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Imperialism Inc.
Posted by WakingLife in General Discussion
Mon Jan 31st 2011, 02:43 PM
I read Krugman's blog most days. One constant is the number of people questioning whether or not using core inflation, which doesn't include food and energy, is appropriate. The charge is usually that it only looks like there is disinflation (positive but shrinking inflation rates) because he is using the wrong measure. His position has always been that if you want to know which direction the economy is moving, to decide on policy, you want to look at core inflation. Food and energy and many other prices fluctuate wildly and you can't make monetary or fiscal policy based on numbers like that. The other charge against him is people saying it only looks like disinflation because of housing that is included in the core CPI. Well, he has discovered a source of data at the Atlanta fed to address the issues. This should really be the end of the debate (though of course it won't be). The numbers are quite clear. Food and energy just fluctuate too wildly to base any policy on. It isn't that they don't effect people just that we don't want to use them for policy decisions. It is also quite clear the disinflation is not merely due to housing. I'll posts the graphs. Go to the link for the text.


Screw Your Coreage to the Sticking Place
http://krugman.blogs.nytimes.com/2011/01/3...








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