A Censorship-Resistant Inflation Index Is Being Built On Chainlink (coindesk.com) 89
Decentralized finance (DeFi) firm Truflation is building a new gauge to track inflation independent from the government and in real-time. CoinDesk reports: Think of it as a competitor to the Consumer Price Index (CPI), and one where officials can't move the goalposts. "The framework that [the government] is using is a hundred years old ... and they have continuously tried to evolve that versus taking a fresh approach in an age where we've got everything computerized," Truflation founder Stefan Rust told CoinDesk in an interview. The team started building Truflation after former Coinbase (COIN) Chief Technology Officer Balaji Srinivasan challenged Web 3 developers to build a censorship-resistant inflation feed, claiming that "the centralized state isn't going to provide reliable inflation stats," and promising an investment of $100,000. On Friday it was announced that Truflation won the challenge.
The key difference between the CPI and the Truflation index is that while the government uses survey data to measure inflation, Truflation looks at price data. The CPI is measured in the form of a survey that collects about 94,000 prices per month for commodities and services and 8,000 rental housing units for the housing component. While the Truflation index is based on the same calculation model as the widely used CPI, it is different because it measures and reports inflation changes daily by using current real-market price data from sources like Zillow, Penn State and Nielsen, among others. About 40% of the data that is being looked at is the same goods basket that the Bureau of Labor Statistics uses. The remaining 60% is being substituted with data from other sources. Truflation, which runs on Chainlink and is therefore accessible and visible for everyone, currently measures a 13.2% inflation rate, as opposed to 7.9% measured by the CPI in March.
The key difference between the CPI and the Truflation index is that while the government uses survey data to measure inflation, Truflation looks at price data. The CPI is measured in the form of a survey that collects about 94,000 prices per month for commodities and services and 8,000 rental housing units for the housing component. While the Truflation index is based on the same calculation model as the widely used CPI, it is different because it measures and reports inflation changes daily by using current real-market price data from sources like Zillow, Penn State and Nielsen, among others. About 40% of the data that is being looked at is the same goods basket that the Bureau of Labor Statistics uses. The remaining 60% is being substituted with data from other sources. Truflation, which runs on Chainlink and is therefore accessible and visible for everyone, currently measures a 13.2% inflation rate, as opposed to 7.9% measured by the CPI in March.
Zillow manipulates it's prices (Score:5, Interesting)
If you want accurate inflation statistics you're gonna have to put somebody in charge of it who doesn't have conflicts of interest and you're going to have to replace them when you screw that up. That means being a hell of a lot more politically engaged than we are today.
Nice grits (Score:1)
Re: (Score:2)
You can publish all you want. But there are a lot of benefits and interest payments tied to the "official" interest rate. The people managing the underlying funds don't want to pay out any more than they have to. So the inflation index written into their rules will be the one that does them the most good.
For a minute there (Score:2)
If anyone needs me I'll be in my room with my greased up Yoda doll.
Re: (Score:2)
Haven't there been web sites around for years that track the true US inflation rate? I remember a friend over there explaining to me years ago about how it's manipulated by the government there (both parties, not just one side), and referring to a site that calculated a non-manipulated rate which, at the time, was around double the rate claimed by the government. I was also surprised that it was the politicians who decided what the CPI was rather than an independent authority, since the possibility for co
Re: (Score:3)
With the unnamed sites you are talking about you are back to the same problem you have with the governments CPI. There is no transparency and you dependent on a trust network which can be compromised.
Re: Nice grits (Score:1)
Re:Zillow manipulates it's prices (Score:5, Informative)
Using a blockchain adds nothing and it is once again a solution looking for anything it can call a problem (and it is getting desperate).
This is supposedly "censorship resistant so officials can't move the goalpost" but... wtf... Anyone is free to calculate and publish their own inflation estimates (except in china and russia perhaps) so there's no censorship issue to solve (and it doesn't solve nation state level censorship anyway).
