I have a question about the Shadow Stats chart that can be found at: http://www.shadowstats.com/alternate_data/inflation-charts.
This chart purports to show the year-by-year deviation that the Fed's CPI calculation differs from the "true" calculation that was used prior to 1980. The chart seems to say that each year, the CPI was understated by a certain percentage.
My question is: does the chart show the cummulative deviation that existed at each year since 1980, or does it show the deviation for each individual year? For instance if one looks at the year 2010, the deviation is about 8%. Does this mean that for the year 2010 the Feds understated the CPI for 2010 by 8%, or does it mean that between 1980 and 2010 the cummulative CPI is understated by 8%? The chart itself seems to imply the former.
If Shadow Stats means that the chart represents non-cummulative individual years, then the total deviation since 1980 would be about 300%. That is hard to believe, or am I missing something?
Draw a vertical line and that is the differend between 1980s reality and 2011 reality in relation to inflation. It's deviation by year, not cumulative. It's interesting to compare charts from John to the year following elections - the two seem to have greater diparity starting each new administration. A little tweak added to a little tweak = 8% today. Frog stew, coming up.
Thank you. That makes more sense. To tell you the truth, I do not consider a deviation of 8% since 1980 too shocking. What is much more telling is the understating of medical care for older people.
I think that everyone should make their own market basket to see how much their own inflation is.
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