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PaperclipPerfector  2mo ago (text post)   3352 thread views

Small-Scale Question Sunday for February 18, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

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Very open ended question: What do you think is going to happen with pension systems in the next 50 years? Where I live, investing the maximum tax deductible amount into pension contributions is a no brainer if the government won’t change the rules of the game down the road. But I have a hard time believing this.

I expect the government will keep social security solvent by lying about the inflation rate, mostly. It’s decent evidence that they’re already doing it; ultimately it’s one of the saner solutions.

Currently truflation is showing 1.6% inflation YoY and the official number is 3.2%.

How would lying about the inflation rate work?

What evidence is there that the government has done this already?

My understanding is that there’s no magic data or math here: prices are public knowledge. I’m aware of debates over what the best formula is, but we aren’t talking about hyperinflation.

“Inflation is low pay no attention to rising prices of basic goods or exchange rates.” I’m unaware of any government being able to successfully lie about inflation because you can’t hide shortages and/or rising prices for very long at scale.

Lying about inflation successfully doesn’t necessitate that hoi polloi believe inflation is low, it necessitates that whatever was intended to be accomplished by lying about inflation actually gets done. In this case, that’s keeping pension payments low enough to be doable. Seniors will complain, but old folks complain all the time anyways, and for working age people it doesn’t even necessitate particularly high inflation.

If you peg your payments to an inaccurate inflation measure, that means you can reduce them over time without actually needing to directly say you're cutting payments.

I agree it’s possible they will try that, but I can’t seem them escaping major political backlash for it.

Not including food or energy (same thing, really) in the inflation number would be a good way to start.

Hence, The Atlantic featuring chin-scratching economists baffled by why the commoners won’t believe Biden’s economy is akshually fantastic (with the deeply insightful conclusion being huh, it turns out they’re concerned with exactly the thing we factored out of our metric).

I’m confused by your logic here.

That article and the public sentiment they analyze clearly shows inflation isn’t being hidden. They even cite the inflation number for food, which was considerably higher than average.

There’s more than one inflation number and any average is going to have its issues, but there are sub indexes for food and energy.

I’m aware of the debate over the best way to calculate the CPI, but competing claims as expressed here are still within a few points of each other.

https://www.investopedia.com/articles/07/consumerpriceindex.asp

This debate is all publicly available information so how would the government hide if it were really trying to downplay inflation high enough to keep SS afloat?

They even cite the inflation number for food, which was considerably higher than average.

Everyone has to buy food, energy, and shelter.

Everything else is optional. If those three things have a higher-than-average inflation rate, and they do (the asset price bubble doesn't help with respect to shelter, of course), the politically-active citizens are much more likely to notice and complain, have a common nucleation point around which to complain, and most importantly can reclaim the moral high ground of "making things more expensive than they need to be is anti-poor" and in so doing split the lower class against the upper (which is one place where the normal strategy of "high and low against the middle" fails).

The trick about artificially making things more expensive is that it doesn't come without cost, the people doing the artificial increases have already leveraged all of their socioeconomic credit, can't pay the interest on the exercise of that power, and their social credit has been downgraded as a consequence.

Wait, you think we have an asset bubble for housing? Where?

Who is engineering the high inflation for specifically food/energy/shelter to drive class warfare and how are they doing that?

I do not follow your last paragraph because I don’t know who these people are or what you mean about what they’re doing and what it costs.

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