I get it, M2 really seems like it should correspond with inflation but at minimum you need to adjust for economic growth. As we produce and consume more we need more money handle those transactions.
The reason CPI is a terrible metric is because measuring inflation is very difficult and somewhat arbitrary (see for example: hedonic adjustments). M2 is a significant, consistent, and logical factor. Even from 1980-1986, rapid changes in M2 consistently correspond to a change in inflation. But there are other factors, like real economic growth, population growth, changes in size of the labor force and velocity of money.
That’s some serious weasel wording right there. Either a model fits real world data or it doesn’t, ignoring all those times a model failed isn’t an eye for data it’s a delusion.
> And all the people predicting decade-high inflation and asset inflation since last year have been right so far.
That’s little different from walking into a room full of broken clocks picking those that are currently accurate and suggesting they must be working fine. If you select for people who accurately predicted the last year you then need to look at their predictions of every prior year.
The only real anomaly in that chart is 2011, which is concealed by the fact that CPI is a terrible inflation metric when wealth inequality is changing (see the increase in equities and real estate during that period).
For reference: CPI is based on a survey to see what median Americans are buying, the prices of those things, and how much of them they are buying. Naturally, people change their spending habits when prices rise to buy cheaper items, and this cancels out the how much of them they buy to end up with an effective metric of "how much are median Americans spending" (hint: basically all of their money). So CPI measures the median American's income, which is why there can never be any changes in "real wages" [0].
[0] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...