So the world sometimes gets better. ShadowStats reports May CPI y/y inflation at above 7.5%.
Source: ShadowStats, accessed 11/10/2023.
Official CPI y/y inflation in May was 4.1%, research series (CPI chained) was 3.9%.
Jim Hamilton on ShadowStats, in 2008, with rebuttal from Williams.
Commenters on ShadowStats’ side: Blissex, W.C.Varones, Ricardo, ppcm, and Dave Cohen.
Princeton Stupid Steve is telling me that a real interest rate near 8% for Russia is not possible. Of course this Village Moron thinks the Taylor Rule is the same thing that Irving Fisher wrote back in 1907. Yea he is that dumb. Now he has challenged me to support my assertion which I have many times but we know Stevie never learned to read – or write.
Back in September 1981 at the height of the Reagan recession, you would get a nominal rate of interest on 10 year government bond near 15.5% (as compared to Russian nominal rates near 15%). And over the next 120 months, annual inflation averaged less than 4%. So an ex post real rate over 11%. But NO according to Stupid Steve – Russian’s real rate must be only 2% not 8%. Why – because he found a paper on the Taylor Rule that he never understood and did some calculation that makes no sense.
I didn’t say that. I said show your work. Why would a country want to peg real interest rates at 8% during a war? In the first months of the war, real interest rates were aggressively negative in Russia, as we would expect. They should still be relatively soft but ordinary standards, as high real interest rates would put a burden on the economy and, by extension, on public opinion and potentially on support for the war. It would also prevent Moscow from funding the war by money printing, indeed, just the opposite.
So, sure, if you can demonstrate some reason to believe the BoR is setting real rates at 8%, make your case.
“Why would a country want to peg real interest rates at 8% during a war?”
Let’s get two things straight. Financial markets set interest rates – both nominal and real. Russia is not pegging rates – the market is. See Irving Fisher’s A Theory of Interest (as I have asked you do so 100 times).
The Taylor Rule tells us nothing about expected inflation or interest rates. It describes monetary policy at best.
Your asking me to show my work is a joke as you have done nothing but use equations for highly absurd and meaningless trash. Your “work” is beyond a joke.
Look Stupid Steve – you are proven over and over again that you do not get even the basics of macroeconomics. So do us all a favor – stop wasting our time with your insanely dumb comments.
“In the first months of the war, real interest rates were aggressively negative in Russia, as we would expect.”
This sentence was followed by the utter gibberish Stupid Steve does a lot. Now had Stupid Steve bothered to read Irving Fisher’s A Theory of Interest (like I asked this worthless troll to do) he might realize the following. Russian nominal interest rates reflected expected inflation but actual inflation was a lot higher. So yea ex post real rates were negative. But that was something the policies were aggressively pursuing.
Of course concepts like actual v. expected are way over Stupid Steve’s retarded little brain. After all – he sees what ShadowStats is reporting as forecasts of inflation that has already happened and been recorded. Yes Stevie is really THAT STUPID!
https://tradingeconomics.com/russia/inflation-cpi
A little reminder about Russian’s reported (ex post) inflation rate. It was less than 10% in 2021 and of late has been modest but yea Russia had a temporary spike in the ex post inflation rate during the first half of 2022 … sort of like we did.
I checked using FRED to see what market short-term nominal rates were in early 2022 for Russia and they were just under 10%. Now we see Stupid Steve telling us that ex ante real rates were aggressively negative then. But I doubt people expected 20% inflation. The expected inflation rate was likely less than 10%.
Now does Stupid Steve has some evidence that expected inflation was as high as he asserts? Not likely as this moron is using his version of the Russian Taylor Rule to do his work. That is about as dumb as using one’s razor to brush one’s teeth.
ShadowStats reports May CPI y/y inflation at above 7.5%.
Have they reported this for Russia? Do they agree with Princeton Steve’s 13%?
As pointed out before, ShadowStats doesn’t do any calculations except take official BLS CPI each month and add 3.5%, that’s it — and charges subscribers $175 a year for it.
I can do that in Excel for only $15 per subscriber!
http://www.sca.isr.umich.edu/files/tbmpx1px5.pdf
Before little Stevie notes actual inflation may have been below expected inflation back during the Volker era we have this Michigan survey showing expected inflation as of 9/1981 was 6.5%. So ex ante real rates were near 9% back then. But little Stevie says real rates cannot be as high as 8%???
I don’t see much evidence that anyone is very good at anticipating inflation, based on the graphs Menzie has put up.
