Liberty Forged

the State has no money of its own, so it has no power of its own. ` Nock

CPI excludes housing prices

Posted by Jesse on December 3, 2007

Inflation-Alive and Well by Ron Paul
“Austrian- school economists demonstrate that true inflation is monetary inflation. True inflation therefore can be measured by an increase in the money supply. Mr. Greenspan and Fed policy makers have more than doubled the M3 money supply in less than ten years. While Treasury printing presses can print unlimited dollars, there are natural limits to economic growth. This flood of newly minted US currency can only increase consumer prices in the long term, as more and more dollars chase available goods and services.”
“The Treasury department parrots the Fed line that consumer prices, as measured by the consumer price index (CPI), are under control. But even some Keynesian economists admit that CPI grossly understates true inflation. The most glaring problem is that CPI excludes housing prices, instead tracking rents. The Fed’s easy credit policies have created an artificial mortgage boom, enabling many Americans who would not have met credit standards 30 years ago to buy houses. So demand for rentals has diminished, causing rental housing prices to drop and distorting the CPI downward. However, everyone knows the cost of purchasing a home has increased dramatically in the last ten years. Home prices in many regions have more than doubled in just five years. So price inflation certainly is alive and well when to comes to the largest purchase most Americans make.”
Price of Oil


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