3 ms·
>CPI * hedonic adjustments * variable basket of goods * structurally created to understate inflation to save gov money on entitlement payments
by _red 7y ago
>CPI
* hedonic adjustments
* variable basket of goods
* structurally created to understate inflation to save gov money on entitlement payments
- derriz 7y agoThe difficulties with CPI are well known to economists and anyone interested in historical finance. But its flaws are insignificant compared to using the price of gold as a measuring stick - given how volatile its price is. By your method of calculating equivalent amounts, the $5 a day was worth $300 in 2020 but only $200 in 2016 - or $380 in 2012 or $50 in 2002.
- fuzzfactor 7y agoIRC these wide variations are all due to relatively greater fluctuations in the value of the dollar compared to relatively lesser fluctuations in the functional value of gold. With uneven but too-frequent devaluation events, the US dollar, or indices based on it, certainly does not have enough continuity to make accurate trending across the previous century feasible. These events are usually reserved for situations when other assets are in extreme flux, exacerbating the difficulty accommodating the discontinuity. This has been by design.