There's several different measures of inflation (https://en.wikipedia.org/wiki/Inflation#Measures) and they all have their pros and cons and they may be more or less relevant to you depending on your particular economic situation. This is supposedly an alternative to CPI but there's no reason why it would be "better" than the official CPI. The fact that they get 13% truflation vs 8% CPI in March just shows that their basket of goods is different from the CPI basket, it is not "better" or more "tru" in any way. They insinuate that the govt would be actively manipulating the CPI but that is actually easy to check since the reference basket is well defined (and both banks and academics do check since they use the inflation numbers for actual pricing of real financial products and they would risk losing money if the numbers were intentionally fudged).
I really don't get what blockchain and "web 3" has to do with it or what supposed problems they solve. Putting the final number on a blockchain doesn't make the calculation any more reliable or resistant to manipulation and there's no censorship problem to solve.
They're trying to grift libertarians (Score:4, Informative)
One of the things I'm wondering is when we're going to reach peak libertarian. Virtually all the scams I see now Target them and other right wingers. At some point the pool of scammers is going to exceed the pool of scamees. Or at least a number of victims who have any money left to grift from.
Re: (Score:1)
All you do is blather, and just like big L Libertarians and bitcoin bros you have no idea how any of it actually works.
Re: (Score:2)
Blockchain oracles are basically Keynesian beauty contests. You're incentivized to make predictions closest to everyone else's predictions. They're immutable/open/decentralized/distributed to "prevent" centralized manipulation.
Take the rest how you want to, not interested in an ideological flame war.
Re: (Score:2)
Re: (Score:2)
> First is one would expect a technical crowd to be more mathematically sophisticated and less susceptible to this kind of scam
There are actually equal parts suckers and blowhard luddite critics here on /.
That said, I share your suspicions about this not actually being properly decentralized at all. There are certainly much better price oracle strategies than whatever it seems this article is shilling for.
Re: Zillow manipulates it's prices (Score:1)
Re: (Score:3)
You really need to work harder on your arguments. Claiming things that require 2 minutes of research to falsify is a bad argument no matter what your opinion of yourself.
The previous sales prices from Zillow, MLS, and Redfin are all the same. But the Zestimates, Redfin home value estimate, and assessed values are entirely different. Pick any 5 random residential addresses in
Re: Zillow manipulates it's prices (Score:2)
Don't care if Zillow manipulates it's prices (Score:1)
to control the housing market.
Based on my own recent home sale experience, the estimated prices on Zillow (the Zestimates) do seem to be systemically higher than competitors like Redfin, although OpenDoor ended up paying us something in between Redfin and Zillow. So there is plenty of competition and Zillow is not controlling anything.
That said, as an inflation gauge, I don't really care if Zillow's price is systemically too high or too low. I only care about how much it changes over time.
FYI, Redfin has their own scam going bec
Prediction (Score:4, Insightful)
This will show all central bank currencies as inflating massively and by sheer coincidence show all cryptoassets as amazing investments
Re: (Score:2)
Why move when they hope they hope to bring all the benefits of a deeply corrupt dictatorship here? Like Putin, Trump did his best to swing his own self-coup to toss out the constitution so he could remain in power. Unlike Putin he completely botched the job, but neither his abject failure, nor his blatant disdain for the constitution has seemed to dampen the enthusiasm of his followers.
Re: (Score:2)
That said the deflationary cryptocurrency like BTC would be expected to go up over time. This isn't because it is worth more but because it remains worth at least the same amount whereas the dollars/euros/etc are always shrinking in value. The rates might vary relative to one another but the
Re: (Score:2)
Amateurs. How does that profit the upper classes at the expense of the poor? Inflation is a wealth tax on everyone who stores their wealth in money rather than fungible goods - and the poor don't have enough money to be worth investing.
Re: (Score:2)
That's not quite how a deflationary currency works. It's not the relationship to other currencies that matters, it's the relationship to real goods. If the amount of real wealth traded in dollars increases more quickly than the amount of dollars in circulation, then the wealth-per-dollar ratio increases, and thus the value of the dollar goes up - e.g. deflation.
