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How Is Inflation Related to CPI?
Posted on October 12, 2008
When Milton Friedman said that inflation is purely a monetary phenomenon, he was 100% correct. Yet, the general public's understanding of the term inflation leads to some confusion. Over the past 12 months I have read an exhaustive amount of articles and commentaries on the CPI's inability to truly track inflation. This has never sat well with me. Although I agree that the Fed shouldn't be using CPI to gauge inflation, I don't believe it has anything to do with hedonic regression or conspiracies about the Treasury not wanting to increase payment on TIPS. Instead, I have always believed that th...
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