I know the CPI is reported without food and energy … but why? It that the usual way it’s reported? It seems that food and energy takes up an increasingly larger and larger chunk of our paychecks so it should be reported in the CPI, right?
[quote=Mr. Fri]I know the CPI is reported without food and energy … but why? It that the usual way it’s reported? It seems that food and energy takes up an increasingly larger and larger chunk of our paychecks so it should be reported in the CPI, right?
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<sarcasm>That would not be appropriate, because these prices are “volatile”. As in, we all know we could extract more oil than we could ever use for the next 200 years right here in America, so the price will soon crash to the low 20s. Besides, we all know that imported food from China and Asia in general is just getting cheaper and cheaper, for us Americans anyway, they eat the inflation abroad, so it will make it all cheaper for us in the future!</sarcasm>
Samuel
Mr. Fri
The CPI does include food and energy. Then they subtract those numbers and the result is the “core inflation rate”, because food and energy can be volitile The media dutifully reports this lower “headline number”. I don’t know why. Maybe because the BLS tells them this number is more useful. Maybe because they are just parrots. It is a ploy to make inflation look better than it is. I have yet to find a way to subtract food and energy from my bills. How about you?
Travlin
I’ll try to simplify the reasoning for currently accepted accounting methods used by BLS.
Core inflation - “The ship seems to be floating along pretty well.”
CPI using hedonics, substitution, and weighting (for better accuracy 
) - “The ship is barely taking on water.”
CPI in real terms (eliminating accounting tricks) - “We’re sunk.”
This is why “core inflation” is what we need to pay attention to.
SS
BOE’s Mervyn King acknowledging the obvious.
http://www.telegraph.co.uk/finance/economics/8282354/Bank-of-England-chief-Mervyn-King-standard-of-living-to-plunge-at-fastest-rate-since-1920s.html
By the way, if stagflation is no growth and inflation, what do you call negative growth and inflation?
Negraflation
The administration, whether Democrat or Republican, would not have been able to get away with murder if the American people were truly educated.
Conclusion is that the electorate is profoundly ignorant to begin with. On top of that we have the mentality of the government union types who consider themselves to be entitled to the exorbitant benefits they have at taxpayer expense.
Solution requires that enough of us do some reading. Since the subject of this thread is inflation and by implication the role of the central bank in America, i strongly recommend a book by G. Edward Griffin entitled The Creature From Jekyll Island.
It is all about the creation of the Federal Reserve System in 1913.
In addition Murray Rothbard’s The Case Against The Fed and Ron Paul’s End The Fed are instructive.
Alan Greenspan’s article on Gold in Ayn Rand’s Capitalism: The Unknown Ideal is also enlightening.
The movie version of Atlas Shrugged will be a trilogy and part one is coming to theaters on April 15th. Google Atlas Shrugged movie to find the trailer.
Better still read the book.
Then join www.campaignforliberty.com and www.YALiberty.com
Enjoy!