Wednesday, July 12, 2006

Is inflation really under control?

No.

The Treasury department parrots the Fed line that consumer prices, as measured by the consumer price index (CPI), are under control. But even many mainstream economists now admit that CPI grossly understates true inflation. The most glaring problem is that CPI excludes housing prices, instead tracking rents. Everyone knows the cost of purchasing a home has increased dramatically in the last ten years; in many regions housing prices have more than doubled in just five years. So price inflation certainly is alive and well when to comes to the largest purchase most Americans make.


The CPI has been a joke for a while. As long as you don't eat, don't use energy, don't buy a house, and don't use healthcare, everything is fine!

2 Comments:

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7/21/2006 5:11 PM  
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7/23/2006 1:49 PM  

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