That's CPI, not inflation. CPI has a number of ways that a thumb may be put on the scale, for example hedonic quality adjustments seem to me to be highly subjective.
Hedonic quality adjustments are necessary though. If people start buying smartphones instead of dumb flip phones, it's not a sign that there is massive inflation in telecom sector, it's a sign that they're getting a lot of value. The BLS's own example uses TVs [1]. When you went from a $200 20" CRT to a $1000 dollar 42 inch plasma, that 5x increase in price is not because your money was less valuable, it's because you're spending 5x the money and getting 5x the goods.
When a couple markets in housing are going up like crazy? Sure. When essentially all asset classes or supply constrained service/goods globally are going up everywhere at record rates? It’s hard to not see the need to at least consider it. Especially after the massive amount of money printing still ongoing.
I mostly just look at the money supply. Print 10% more money, that's 10% inflation. It may not be uniform throughout the economy, or take effect immediately but that's 10% more money chasing the same assets. It's all has to go somewhere.
What is the actual money supply though - if I earn 1k and put it in a bank and it gets loaned out to someone else is there now 2k in circulation since my money is insured?
Only a teensy tiny portion of "value" in the economy is actually on printed bills - but even the abstract value we can track won't tell the whole story.
One note, is that bank loans are not taken from deposits anymore, that story we were told as children does not reflect modern banking. There's not even "fractional reserve" so much anymore, just "stress tests." So banks really do own a printing press when it comes to money, which is sometime called horizontal money, as opposed to the "vertical" money that comes from a monetary sovereign.
No: If you're approved for a $100K loan, you are credited with $100K balance to draw from your account, and the money supply is recorded as going up by $100K.
But if you don't withdraw any money from the account (e.g., a HELOC that you intended only for emergencies), then how can it be inflationary if it's not circulating in the economy? But it is registered as increased money supply.
Do a lot of people take out loans they never use? If you get a loan to buy a house, the seller gets the money immediately and uses it to buy another house. You've just put a whole house's worth of debt into circulation.
Money supply in theory is chasing actual economic effects such as growth, so your view of just one side is not very meaningful. The flaw is in considering assets static.
This is just incorrect. Value is added to the economy every day. Take the home you're living in. That probably did not exist 100 years ago (and if it did, it certainly wasn't as nice as it is today). That's new value, and having money in circulation to correspond to that value makes perfect sense.