BTC is designed to be deflationary because the amount of coins is designed to plateau to a finite total (which will then effectively shrink over ti
Re: (Score:2)
It is how it works when the other currency is inflationary and you are talking to a largely anti-crypto crowd who is obsessed with speculation. A currency is just another good an inflationary currency is a good which is constantly becoming cheaper. Since this 'good' is constantly losing value a static currency would in theory be able to constantly buy more of
Will be interesting to watch (Score:5, Informative)
Bank of Canada claims up and down inflation is steady at 6% a year right now (over the last year and moving forward), but there's no way that is anywhere close to the real rate. From gas to food to energy prices, I seem to be paying at least 25% more than I was at this time last year. I'm in agriculture and my business input costs have all gone up by at least 25% on everything. Some high dollar inputs have more than doubled, but hopefully that's temporary. I expect them to come down to 125% of what they were before this year. Commodity prices too I expect to settle in at 25% higher than they were at the beginning of 2021. This definitely translates into inflation for the consumer, no doubt about it. Despite the high commodity prices, I'm no better off than I was before. Someone in the middle is making a killing on food, and it's not me! Have to wonder at what point do we start seeing people protesting in the streets who can't afford food.
Re: (Score:2)
Are you looking at CPI or PPI? CPI is consumer inflation, and PPI is producer inflation. Your post seems to confuse the two, as you're talking about the published CPI rate vs what you unscientifically and without actual measurement feel like your inputs to a business have gone up. That lack of basic knowledge and any real numbers makes me ignore the rest of your post.
Re: (Score:1, Interesting)
Beef up from $3 per pound to $4 per pound. Gasoline up from $2.79 to $3.89 per gallon. Same exact TV dinners up from $2.19 to $3.59. Precious metals to make catalytic converters up enough to drive a huge spike in theft of catalytic converters. Rent up from $900 to $1100 for a 1br. Lowest cost internet up from $35 to $55. Taxes on my house up from $5300 to $5900 in the last year.
The CPI is a *bullshit* number subject to massive political pressure. I don't *need* the government to tell me inflation
Re: (Score:3)
Sure. You know more than the experts despite the lack of both expertise and data.
Re: (Score:2)
They are experts at shading the numbers to be what the government needs. Can you imagine the impact on COLA alone if they didn't finagle the numbers? It would break the budget. Even shaded down, this was a historically high COLA adjustment this year.
Plus I track all the items I buy in a spreadsheet. The increases on every category has been double digits often +20% in the last year to eighteen months.
Re: (Score:2)
Adding baseless conspiracy theories and absurd speculation doesn't make your position stronger.
Re: (Score:1)
Adding baseless conspiracy theories and absurd speculation doesn't make your position stronger.
You haven't actually made any arguments, stop gaslighting. If we lived in a world where children were the ones in charge of grading themselves and they came home with straight As with a few B+'s, would you call that a conspiracy? Many of the methodologies in the CPI are nonsense (e.g. substitution and owners' equivalent rent) and result in the official inflation rate being understated.
Re: (Score:1)
Thank you and yes it was gaslighting. I know my numbers. For most people in the bottom 60% income brackets, inflation is much higher than stated.
Re: (Score:1)
And now even the official number is at 8.5%.
It's only been 3 days...
Re: (Score:2)
You don't seem to know what "gaslighting" means.
He has presented zero evidence for any of his nonsense claims. I don't need to make an argument, nor should I as it gives the illusion that there's controversy where none actually exists.
He's the drunk guy at the end of the bar ranting about "the government".
So, I'll tell you both: Present evidence or GTFO with your conspiracy bullshit.
Re: (Score:2)
I don't need to make an argument
ah, but you did
You know more than the experts despite the lack of both expertise and data.
Assuming this was sarcasm, you claimed his numbers to be false without providing evidence to that effect. Along with an appeal to authority [wikipedia.org].
His post had some information that was possibly insightful, possibly with error. Yours was an assertion with nothing of value whatsoever.
Re: (Score:2)
Wow, you're really bad at this. Try harder.
Re: Will be interesting to watch (Score:2)
Internet premise, 18 months of 20% inflation in all categories?
So for example gas in late 2020 was 20% more than late 2019?
Prices overall are up 30% since late 2020? That doesn't match my experience at all. My pay has been flat, my costs have gone down 10% (less gas and eating out), according to you I should have a 15% deficit in my saving (30% total inflation in 18 months means I effectively have 75% the money I used to have), yet somehow that hasn't happened. A little extra went into savings even.
Re: (Score:1)
Wait... are you seriously saying that because
* You chose to eat out less
and
* You are driving less
That inflation is lower?
Do you want to restate that?
