The Pankian Metaphor wasGoodbye to USENET 3006

This is a professional peeve of mine, and a lot of others in my profession. The official inflation measures is based on a pure consumer-based index that has a lot of evident flaws.

* it measures a decades-old shopping mix * it is very narrow and food+shelter+clothing-centric * it measures no production effects in construction, arts-ip, automotive etc. * it has a standard, static, narrow mix of goods, and is very prone to manipulation.

This is the reason for the BigMac index, originally a riot against the establishment's bad work. This single item index is actually a worthwhile index.

And, i do actually have nearly a decade of professional experience making such indices, and have co-authored one that is actively traded daily; including futures and option contracts.

At that time he had the devil's choice of either puncturing a boom and making a bust out of it, or letting it run on to a spectacular crash.

With hindsight, he waited too long. But who else was saying this in mid-1999 (this is when he started to take the first actions).

How would it ? By suddenly dumping euros? For what, dollars?

The M3 started it's climb in late 1994.

The structure change may have as much to do with the Internet and China as it has to do with political actions in the US. Oh, I forgot, Al Gore invented the Internet.

Just explaining, "stagflation" is the description of a state in the system where you have both high unemployment and high inflation. Economists in the late 60's and 70's had the notion that you could reduct unemployment by raising inflation. And, you can, up to a point where you get both. And from there it is very expensive and difficult to back down, as Jimmy Carter discovered. To his credit, he did what was needed even if it made him unpopular.

Modern theory has debunked this as a direct relationship, it is rather a set of side effects from monetary policy. Print money, and people buy stuff, making jobs (but only for a while), and this brings up inflation. It doesn't work as well in reverse.

-- mrr