Bill Gross calls CPI fraudulent

[haha]

"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-

http://www.pimco.com/LeftNav/HomePageAnnouncements/IO+Con+job+redux+04.htm

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.

Puh-lease

Mikey

 

[cute fuzzy bunny]

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

The original Gross article:
http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2004/IO_Oct_2004.htm

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.