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"inflation rate" is a nebulous thing. Interest expense and interest rates, concretely paid by people like any other expense is not any more nebulous than track
by PKop 3y ago
"inflation rate" is a nebulous thing.
Interest expense and interest rates, concretely paid by people like any other expense is not any more nebulous than tracking other expenditures.
We already know the interest rate and various categories of interest expense paid by population. It is just not included. Your rationale sounds very much like "we shouldn't include it because the inflation rate would be higher".
There is nothing mechanically weird about not ignoring a real expense the economy and people bear the cost of.
This isn't touchy feely, this is concrete costs people pay. Not tracking is purely political.
- ethbr1 3y ago> Your rationale sounds very much like "we shouldn't include it because the inflation rate would be higher". What is the CPI actually used for? To set various levers at the central bank level to manage inflation and keep the economy humming along. One of those levers is... the Fed funds rate... which in turn influences most other interest rates. So you'd be incorporating interest into the measurement used to set interest.
- JumpCrisscross 3y ago> What is the CPI actually used for? Technically, they pay closer attention to PCE.
- mitthrowaway2 3y agoCPI is used for other things too, including contract negotiations and standard of living comparisons. Anyway, recursive sums like that are nothing unusual; as long as the sum converges it's not a problem. Any negative feedback amplifier does the same thing.
- deleted 3y ago[deleted]