5 ms·

It would be if the thesis is that the CPI is systematically manipulated to suppress inflation.

rsj_hn 6y ago
That would be pretty hard to do in our data rich environment. It's pretty easy to look up historical prices of things like oil, wheat, and other commodities, as well as labor, automobiles, and other consumer goods. Even a small systematic manipulation would become really obvious after a decade or two.
totalZero 6y ago
Not necessarily, if the manipulations are reverted smoothly over time. There are certain moments in which inflation is a focal point (now for example) and other moments where nobody really cares. Also, I think the inclusion of things like tuition and medical care kind of adulterates the data. I have read that people go to the hospital for non-emergency reasons less often than before the pandemic, and also that several schools slashed tuition due to the pandemic. That offsets price increases in other areas.
- imtringued 6y ago
  The problem with this type of argument is that the fed doesn't want to exceed more than 3% inflation. It has no reason to lie and pretty much every central bank is struggling with lack of inflation. You can criticize the Fed for doing reckless policies that fail to increase inflation and only drive a bubble. Why would you even need an unproven conspiracy theory like CPI when the problems with the Fed are undeniable? You can even complain to the fed that inflation is too low and they should either calm down or do something else since the Fed is clearly not capable of driving inflation. Considering the mission statement of the Fed that's a huge blow by itself.
  - totalZero 6y ago
    I don't think you understand what I am saying. 1. I'm not arguing that the fed is artificially inflating inflation. I'm saying that if they want to suppress the appearance of inflation in the short term so that they can keep rates low and prevent any panic about the dollar until they can react to it, they have some ability to do so because of the opaqueness of the data. 2. Bias in a signal doesn't have to be persistent to be problematic. The average reading does not have to be biased in the long term for there to be a problem with the spot reading. That's a major reason why more granular data is always better. 3. I'm not stating any conspiracy theory. The Fed is driven by data. Biases in data affect data-driven decisions. CPI includes various inputs, not all of which are experiencing the same demand. CPI is an agglomerate reference.
  - eru 6y ago
    Your complaint about the Fed was right in the last decade. But something seems to have changed for the better when they changed to average inflation targeting recently.

That would be pretty hard to do in our data rich environment. It's pretty easy to look up historical prices of things like oil, wheat, and other commodities, as well as labor, automobiles, and other consumer goods. Even a small systematic manipulation would become really obvious after a decade or two.

totalZero 6y ago

Not necessarily, if the manipulations are reverted smoothly over time. There are certain moments in which inflation is a focal point (now for example) and other moments where nobody really cares. Also, I think the inclusion of things like tuition and medical care kind of adulterates the data. I have read that people go to the hospital for non-emergency reasons less often than before the pandemic, and also that several schools slashed tuition due to the pandemic. That offsets price increases in other areas.

imtringued 6y ago
The problem with this type of argument is that the fed doesn't want to exceed more than 3% inflation. It has no reason to lie and pretty much every central bank is struggling with lack of inflation. You can criticize the Fed for doing reckless policies that fail to increase inflation and only drive a bubble. Why would you even need an unproven conspiracy theory like CPI when the problems with the Fed are undeniable? You can even complain to the fed that inflation is too low and they should either calm down or do something else since the Fed is clearly not capable of driving inflation. Considering the mission statement of the Fed that's a huge blow by itself.
- totalZero 6y ago
  I don't think you understand what I am saying. 1. I'm not arguing that the fed is artificially inflating inflation. I'm saying that if they want to suppress the appearance of inflation in the short term so that they can keep rates low and prevent any panic about the dollar until they can react to it, they have some ability to do so because of the opaqueness of the data. 2. Bias in a signal doesn't have to be persistent to be problematic. The average reading does not have to be biased in the long term for there to be a problem with the spot reading. That's a major reason why more granular data is always better. 3. I'm not stating any conspiracy theory. The Fed is driven by data. Biases in data affect data-driven decisions. CPI includes various inputs, not all of which are experiencing the same demand. CPI is an agglomerate reference.
- eru 6y ago
  Your complaint about the Fed was right in the last decade. But something seems to have changed for the better when they changed to average inflation targeting recently.