Re: (Score:2)
Sure.
The premise is 30% total inflation in 18 months (20%*1.5).
That leads to 77% drop in purchasing power (100/130).
I cut my spending about about 10%, so I should have 13% less left over going into a savings accounts (if the premise were true I'd actut be saving nothing and withdrawing 3% of my income from existing savings).
As it is I've actually been able to use some of the reduced spending in recreation as savings, not withdraw from my existing savings.
The fact that a 10% reduction in spending was enough
Re: (Score:1)
Okay that makes bit more sense. It's a good anecdotal datapoint. I don't know what part of the country you live in, but that has not been my experience.
Okay... so first.. what I said was, "The CPI is a *bullshit* number subject to massive political pressure. I don't *need* the government to tell me inflation is 7% when many of the things I buy are up 25% in the last 12 to 18 months."
So, no... I didn't say inflation was 30%. And no, I didn't say inflation was 25%. I said it was *over* the official 7%.
H
Re: (Score:2)
I don't keep a detailed budget, so maybe I'm accidentally saving more than I realize.
Some deflationary things I've experienced though are home internet $75-$50 (Comcast to TMobile, one could argue it was a service cut, but I went from 200/12 25ms to 200/100 35ms, I'm calling it an upgrade).
My homeowners insurance went from $90/mo to $60/mo (not sure why).
Property tax was flat but will be going up 7% or so
Water was flat, but they bumped it a few years back in a sneaky way (went monthly and added more complex
Re: (Score:1)
Thanks for the detailed response. It gives me some insight into things elsewhere.
Re: (Score:2)
Fwiw, I do think the current headline number is probably a little low, it was the 25% that really jumped out at me.
And overall, CPI seems to be pretty accurate when I look back 20 years.
I think think there's serious cherry picking when people look at prices and claim it's super high in general (not directed at you, it's just the "CPI is made up" is a song I've been hearing for a while, but in the end the lobor and statistics people seem to be neutral bearucrats to me. Perhaps not super enthused about doing
Re: (Score:1)
Just fyi, the official inflation rate has been declared at 8.5% some three days after our discussion.
I've been spread-sheeting this stuff since 2 years before I retired a decade ago. I was retiring at 51 so I had to make sure my numbers were solid. There is likely some goofy stuff in that 8.5% number (like big screen TV's which have dropped a lot but that folks only buy once every 7 to 11 years) and most people are experiencing higher than 8.5% now.
The last time this happened it didn't' stop til 14% to 1
Re: Will be interesting to watch (Score:1)
Re: (Score:2)
Like the parent, you don't seem to understand how research works.
So tell me. If you disagree with the official figure, I'm sure it's because you've done the actual work and came up with a different number, right? Present your results and explain your methodology.
I'll wait.
Re: (Score:2)
Yachts and other similar things are down so it balances out.
Re: Will be interesting to watch (Score:2)
Did your mortgage go up? And how much of your personal costs are up if you include that?
The problem with inflation is that there are many ways to calculate it, depending on what you aim for.
If you aim for short term compensation for the working poor you disregard mortgages. If you need to take inflation into account for pension funds, you have to check your population and compensate accordingly.
There is no single inflation figure that will cover all needs of all parties.
Re: (Score:2)
Almost certainly but unlike the other commodities mentioned where the price growth will be common to most his personal mortgage isn't likely to be the most telling indicator because if it changes at all it likely only changes by the centrally controlled fed rate adjustments.
Residential housing prices and rents are what we look for there. Those are definitely soaring. About the only thing you can do right now to avoid l
Re: (Score:1)
Also once you buy a house, your monthly mortgage freezes (except for tax changes). It's one of the reasons you buy a house. When you buy it, rent is $1700 and the house costs $2000 a month. Five years later, rent is $2000 a month, and the house costs $2050 a month. 20 years later rent is $3400 and the house costs you $2300 a month. 30 years later rent is $4500 and the house costs you $2600 (then you pay it off and it drops it $700 a month). Repairs? Get a home appliance warranty ($600 a year). Disa
Re: (Score:2)
That actually depends on the mortgage terms/type and really any loan could work like that.
" But her neighbors are still paying about $180 a month total in taxes and nothing for rent/mortgage."
