So we have an economy inflated at 12% per year, and yet cars don't cost 12% more every year, nor does clothing, or food, or pretty much anything you'd consider actual inflation.
The average cost of a thanksgiving dinner went up 13% last year
Food and energy ARE NOT included in what the media calls "core" inflation to eliminate month-to-month volatility. A bad orange harvest or Persian Gulf saber-rattling could cause a significant cause in apparent inflation, but would not tell the whole financial story.
You're drinking the "volatility" kool aide. A single crop going bonkers (oranges quadrupling in price) would not do anything to CPI because it would be drowned out by the many 1000s of items that did not experience such a huge boost in price. If the price of ALL FOOD went through the roof because the grain belt had a massive drought, then that should be reflected in inflation since the economic impact is widespread and real as families are forced to make real decisions about their nutritional security. Besides, the CPI as stated really doesn't pass the smell test. Go look up a random sampling of prices from 2000 and then from 2012. BLS says we've had 34% inflation (aggregate). Everything I spot checked and could find prices for (cars and some food items) was more than double what the BLS said the increase should have been.
I'm not sure what you think inflation means, but it has nothing to do with whatever it is you think you're calculating. CPI blahblahblah...
Inflation can be measured both in terms of dollars in existence (which he is measuring) and in terms of prices, which the CPI purports to measure. Unfortunately for the American public, CPI is basically a wad of shit and doesn't measure anything meaningful these days. Amongst the absurdities: A) Geometric weighting is applied so that the items expanding in cost most rapidly are given less weight on the theory that people are likely to use less of those resources in future years B) Individual items that have gone up dramatically in price are dropped from the basket of goods via substitution. So if prime rib goes up 15% this year they will instead measure hot dogs. (This was part of how the Greeks got into the Eurozone - they flim-flammed the other continentals with dropping lemons from the CPI basket, etc) C) Pretty much everything they can dream up over at BLS will get hedonically adjusted. An entry level laptop that is $299.99 in year 1 and is $299.99 in year 2 will actually get reported as negative inflation because the new laptop will invariable have some new feature (or even bugfix!) that causes it to have more utility for the same cost. The BLS can say whatever it wants for the adjustment and there is NO PROOF because it is entirely opinion based as to whether or not the new feature set is worth $299.98 or $0.01
Keep the number of passes in a compiler to a minimum. -- D. Gries
