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A comment on Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula. Parent comment

Re:Summers: Inflation Reached 18% in 2022 Using the Governme... by ethbr1 on Saturday April 13, 2024 @05:24PM (#40026293)
> Your rationale sounds very much like "we shouldn't include it because the inflation rate would be higher".

What is the CPI actually used for?

To set various levers at the central bank level to manage inflation and keep the economy humming along.

One of those levers is... the Fed funds rate... which in turn influences most other interest rates.

So you'd be incorporating interest into the measurement used to set interest.

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Re:Summers: Inflation Reached 18% in 2022 Using the Governme... by JumpCrisscross on Saturday April 13, 2024 @09:07PM (#40027787)
> What is the CPI actually used for?

Technically, they pay closer attention to PCE.

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Re:Summers: Inflation Reached 18% in 2022 Using the Governme... by mitthrowaway2 on Sunday April 14, 2024 @02:50AM (#40029195)
CPI is used for other things too, including contract negotiations and standard of living comparisons.

Anyway, recursive sums like that are nothing unusual; as long as the sum converges it's not a problem. Any negative feedback amplifier does the same thing.

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