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The problem is that they are measuring inflation of things like consumer goods, but where inflation ended up occurring was in the stock market - it costs substa
by ac29 7y ago
The problem is that they are measuring inflation of things like consumer goods, but where inflation ended up occurring was in the stock market - it costs substantially more to buy a given percentage of a companies stock now than it did 5 or 10 years ago.
Plus, some common expenses like health care, college education, and housing have been increasing by way more than the Fed's target as well, and credible arguments have been made that the official inflation numbers don't take this into effect appropriately.
- thu2111 7y agoYes! I've been saying this for years, so nice to see it just pop up here as a matter of fact statement. Central banking is central planning. Central planning has a bad name because it's so hard for planners to pick the right targets, fully understand the economy and not create side-effects worse than whatever problem they're trying to solve. Economists have been penning articles for years about the 'mystery' of why inflation remains low despite high rates of money printing, whilst mortgages bonds and stocks soar around them. Well, CPI/RPI aren't complete measures of prices. They are excluding prices that matter a lot to companies, like the prices of financial instruments. CPI does take into account healthcare and education costs, however. And some countries try to include house prices, albeit sometimes via indirect proxies of questionable utility like modelled "rent levels we think would be charged if people were renting instead of buying". I think there's a lot of great economics journalism to be done on the exact nature of the inflation time series, because so many things are tied to it and there's just so much largely unexamined complexity sitting behind it.