free market capitalism is the path to prosperity. i'll rather have the free market determine rates and prices than let a guy in the gov't telling me what the price should be. free market: free from market manipulation, from from fraud ,free from monopolies..from from gov't intervention. free markets work..plannned communist central command economies always fail. or not the best for consumers or not good for economy or majority. prosperity: plenty of supply, all demand is filled..there are no shortages.
Food and energy are excluded for a reason. An increase in the price of energy is reflected in the price of a durable good so counting energy would effectively count it twice. Food? I dunno, I'm no economist
yours is dubious reasoning at its worst. by your line of reasoning only something at the final stage of output would be measured.
Food, shelter and clothing are the are the necessities of life and should be counted. Also the price of war is steadily going up. Why shouldn't we count that too.
Ok, lets suppose the FED did use energy and food in its calculation. Now when the FED goes to make a policy decision based on their inflation data they are going to end up trying to fix a problem their policies can't affect. Increases in food and energy costs are directly related to the growth of emerging markets. The FED has no ability to stop this kind of inflation with their policy tools. By excluding that data the FED is limiting its scope to that which it can affect.
Where did you get those kind of ideas? Before Fed started QE2 oil was 72. today 91. Now do you homework and tell us about increases in food since QE2 was announced Maybe this task will help you to understand - Fed is directly responsible for food and energy inflation
Of course they can stop this kind of increase of Food and Energy. Volcker did it in the 80's when he raised the discount rate to 14%. It brought everything down. Bernanke can't do that now. If he does real estate and banking will be crushed even more.
Bernake raising rates doesn't halt growth in the developing world. Consumption growth in those countries is driving commodity inflation. We have no policy tool that can stop that. We accounted for more of the demand in 1980 and thus held more influence over their price. We cannot control the price of goods with our policy tools anymore. Pure and simple.
You mean we are seeing inflation during a period where economic expectations are increasing? Can you not see how they might be correlated? But is my guess at their correlation any more accurate than your guess? Association does not necessarily equal causation in either scenario. So really we are both left to our own opinions.