Full Stack Economics

you need to compare the alternative. and also take into account the growth that happened thanks to cheap mortgages. there was a nominal price bubble (especially visible in the rent vs buy graph) but rents did not show the same spike, there was no general shortage (as seen in vacancy rates), and since interest rates fell nominal prices went up, and the central bank overcorrected. https://www.fullstackeconomics.com/p/the-2000s-housing-bubble-was-grea… ... the obvious problem is the low productivity of suburbs. spending a lot of money on building them is good for short-term GDP growth, but long-term it's a poor investment compared to the usual recommendations.

The US federal government is going to ban anti-compete clauses, which is great news: https://www.fullstackeconomics.com/p/banning-noncompete-agreements-wou…

When 1984 was written in the 40s the economics of car ownership were very different. Great post on this: “Why Agatha Christie could afford a maid and a nanny but not a car” https://www.fullstackeconomics.com/p/why-agatha-christie-could-afford-…

Not just 19th century; this persisted well into the 20th as well. Agatha Christie wrote in her autobiography about in post Great War Britain a servant being a necessity but that she wasn’t likely ever going to be rich enough to afford a car. https://fullstackeconomics.com/why-agatha-christie-could-afford-a-maid…

> I think it makes sense to tax actualized gains at the point of sale. There are a lot of loopholes that should be closed. Let's say your parents buy an asset and you inherit it when they pass away. Logic says that if you eventually sell that asset, the appreciation is the difference between what your parents paid for the asset and what you made from the sale. However, a tax loophole resets the value of the asset to what it was theoretically worth when your parents died, which renders nontaxable the capital gains that occurred during their lifetime. https://fullstackeconomics.com/how-a-key-biden-tax-idea/

I've seen a lot of speculation like this article, something to the effect of "these sanctions will weaken the international power of the U.S. dollar by forcing more countries to consider non-dollar monetary systems." It's a reasonable concern. But I think it's important to consider the reasons why that might not happen. Alan Cole from Full Stack Economics provides a couple good general thoughts on sanctions here [1], but I'll highlight my favorite: > The fact is that the US has most of the world’s largest economies on its side. China is the world’s second largest economy at nominal exchange rates, and Russia is about eleventh. The top ten also include Japan, Germany, the UK, France, Italy, Canada, and South Korea, all of which are actively participating in the anti-Russia sanctions. > Financial commentators love talking about the dollar losing its status as reserve currency, because it gives them a permission structure to wildly speculate. But there is little constituency for a Russia-friendly financial system among the world’s largest economies. And for countries seeking a relatively neutral and rules-based system free of geopolitics, China isn’t a very good alternative anyway. (It has a variety of idiosyncratic foreign policy demands of its own, and regularly uses economic might to help reinforce them.) The fact is that a huge majority of the world's GDP is actively in support of of these sanctions. This is not some arbitrary, capricious act – Russia is engaged in the…

Shadow stats is a crank blog with absolutely no validity. Choose your debunking source, but the owner of the blog literally just adds an amount to the official rate that he thinks represents the government error. There’s no calculation, there’s no “pre-1980 methodology”, just one dude’s vibes. If the rate has averaged 9% over the past 25 years, you’d be talking about over 750% inflation since 2000. You can buy any manner of new car today for $35k - could you buy a new car for $5k in 2000? Did a gallon of gas cost $0.40/gallon? Could you rent a modern $1,500 apartment for $200/month? https://www.fullstackeconomics.com/p/no-the-real-inflation-rate-isnt-1…

That depends on how much power you give the locals. Sometimes the state level has power to disempower the local NIMBYs. Like with SB-9. https://www.fullstackeconomics.com/p/how-california-plans-to-turn-the-…

I don’t know if you’re thinking of it but there’s this site called shadowstats which claims to calculate CPI/inflation with the old method and shows totally wild inflation numbers but the way it actually works is that the guy who runs the site takes regular CPI and adds in adjustments to his liking to get inflation numbers that he thinks look right. My understanding is that you get pretty similar numbers with either methodology. See more here for example: https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-perc…

A word of caution about shadowstats: they have been making basic, verifiable conceptual errors about the mathematics of inflation indexes for years. Details here: https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-perc…

Not all companies (stocks) have the same sensitivity to inflation. Depends on all sorts of things that are business specific. One example is how easily price increases from suppliers can be passed on to customers. A company that sells a commodity into a very liquid market won't suffer as much. At the other end of the spectrum, inflation decreases the real value of future cash flows, so tech stocks have been hammered. Here's an explanation I like: https://fullstackeconomics.com/rising-interest-rates-are-hammering-tec…

Perhaps if we weren't subjecting the tens of millions of Americans in the $15,000 - $40,000 income range to effective marginal tax rates of up to 103% [0], we would see more labor force participation. Between income tax and benefit phaseout, it can literally cost money to get a raise in our system today [1]. [0] https://fullstackeconomics.com/103-percent-the-hidden-tax-rates-of-mea… [1] https://www.heritage.org/taxes/report/effective-marginal-tax-rates-low… P.S. if you account for need-based financial aid scholarships for college, the situation is even more dire.

