07-23-2018, 02:11 AM
(07-22-2018, 05:50 PM)Obi2Kenobi Wrote: Adjusting for the CPI (which has its flaws, I would rather have the 2018 basket of goods than the 1970 basket of goods, even if they are considered the "same" price in inflation adjusted terms)
It certainly does have flaws. However, it is commonly referenced and "understood". Items that are entering or leaving the market are given lower or higher weights in the calculation. The weights are arguably wrong of course. Considering it is literally impossible to calculate the price of a modern cell phone in 1970, due to the non existing technological know how and or the combination of replaced technology, I think the best calculation for my taste would include only "necessary" items such as housing/rent per square foot, basic food items, and electricity/natural gas. These items have hardly changed technologically. What has changed is how some of them are derived. We of course have to remember that CPI is only useful when compared to something else. CPI alone does not tell a story. For instance, if I compare the CPI to wages I get a better idea of where the average consumer is financially.
Great read. Thanks for the reply.