“Many argue that these weightings skew the CPI lower, as do hedonic adjustments. The motivation for this skew is transparent: since the government increases Social Security benefits and Federal employees’ pay annually to keep up with inflation (the cost of living allowance or COLA), a low rate of inflation keeps these increases modest. Those claiming the weighting is accurate face a blizzard of legitimate questions. For example, if healthcare is 18% of the U.S. GDP, i.e. 18 cents of every dollar goes to healthcare, then how can a mere 7% wedge of the CPI devoted to healthcare be remotely accurate?”
http://charleshughsmith.blogspot.com/2013/07/whats-up-with-inflation.html
Related posts:
Bill Bonner: You Say You Want a Revolution
Bill Bonner: How I Explained Bitcoin to My 94-Year-Old Mother
Mises Explains the Drug War
Lawrence Reed of FEE on the Expansion of Free-Market Thinking
Obama's abuse of the Espionage Act is modern-day McCarthyism
Deciding on Living in Medellin, Colombia: The Good & Bad
The State of Cryptocurrency Mining
It's Happening Faster Than Even I Thought
Bill Bonner: Can This Simple Trading System “Beat the Market”?
Jimmy Carter: U.S. Has ‘A Cruel and Unusual Record’
How Empires End
Don't Make it Easy for Governments to Compile Your Digital Dossier - Part II
The Rise of the Antiwar Libertarian Republicans
Bill Bonner: Price does not tell you all you need to know
The risk of taking on Syria