OP author here. I wrote a shadowstats debunker back in November: https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-perc… tldr: they don't actually reconstruct the old methodology. They add a fudge factor based on how much they think the new methodology increases the inflation rate. And that estimate is based on a basic math error.

Article you may enjoy: Why the government took home prices out of its main inflation index https://fullstackeconomics.com/why-the-government-took-home-prices-out…

For those who don't know about shadow stats, here's a good explanation of the issues with it, and why their numbers are off https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-perc… > Based on my conversations with Williams, I think I now understand what he’s doing: he’s misinterpreting a cumulative 20-year change in the measured price level as a change in the measured annual inflation rate. And that caused him to overestimate that annual change by at least an order of magnitude.

The near flat graph of housing costs since 1993 [1] seems really suspect. It's from the BLS so maybe housing costs have been much more stable in the USA, because in the UK they have soared since the early 90's - so much so that Millennials are often called "Generation Rent" due to the declining rate of home ownership. [1] https://fullstackeconomics.com/content/images/size/w1600/2022/01/07Inf…

A take down of Shadowstats from 2011: * https://www.pragcap.com/why-is-there-deflation-in-hyperinflation-forec… And then again in 2017: * https://www.pragcap.com/theres-still-deflation-hyperinflation-forecast… And November 2021: * https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-perc… Seriously, these guys are garbage. If you want to verify the official numbers yourself MIT has some code: * https://en.wikipedia.org/wiki/MIT_Billion_Prices_project

See https://fullstackeconomics.com/how-luxury-apartment-buildings-help-low… for the empirical research refuting that point and agreeing with the basic supply-demand issue. The issue in Toronto is not just the anecdotal "new condo buildings" but how much housing Toronto has built per capita for the last several decades, which is almost certainly "too little." See the link in my original post to data from Tokyo, which is one of the few cities to have done housing right. "Filtering" has always been a housing phenomenon: https://cityobservatory.org/what-filtering-can-and-cant-do/ and https://cityobservatory.org/how-luxury-housing-becomes-affordable.

Homelessness also decreases when cities simply let more housing be built, even if luxury housing. https://fullstackeconomics.com/how-luxury-apartment-buildings-help-low… For some reason liberal policymakers (or their constituents) either can't seem to get that in their head, or can't act on it. And instead cling to things like rent control, which "feel good" in the short run but end up doing the opposite of what was intended. Sometimes I think that every policy (that isn't a "duh, of course" policy) should come with an expiration date. So that the people you wanted to help are specifically identified, and given a finite time to be helped -- and people who come after know that it's a one-time intervention and the system is what it is from now on. Then when the people you thought it would serve / benefit are gone, you are required to assess whether it worked as you thought, and it doesn't just go on autopilot forever. Now, whether the policymakers would respect that, or simply keep on extending it on public opinion, who knows. It's just too easy for well-intentioned people to put in place rules they think will work, and go away for 10 years and discover it didn't, and then still do nothing to fix it.

I don't think so at all and the evidence points to a profound stagnation in our ability to build. So, if we can't even admit that we're terrible at building fast, there is very little hope. Step No. 1 is admission and introspection: https://www.fullstackeconomics.com/p/why-america-cant-build-big-things… https://www.nytimes.com/2019/02/25/us/california-high-speed-rail.html https://www.nytimes.com/2023/02/05/opinion/economy-construction-produc… https://www.nytimes.com/2021/01/04/opinion/manufacturing-united-states… https://www.palladiummag.com/2022/06/09/why-america-cant-build/ https://www.wsj.com/articles/infrastructure-us-costly-explained-soluti… https://techcrunch.com/2019/02/19/why-cant-we-build-anything/

> https://www.shadowstats.com/ No. Just No. First off the math makes absolutely no sense: > But if we take away the outlier 2020 data points, the average real annual GDP growth from 2010-2019 was 2.3%. The inflation rate in that time averaged roughly 1.8% per year. > If you’re one of the conspiracy people who believe inflation has actually been running at 5-6% per year, that would assume the economy has been contracting by 1-3% per year over the past 10 years. > And if you’re a full tinfoil hat person who assumes inflation is actually 10-12% per year[2], that’s like saying we’ve been in a full-blown depression and the economy has lost 80% of its value. * https://awealthofcommonsense.com/2021/01/inflation-truthers/ Second, the methodology is all wrong: * https://www.fullstackeconomics.com/p/no-the-real-inflation-rate-isnt-1… As much as you can call it a "methodology" of taking the official CPI number and adding your own, which the author of the site admits to: > I’m not going back and recalculating the CPI. All I’m doing is going back to the government’s estimates of what the effect would be and using that as an add factor to the reported statistics. * http://econbrowser.com/archives/2008/10/shadowstats_res * https://en.wikipedia.org/wiki/Shadowstats.com#Negative Further, the current price of a subscription to the 'full report' is $175/year right now, the same as it was in 2014: *…