[Toddsterpatriot]

Another data dump by Paul Ross. What's wrong, can't make your point with less than 3000 words?

Let's just refute a small point from your gold bug source.

BUT, you also know that as of year end 2004, the actual homeownership rate in the US stood at a record 69.2%. In other words, just less than 31% of the US population was actually renting as opposed to owning residential property. So, when the CPI calculation is being made, 23.4% of the entire CPI number is picking up the "housing cost inflation" experience of only 31% of the total US population. The housing cost inflation experience of the other 69% is largely being ignored. C'mon, does this make sense?

The BLS definition: The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
How is the CPI market basket determined?
The CPI market basket is developed from detailed expenditure information provided by families and individuals on what they actually bought.

So, seeing as 69.2% is the American homeownership rate, 69.2% of American household are not directly impacted by a rise in the value of their home. The value could double overnight but mortgage payments would not change. Because this 69.2% of the population has already bought an increase in price does not impact them. Only new, first time buyers or buyers of new construction are impacted by these price increases.

So, what % of the population buys a house for the first time each year? 0.5%? 1.0%? So, does it make more sense to calculate CPI based on the 31% of the population who rents or on the 1.0% (maybe) who buys for the first time?

[Paul Ross]

So, seeing as 69.2% is the American homeownership rate, 69.2% of American household are not directly impacted by a rise in the value of their home.

Same argument can be made for food, Todd. You bought food last month, hence you don't need anymore the rest of the year....right?

[TopQuark]

Excellent post, Patriot! I hope Paul Ross learns something from it. If I may add a small detail --- and it is indeed small compared to the main points that you made: as far as I know (I am not an expert on the CPI), even those 70% of the population that do OWN are actually included into the CPI via "rent-expenditure equivalent," which translates housing expenditures associated with an owned asset (such as mortgage, as you pointed out) into a comparable expenditure on a rented asset.

But you simply cannot argue with conspiracy-theorist: it's much easier to assume a conspiracy --- the government, in cahout with tens of thousand of economists around the world, is falsifying the inflation data --- than to study the issue. I guess playing a detective in uncovering that evil conspiracy gives to Paul Ross the meaning of life. He will not listen to the facts, even when you present them so well.