>
> Whether this is screwy depends on why we care about inflation. If we care
> about it in order to adjust social security and other spending to help
> people pay the bills, then it's a terrible distortion.
>
> But if it's to guide monetary policy, it seems like there is more argument
> for it. At least from the Greenspan-conventional wisdom perspective, the
> fear of inflation is largely based on the fears that "excess income" by
> consumers will bid up prices and ignite an inflationary cycle. Since the
> oil price spike is completely independent of consumer actions, it does seem
> that factoring out the OPEC oil price spike makes sense for a lot of policy
> areas.
>
> -- Nathan Newman
Agree on both counts. However, the CPI is supposed to measure how much things went up since last month. Period. If they changed the definition to "price changes that make Greenspan life easier", that's big news, I think.
Personally, I think that a 1% monthly price change would have gone a long way towards shattering the stock market dream of "borrow, spend and retire a millionaire at 50, thanks to the New Economy" that the richest third is enjoying, regardless of how meaningful the actual number is.
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique
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