Wednesday, May 4, 2011

Inflation Reality

Professor Niall Ferguson authored an excellent article in Newsweek on realistic inflation computations versus the official estimates. As he points out, the rules behind the calculations have changed or "been improved" 2 dozen times since 1978. If current inflation were calculated using the 1978 methodology it would be...10%!! Simply move the decimal point on "core " inflation one place to the right and you have the real number.