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<p>[QUOTE=&quot;Cloudsweeper99, post: 705446, member: 3011&quot;]The traditional measure was to measure changes in the cost of living by using a fixed basket of goods.&nbsp; But now the CPI is calculated using a changing basket that only includes things that don&#039;t increase in price because it is assumed people substitute.&nbsp; So here is an example of how it works [this is meant in the economic and not political sense].</p><p><br /></p><p>Suppose at the start of a period, steak and hotdogs both cost $1 per unit.<img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" />&nbsp; If at the end of period 1 steak is $2 and hotdogs are $1, it is assumed that people will buy hotdogs and the inflation rate will be zero.<img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie4" alt=":mad:" unselectable="on" unselectable="on" />&nbsp; If at the end of period 2 steak is $2 and hotdogs rise to $2, it is assumed people will buy steak, and again the inflation rate is zero for the period.<img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie5" alt=":confused:" unselectable="on" unselectable="on" />&nbsp; So at the end of two periods, the government will report no inflation even though prices have doubled. <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie9" alt=":eek:" unselectable="on" unselectable="on" /> They have other tricks too, but this is sufficient to demonstrate how to lie with statistics.</p><p><br /></p><p>So the answer to your question is that there is no measure anymore.:bigeyes:&nbsp; People just have to use personal experience to determine whether the dollar is gaining or losing purchasing power. :desk:[/QUOTE]</p><p><br /></p>

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