Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Milton Friedman (famous Economists) “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
My take is that if more money is produced they will chase the same amount of good until the prices increase enough to accommodate the new money.
Carl Barks described inflation in the best way in his 1950 Donald Duck classic: "A Financial Fable"
https://en.wikipedia.org/wiki/A_Financial_Fable