Examining Inflation

[WFJ]

The two main issues with inflation are 1. can it be measured accurately? 2. If perfectly measured, can one make decisions using this information?
1. One must assume this is true to even attempt to use the data. At best, Inflation is a messy backward looking unscientific measure that provides information about short term trends and can't be used to compare conditions more than a few time periods in the past. Use a "discounted data analysis" where (data/1+R) where R is amount a fudge in the estimate results in making any T+XX meaningless for analysis. Measuring inflation is better than not measuring it at all, but barely.

2. If everyone has access to this perfect information, making decisions based on this is unlikely to provide any abnormal returns.

[JCD]

Purely in the interest of transparency, here were the inflation items I noted I thought were short term and a rough estimate of inflation.

I believe the inflation risks are:

Short term (24 months):
- Supply chains being emptied or off line.
- China buying everything up during the pandemic. (https://www.cnbc.com/2021/06/07/chinas- ... -data.html )
- Significant war
- Party time with gov't money.- Workers refuse to go back to work for a variety of reasons.
- Banks might finally use the brrr to create credit (not true thus far)
- The Brrr might actually become money printing.
- Rich might "diversify" into owning commodities and keeping them in storage--making them more scarce.
- China cuts off trade with the US.
- Infrastructure "rot" due to the pandemic now must be replaced.

Those in the short term bucket I believe are the ones you're noting, but I suspect it will snap back to 2019 levels, give or take 15% by 2023.

I will note a dollar of stuff in June 2021 terms costs in June 2023 terms 1.12, or a 12% increase in inflation, per the BLS calculator. Depending on how you want to read my writing, you can conclude I was reasonably right, being under 15%. If we measure from June 2019 to June 2023, it was a 19% increase in inflation, which would clearly be over my 15%. I honestly came back to this thinking I had made the first version (2021-2023), but when I found the post and re-read it, it sounds more like the second version (2019-2023). False memory or bad wording, I don't know. In any case, feel free to grade my performance anyway you'd like, particularly given how some risks I listed did occur, whiles others did not.

I know many or most folks will say the BLS tool is completely wrong, and I might even agree... Yet, since I was defending the official numbers in 2021, I don't think it should be unexpected for me to choose to measure myself using that measurement stick. If you complain about the measurement chosen, I will likely not respond, since that has been well litigated in this thread and if you review the history of this discussion, it's clear I intended to be measured against official measures. Here is the particular calculator I used.

[JCD]

Going back to the origins of this topic, I made a spreadsheet around various inflation related prices. I discovered that a library did more research around this by capturing a bunch of historic prices.
This seems like a great resource for anyone who wants to actual do research around price inflation. I may update my spreadsheet if I get the time.