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Nice post and nice bet on GS.

How & What u measure partly depends on how u will use those stats. To measure change in living standard? To determine optimal growth fosteringpolicies. To see how much power foreign economies have over domestic prices?

I think ur ? needs a bit more framing for a decent dialogue.

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thanks and good point.

to expand, the POINT of the measurement would be for a number of things:

1) a "true" measure of inflation would deliver on average, higher nominal interest rates while possibly leaving real rates unchanged, thus reducing distortions in the economy. imo though real rates would also rise since inflation as measured isn't insanely off the mark (by like 5-10% as some people claim), though not by as much as nominal rates. basically, giving those that steer the economy w/ a clear bias for lower rates a clearer mandate to deliver higher rates.

2) to have investors of TIPS and otherwise inflation linked mandates (i.e. endowments/foundations sometimes benchmark spending on a "real rate" of 5% /year so 5% of assets. if inflation is 2% and their earnings are 10% in a year, they'll set aside 7% of those earnings in nominal terms to spend. now w/ a higher inflation #, a truer inflation #, they would set aside more and deliver more charity now vs. later when it would be worth -arguably exponentially- less)

3) to know more where we stand overall. i think #s 1 and 2 pretty much cover it but i needed a #3 [img]/images/graemlins/smile.gif[/img]

hope this helps frame the question better,

Thanks,
Barron

PS- i'm obviously an idiot typist. lol @ Raul Paul indeed. and also lol @ boro's post about him going by raul in his porno days