How The Cpi Is Figured - Coin Community Forum

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biggfredd Rest in Peace United States 9104 Posts	Posted 07/20/2011 02:12 am I put this in the bullion area because the CPI affects everything from union contracts to SS income to retirement payments. We've heard that the way the gubmint calculates it has changed, but I never heard specifics. Here you go: Quote: The geometric mean formula, though, does not account for consumer substitution taking place between CPI item categories. For example, pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories. In this example, the C-CPI-U would rise, but not by as much as an index that was based on fixed purchase patterns. IOW, if you have to pay 20% more for pork chops, your cost of living didn't really go up at all, because you can eat beef instead. Then when beef goes up 20%, you can switch to chicken, with no increase in the CPI. No word on what you substitute for beans and rice. Sounds like "let them eat cake" to me. The last sentence basically says that they're coming up with a still newer way to calculate the CPI, which will show even less inflation. When I read that explanation, I thought major ? Common sense says a number to compare cost of living at different dates would compare the same living, not the cost or maintaining a bicycle instead of a car, or rooming instead of having an apartment. Essentially, all the new CPI says is "if you cut back, it only costs a little more than it used to. How little is determined by how much you cut back." Report this Post to the Staff

Silverhawk74 Pillar of the Community United States 3670 Posts	Posted 07/20/2011 1:56 pm Was it not Marie Antoinette that said "Let them eat cake"? And of course that was probably a bad political move in hindsight for her and Louie the 16th, rof.... Edited by Silverhawk74 07/20/2011 1:58 pm Report this Post to the Staff
GoThunder Pillar of the Community United States 830 Posts	Posted 07/20/2011 2:35 pm Very interesting Fred Report this Post to the Staff
Ed_B Pillar of the Community United States 4008 Posts	Posted 07/20/2011 6:15 pm Quote: No word on what you substitute for beans and rice. Sounds like "let them eat cake" to me. Indeed so, Fred. It is data manipulation like this that prevents any scientist from recognizing Economics as a "science". In science, people who manipulate data in this way are searching for a particular outcome and not for the truth. Since all scientists revere and desire to know The Truth about what they are investigating, it is clear that the manipulators are NOT scientists. Science can and does ostracize those who do such things. Credibility is critical to one's work in science. Once that is lost, everything that follows is suspect. The data that we have on the Fed and the US government's calculations clearly shows a pattern of data manipulation with the goal in mind of making them and their policies look better than they really are. The problem for the Fed and the gov is that a significant fraction of Americans are not stupid... despite the best efforts of US public education and the lap dog media. We see right through their activities and know that they are not fooling us one little bit. Quote: Was it not Marie Antoinette that said "Let them eat cake"? Indeed it was, Hawk. Historians are not especially clear on whether Marie was serious about this because she was totally out of touch with the conditions under which her people were suffering or whether she was being sarcastic. Neither of those was a proper response. Once again, history shows the penchant for kings and princes to expend the public treasury on foreign adventures instead of caring for the home folks. Unless vast amounts of plunder are recovered via such adventures, they are doomed to fail and usually in a most hideous way. If we look at the lessons we can learn from Marie's and Louis's experience, one can only wonder what will be the result of US government behavior. Will it take an "off with their heads!" experience to convince them that they are terribly off the right track? Perhaps. Report this Post to the Staff
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