Lou Dobbs -- I mean Paul Craig Roberts -- writes that: > Another deceit is the measure called "core inflation." This measure of > inflation excludes food and energy, two large components of the average > family's budget. Wall Street and corporations and, therefore, the media > emphasize core inflation, because it holds down cost of living increases and > interest rates. In the second quarter of this year, the Consumer Price Index > (CPI), a more complete measure of inflation, increased at an annual rate of > 5.2 per cent compared to 2.3 per cent for core inflation.
this is crap. No serious economist believes that the "core inflation rate" is an actual measure of the inflation rate. Rather, it's supposed to be a measure of that part of the actual inflation that is most likely to persist in the future. It's being used as a way of predicting future inflation. > An examination of how inflation is measured quickly reveals the games > played to deceive the American people. Housing prices are not in the index. > Instead, the rental rate of housing is used as a proxy for housing prices. it would be stupid to count the purchase price of a house as part of the CPI. Nobody buys a new house every month. Instead, we pay for the services provided by the house during the month, which is a much smaller number. I'm sure that the government doesn't measure the latter well, but at least they are aware of the problem. In fact, Mr. Roberts (where are those strawberries, by the way?) would find that his view that actual inflation is higher than it's measured totally undermined if the CPI were measured in the way he wants. This is because the housing crunch would likely cause deflation in the measured inflation rate -- Jim Devine / "The more you read and observe about this Politics thing, you got to admit that each party is worse than the other. The one that's out always looks the best." -- Will Rogers
