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Bill Gross calls CPI fraudulent
Old 10-13-2004, 12:02 PM   #1
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Bill Gross calls CPI fraudulent

"The CPI inaccurately calculates Americans’ cost of living. Since Social Security and pension benefits, as well as the level of wage hikes are predicated upon the specific number and/or the perception of annual increases, Americans are being in effect conned by their government and falling behind the inflationary eight ball year after year. After slamming the concept of the core CPI, the primary culprits I cited were the government’s use of hedonic and substitution adjustments to lower the CPI by as much as 1% in recent years."

Read all about it here-

This is no news to me. I guess I am just cynical when it comes to government, but really it takes a lot of faith to make a contract with another party, and let that party who is responsible for funding the benefit also determine the adjustments.


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Re: Bill Gross calls CPI fraudulent
Old 10-13-2004, 12:12 PM   #2
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Re: Bill Gross calls CPI fraudulent

Pretty much what I've been saying for a while now.

The original Gross article:

Looks like after the tomfoolery is removes, the actual inflation number may be 1-1.1% higher than reported.

Which is why you cant buy TIPS or a CPI adjusted pension/annuity and feel that you've removed inflation from the equation...add 1% back in to your calcs with those inflation adjusted instruments and you'll be nearly on target.
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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