4 ms·

> Basing the inflation definition on basic goods and needs at the time is a reasonable proxy due to their broad-based requirement by individuals But what of no

> Basing the inflation definition on basic goods and needs at the time is a reasonable proxy due to their broad-based requirement by individuals But what of non-luxury goods that aren't included like housing? If the CPI is to measure essentially the value of the dollar to what is required to live, isn't it useless without housing? Why is housing left out? I surmise it wouldn't fit the inflation targets the fed claims to be attempting. Either way, when a measure becomes a target it fails to be a measure. Edit: Just another thought. Is today's produce even equivalent to that of 60 years ago? Today's corn is genetically modified and soaked in `safe` glyphosate. If the CPI was honest they'd at least have to acknowledge that the food we eat today is of extremely so lesser quality. Today's nearest equivalent would be to eat a wholly organic diet. If one were to hold the quality of food stable, that too would have to show a _much_ higher rate of inflation.

arcticbull 5y ago
> But what of non-luxury goods that aren't included like housing? If the CPI is to measure essentially the value of the dollar to what is required to live, isn't it useless without housing? Housing is included by proxy of rent. [1] I think you'll generally find that rent growth has significantly outpaced mortgage costs, and therefore housing is overrepresented in the CPI. [2] This makes intuitive sense, after all, people tend to refinance into lower interest rates (and the general trend has been down) whereas rents seem to only go up. So, by using rents your housing costs go up a lot more over time (indicating higher inflation) as compared to using mortgage principal and interest payments. [1] https://arbor.com/blog/how-does-rent-factor-into-the-consumer-price-index-cpi/ https://arbor.com/blog/how-does-rent-factor-into-the-consume... [2] https://www.businessinsider.com/monthly-mortgage-vs-monthly-rent-payment-2014-3 https://www.businessinsider.com/monthly-mortgage-vs-monthly-...

arcticbull 5y ago

> But what of non-luxury goods that aren't included like housing? If the CPI is to measure essentially the value of the dollar to what is required to live, isn't it useless without housing? Housing is included by proxy of rent. [1] I think you'll generally find that rent growth has significantly outpaced mortgage costs, and therefore housing is overrepresented in the CPI. [2] This makes intuitive sense, after all, people tend to refinance into lower interest rates (and the general trend has been down) whereas rents seem to only go up. So, by using rents your housing costs go up a lot more over time (indicating higher inflation) as compared to using mortgage principal and interest payments. [1] https://arbor.com/blog/how-does-rent-factor-into-the-consumer-price-index-cpi/ https://arbor.com/blog/how-does-rent-factor-into-the-consume... [2] https://www.businessinsider.com/monthly-mortgage-vs-monthly-rent-payment-2014-3 https://www.businessinsider.com/monthly-mortgage-vs-monthly-...