February 28, 2022

Inflation and bad data

Data means everything.  You've heard the expression "garbage in, garbage out"? It applies completely to data.  If you have bad data, it doesn't matter how sophisticated your formulas in a system are, your results are going to be flawed.  In a more real world example, let's say someone tells you that eggs are on sale at the local supermarket for 10 cents per dozen.  You love eggs and that's an awesome price, so you hop into your car and drive to the store, hoping to buy so many dozens that you couldn't have walked and saved on your carbon emissions.  But it turns out when you get there it's actually not on sale.  So much for your egg-stravaganza this month. Bad data, bad result.  But there is one thing worse than bad data, and that's manipulated data.

Manipulated data means that someone using that data has altered it to get the outcome they desire. I've been arguing that inflation is going to get much worse than it is. I've also argued that a lot of the price of inflation is hidden by things like size changes in product prices.  Fewer sheets of toilet paper on a roll does not get factored into the price of a dozen rolls of toilet paper.  12 rolls before is 12 rolls now, even if the rolls have been shrunk down to half their former size.  This is how companies hide price increases.  And it aids and abets government's calculation of inflation. It isn't some sort of deliberate co-operative effort, but it is mutually beneficial so no one does anything about it.  The only ones hurt are consumers (aka people).

Here's a great video explaining how it's more prevalent than you might know, and indeed far scarier.  It's worth watching if you want a better understanding of what's happening to us in 2022.

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