Oh my God – you really are stupid. The discussion is not about forecasting future price levels or inflation rates. It is about reporting what has really happened. We do not need to forecast events in May 2023 as they have already occurred and been measured.
Come on Stevie – we have asked you not to comment on things you do not understand. And it seems you do not even understand the most basic matters.
Maybe if Stupid Steve would read their website:
http://www.shadowstats.com/alternate_data/inflation-charts
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990. The CPI on the Alternate Data Series tab here reflects the CPI as if it were calculated using the methodologies in place in 1980. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
John Williams is not trying to forecast inflation. He is putting forth indices of past price changes albeit without how the BLS has improved their measurement of CPI.
And this is why I refer to Stevie as Stupid Steve.
Off topic, though also aboutbad economics –
pgl, you mentioned Hanke’s 2002 paper. Here’s Hanke and Schuler:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2204682
This paper is Hanke’s effort to excuse the failure of his advice to Argentina – and other countries with similar problems – to adopt “currency board” systems. (Argentina’s currency boad collapsed in 2002, and interest in currency boards collapsed with it.)
If you recommend a system which works just fine until reality sets in, as Henke did, you’ve committed a fundamental error. Currency boards are not excused from functioning in the real world. As Mike Tyson put it, “Everyone has a plan ’till they get punched in the mouth.”
Thanks – I remember this (alas). Edwards in his excellent paper noted it to in a kind of polite put down.
Menzie Chinn,
Wow – holy vendetta. You really went deep into your little black book. I’m curious, is your econbrowser shame log of ego-boosting ammunition a physical or digital record? I don’t for a second think you actually search the archives. I imagine it as a leather-bound notebook with grid paper. When you aren’t at your computer it stays on your nightstand with entries via a feather quill pen.
And be honest, do you have little hearts adjacent to entries with my name??? Keep it real.
We get you have serious emotional issues but please take your worthless trash to right wing blog. Damn!
Menzie Chinn,
Do you also color the hearts a pretty red?
And the little turd rears its ugly professional jealousy once again. Econned the failed academic just cannot let it go.
In the post that begins
Shadowstats responds
Last month I called attention to an analysis
The link does not seem to work.
pgl: In transfer to different web hosts, links didn’t follow correctly. Try https://econbrowser.com/archives/2008/09/shadowstats_deb (i.e., delete “.html”)
Thanks. The various links provided make for some interesting reading on various parties have viewed this issue so the post is most welcome.
And comments like “holy vendetta” are the usual intellectual trash we have come to expect from Econned. His huffing and puffing is not only insulting but it is also so utterly worthless that banning this clown would be a good thing as his comments would not be missed by anyone.
Question from the clueless part of crowd: Why does he label the main parts of his blog “John Williams’ Shadowstats” if his real name is Walter??
I vividly recall the Hong Kong dollar currency board (est Oct 1983) getting punched in the mouth during the 1997-98 Asian Financial Crisis. Wholesale revisions to the rules of the game were required to overcome the gamblers’ “ATM” approach to the markets.
In the end, HK Government bought 20% of the stock market free float, to drive speculators away. They decided, on that day, that up was good and down was bad, and never looked back.
End of an era.
The flow during the Asian crisis was too heavy to withstand. The lesson was that rules can be very, very expensive.
Stevie wants us to know he is THE expert on Hungary which makes me wonder why he did not tell us Hungary’s inflation rate has followed the pattern of Russia’s.
https://www.statista.com/statistics/339881/inflation-rate-in-hungary/
And short term interest rates in Hungary were higher than 15. So I guess little Stevie if had an ounce of consistency would be telling us expected inflation in Hungary was still very high. Never mind what my link is saying:
The average inflation rate in Hungary was forecast to continuously decrease between 2023 and 2028 by in total 14.6 percentage points. According to this forecast in 2028, the average inflation rate will have decreased for the fifth consecutive year to 3.06 percent. It seems Aaron O’Neill is not dumb enough to abuse some Taylor Rule in a stupid attempt to forecast inflation.
BTW Stupid Steve keeps asking me to show my work. I have many times but this moron thinks I have to abuse the Taylor Rule. I’m not that dumb even if Stevie is.
But anyone who ever read Irving Fisher knows that if the MARKET (which is not the Bank of Russia) sets a nominal rate (i) at 15% and expected inflation (p) = 7%, then the ex ante real rate = i – p = 8%. Which makes sense in an economy that has aggressively geared up for a sustained invasion of Ukraine.
But of course I’m doing macroeconomics – a topic completely foreign to Stupid Steve.