You're discussing two separate things. #1 The existence of cost-push, or supply shock inflation, as addressed in your OP and title. To which I affirmed yes. #2 The inadequacies of the contemporary definition of inflation which excludes food and energy and incorporates hedonics - largely supply-side factors - which contribute overwhelming to street-level inflation. This point was elucidated later in the thread and I never read it. Hence, why I didn't respond. But, yes, contemporary measures of inflation are bullshit, and designed to benefit debtors of fixed-income securities/commitments (ie Government), and maximize economic output by keeping wage-push inflation from taking root. By keeping joe sixpack ignorant as to real inflation, Blue Collar American can't demand raises en masse and curb output. The inflation reporting game is really a white-wash for artificially low rates. The FED buys an ever growing majority of debt to suppress rates which fuels an explosion of debt products/securities (Bankers/IB's love it), finance mountains of Government pork (Government loves it). Then when its time to "pay the piper" via honest reporting, they pretend inflation never happened so the Government ponies up half what it should in fixed-income/weflare/SS. Business owners love it because clueless employees never catch on and demand raises. Its a rigged game, and always has been. The rich sticking the poor. Believe it or not, Morganist, us ET old schoolers have kicked around this topic at least 20 times in the past 5 years. You're not broaching anything new or "revolutionary."
so you admit that i do understand eco 101 and more then. because that was quite insulting. an apology would be nice. to get the ball rolling i will apologise to you. i am sorry for insulting you it was a retaliation because you claimed i was a novice, when you had not read my previous posts. anyway my point being that there are a lot of macro economist that do believe the current inflation bs. although you and others here may understand that problem as do i. you may also of debated it before. however have you ever been in a position where you could influence politicians who believe the monetarist definition of inflation. i am guessing not. i am in that position.
There's not much to cover that I haven't already addressed. Bernacke refers to inflation as fluctuations in price level. This is the Keynesian definition and a far better metric than, as you contend, money supply data used by the Monetarists. I would argue its more Austrians who rigidly define inflation via money supply measures. If a basket of regular goods were tracked - weighted in proportion to the budget of an "Average" household, on an "Average" income - yes, monitoring price level fluctuations is a much better tool. The problem is modern economics pollutes good data with bad to serve Agendas. This alludes to what Pascal said earlier in the thread and why academic debates are often fruitless because intervention, obfuscation and false reporting make it hard to discern the finer details, even with slam-dunk theory.
thank you. to be fair it can get confusing when arguments show on different pages. so i understand why people don't read all posts. i live in england in the south near london. i don't have any influence in america (yet). i have the ear of some one in most political parties here. i also had a taxation model sent to the ministry of finance in prague. although to my knowledge they did not adopt it. but at least the ambassador in england was impressed enough to pass it on. i have influence in other institutions too. the point is i do get listened to from time to time. but in general most politicians are ignorant. the reason i posted this thread was because i had a meeting with a top macroeconomist who as soon as i said cost push inflation pretty much stopped listening to me. it is his position that it does not exist, he is a rational expectations economist. unfortunately i might have to debate with him and have to prove him wrong to get anywhere. one thing you will learn is that for anything to change you have to disprove monetarism. all of the think tanks, most politicians and most institutions think it is perfect model. things will not change unless it is disproved. some are switching to the austrian school of economics however, my fear is they will use the same inflation measurement monetarism did for the reasons you stated. i don't know if the politicians are trying to cover stuff up or not with that measure. what i do know is that they are woefully ignorant. anyway thank you for your post.
From http://www.thegoldstandardnow.org/featured-articles/112-jp-morgan-to-accept-gold-as-collateral J.P. Morgan to Accept Gold as Collateral Gold hasn't reinvented itself as a currency yet. But it is getting closer. J.P. Morgan Chase & Co. said it will allow clients to use the metal as collateral in some transactions. For example, a hedge fund wanting to borrow money for a short period can put up gold as collateral and use the borrowings to invest elsewhere, betting on making a better return. Typically, banks accept only Treasury bonds and stocks in such agreements. By making the announcement, J.P. Morgan is effectively saying gold is as rock solid an investment as triple-A rated Treasurys, adding to a movement that places gold at the top tier of asset classes. It also is trying to capitalize on all the gold now owned by hedge funds and private investors that is sitting idle in warehouses.