In an article called "The White Elephant That Could Destroy Your Investment Portfolio", the way inflation is computed now is compared to the way inflation was computed when Paul Volker ran the Fed before 1983. If you compare the numbers, then our real rate of inflation under the Volker scenario is actually worse than when Jimmy Carter was president. Also of note is the fact that Volker calls the new method "inaccurate".



Judging from what I am now paying for gas and food, I would say that the pre-1983 numbers are the accurate ones. The latest method [1998]? That method seems to be for covering the butts of screw-up politicians. Another relic from Bill Clinton, the gift that keeps on giving. You can be sure George Bush loved that going away present from the Clinton administration. According to the pre-1983 method, we are now in double digit inflation.

Article is here.

It's extremely important that the actions of the Fed stay uninfluenced from the will of the people. I think that the Fed mostly does a good job, and part of its job is to make the right decision on economic issues even if the right decision is not the popular one. A round of applause to this guy.

__________________