Economist John Williams is interviewed [site declined to let Mises.org link on grounds of copyright, or something — ed.] [and the same for the PDF that was once linked here — ed.] about his research (available on his web site, [which is also no longer linked because the site manager refused to grant permission for “several weeks” — ed.] Shadow Government Statistics.
The basis of his research is the tracking of government statistics using their earlier definitions before politically convenient modifications were introduced. The headline CPI, to take one example, has been redefined a number of times, always to produce a lower measured rate of inflation. Some of the modifications included accounting for the substitution of lower-priced goods when some goods increase in price, removal of food and energy, the use of imputed owner-equivalent rents rather than home prices, geometric weighting rather than arithmetic weighting, and “hedonic” price adjustments to account for improvements in quality. Williams explains these changes in more detail and why they produce a lower number.
While the central bank debases the currency, it is certainly in their interest to lie about the extent to which they are doing it. One frequently reads speeches by central bankers stating that “inflation is contained”, “we have won the fight against inflation”, etc. But according to Williams’ measure, the CPI-as-measured-during-the-Carter-administration is now around 8%. If the stock, bond, or real estate markets believed that inflation was now 8%, there would be serious dislocations.
[this post was once continued but no longer is at the request of the site link, pending “several weeks”— ed.]
