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Core CPI doesn't include food, energy or home ownership.

You may want to go to the BLS website and look up Owner's Equivalent Rent. The Bureau of Labor Statistics, calculates a data series called Owners' Equivalent Rent, which measures the implicit financial value of home ownership. The rising cost of home ownership is absolutely included in the CPI.

Through July of this year the core CPI was 2.1%. The CPI, including food and energy, was 3.2%. During the 19-year bull market that began in 1982, the average annual CPI change was 3.3%.

Business Week

With the 10-year bond yielding 4.3%, this all sounds reasonable, unless of course, you are someone who thinks they know more than the bond market and all the others who buy our debt instruments.

They rely successfully on widespread economics illiteracy among the U.S. population.

I guess you do know more than the markets. You must be a very wealthy individual.

You may want to go to the BLS website and look up Owner's Equivalent Rent. The Bureau of Labor Statistics, calculates a data series called Owners' Equivalent Rent, which measures the implicit financial value of home ownership. The rising cost of home ownership is absolutely included in the CPI.

Since rents are not in line with house prices, this understates housing inflation.

The Federal Reserve commissioned a 52-page study on the subject. In it, they discussed the impact of housing demand on the OER component of the consumer price index. They found:

"Downward pressure on rental prices mainly resulted from an increase in demand for homeownership, which was spurred by historically low mortgage interest rates (see Figure 19). As housing starts and home sales surged in the recent recession and recovery, the national rental vacancy rate jumped from 7.8 percent in the fourth quarter of 2000 to 10.2 percent in the fourth quarter of 2003. This effect was compounded by the way owner-occupied housing prices are measured in the CPI. The CPI uses a rental-equivalence approach, measuring the value of the shelter services an owner receives from his or her home. Price movements in owners' equivalent rent reflect changes in prices of rental units that are comparable in characteristics to owner-occupied homes. Therefore, increased demand for homeownership put downward pressure not only on tenants' rent but also on owners' equivalent rent -- the largest component in the CPI."

I guess you do know more than the markets. You must be a very wealthy individual.

Don't you have any other lines?