Here we go again – formulating the CPI

There are those who claim that revising the CPI will help the Fed stop fighting inflation. This is the case for Americans who only watch the Fed and nothing else. The CPI formula has been changed routinely. Previously real estate was included but when it was going up so much they replaced that with rents. When rents started to rise, they replaced them with controlled rents.

This is it Not About helping the Fed cut interest rates or stop raising interest rates as most seem to be promoting it. Powell is not that stupid and this will be him zero Impact on future Fed decisions. This is all about government spending which is a much bigger problem than worrying about squeezing the Fed. default All government program automatically indexed to CPI. Thus, agencies’ budgets are automatically increased every year based on the CPI. Your taxes are indexed to CPI. By lowering the CPI, they collect more taxes! there no one In Congress or the Bureau of Labor Statistics that gives the Federal Reserve a second thought.

Even if we look at inflation using pre-1980 equations, the CPI is close to 10%! When we calculate inflation by eliminating everything that is really irrelevant and focusing on food, energy, transportation and taxes, which they don’t take into account at all, our number really comes out to 32% for 2022. And that’s a far cry from the official figure. Socrates simply calculates this from an unbiased perspective.

What a wonderful new world the Biden administration has created. Thank you covid and russian sanctions. The biggest increase we found was obvious fuels between gasoline and diesel used in trucking and homes averaging 65% + moving to staple food eggs were up nearly 50% flour was up 25% cooking oil was up 23% butter was up 35 %, chicken by 14% and rice by 18%. If we throw away toothpicks, paper clips, etc., the more we can include the lower the rate of inflation. We do not include rent or real estate. Our figure is much more accurate for daily living expenses than the government’s 10% level. It also does not include sales taxes. The national average rise in rental rates was 7.8%, in Florida 8.5%, and in New York City 1.5% when controlling.

When I used to buy the IBM XT desktop computer during the 1980s, it was always around $7,000 for the best hardware. Today, this cost has decreased significantly. Obviously, we don’t buy computers every week. Should that be part of a formula? The BLS has made many revisions to the CPI over the decades, it is really a political tool these days.

Back in the ’90s, our staff would dissect every statistic. We discovered that they were exaggerating economic growth because they counted government employees twice. The sum of all personal income, then government spending. I called the head of the BLS and definitely asked that this should be supported somewhere to hire government employees to increase GDP instead of the private sector. They reviewed it and finally just said – no comment.

The notion that this latest revision to use 1 year as a weight instead of 2 years will allow the Fed to stop tightening is really the ranting of people who view the Fed only as their guidance. There are a lot of incentives behind this adjustment that the Fed did not have in mind.

Inflation and the tricks of trade

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