To: skeeter
Item substitution is only assumed to occur within categories. Hamburger and steak are not in the same category. Consumers are assumed to substitute different kinds of hamburger when its price changes.
5 posted on
12/15/2014 9:13:48 AM PST by
1rudeboy
To: 1rudeboy
I understand, but does the official CPI calculation still make this same assumption?
I've wondered why the rate of inflation has stayed so low recently in spite of the rise in the cost of energy, all the new cash in the system etc. It seems like the old rules no longer apply.
6 posted on
12/15/2014 9:17:32 AM PST by
skeeter
To: 1rudeboy; skeeter
Item substitution within categories still validates Mr. Willams's point.
There is a small grain of truth at the bottom of the quality adjustment theory, but this theory has been used as cover for political manipulation of the CPI. The federal government has obvious political and financial incentives to do so.
8 posted on
12/15/2014 9:25:15 AM PST by
T Ruth
(Mohammedanism shall be defeated.)
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