That sounds like it could be somewhere away from a city centers. This is how life often is for people in rural worlds, the taxes don't change much. Here in the city they brag about the low property tax rate but they are constantly reass
Re: (Score:1)
It's pretty close to the center of town but half the taxes freeze when you turn 65 in this state.
Re: (Score:2)
Time to start shopping at the Farmer’s Marke (Score:1)
Re: (Score:2)
Never been to a farmers market, eh? You're in for a shock.
Re: (Score:2)
They are going to be pissed when... (Score:2)
They are going to be pissed when they run their inflation calculator and find out the CPI index is actually pretty sound statistically.
Re: (Score:2)
Just like everyone else who's started up an inflation index. This isn't exactly a novel idea.
Re: (Score:1)
Yeah. When I was in highschool and ran experiments to test Vf^2=Vi^2+2ad and it turned out to validate Newtonian physics... man was I pissed. Because... science.
Re: (Score:2)
Now if only they considered that software bloat has made that 35% improvement equal a 15% downgrade.
Re: (Score:2)
Of course you don't have to use this calculation. This was a competition to build a decentralized system and this is the system that won as the most manipulation resistant. All the pricing data comes from verifiable sources at the time it goes on the blockchain and then stays immutable on the chain forever. So you can use whatever metric you like from there.
Truflation? (Score:2)
Really? That name alone disqualifies them from even remotely pretending to be 'impartial'.
Best They Could Come Up With (Score:2)
Re: (Score:3)
Hell, when he cooked up all the mortgage relief and quantitative easement schemes with the Fed Obama openly manipulated the calculation to hide the amount of hidden inflation caused by suddenly erasing vast quantities of debt via refinancing.
Conflict of Interest (Score:3)
Re: Conflict of Interest (Score:2)
I've been surveyed for this. It's accurate. They don't ask you to guess, they ask you to pull the last receipt or credit card entry for item X. Then a month later they call and ask for the same item from a month later.
Re: (Score:2)
Wouldn't a true measure need actual purchase data? (Score:2)
To know the average of how much people are spending on things, wouldn't you need to know how many people purchased at that recorded price too? Just because a price is set doesn't mean it's "exercised" or whatever you want to call a purchase being.
Watch posted prices to make an artificial "price index". Watch what people are spending in their life (per category) to know what typical costs are for living (inflation index), right? Or maybe more accurately a "consumer spending index".
Or am I missing the poin
christ, stop it (Score:3, Informative)
this has nothing to do with censorship
watching crypto people mis-use words to pretend they're doing something ethically positive is so toxic
Re: (Score:2)
How long have they been collecting data? (Score:2)
The inflation rate is supposed to be calculated per-annum. A rate of 13.2% for March 2022 is supposed to mean that the selected basket of goods & services is 13.2% higher than it was in March 2021. This is to avoid any seasonal distortions (For example, produce is always more expensive in winter. That is not an inflationary effect, just a seasonal one). Unless Truflation has been collecting data for over a year, they are just pulling these numbers out their ass.
Ignoring weak links... (Score:2)
Why is it that every 'track real world things with blockchain' scheme seems to ignore all the actually nontrivial problems of gathering good data in favor of rhapsodizing about the integrity with whic
Re: (Score:2)
Just like people who advocate for democratic/populist voting regimes to determine policy claim the majority always chooses the best alternative? It isn't much different.
Like voting machines, blockchain is just a tool. A distributed ledger is still just a ledger. Garbage in, garbage out.
There's gold in them thar numbers! (Score:2)
Re: (Score:2)
Well, gold was originally $20/oz (1783). From 1879-1932 it was officially $20.67. Varied between $30-$45 from 1933 to 1971 . $133 in 1976, ~$600 in 1980, ~$400 in 1990, ~$300 in 2000. $1400 by 2010, floating around $2000 right now.
What measure to choose (Score:2)
There is no unique measure. What matters to each individual is what mix of goods THEY purchase - which may be very different from some (weighted?) average.
That isn't even counting the politi
ShadowStats (Score:3)
Re: (Score:1)
Official rate is now 8.5% (Score:1)
And it probably has some goofy things like Big Screen TV's that have gotten really cheap but which most people only buy every 7 to 11 years that are holding it down.