1. Shadowstats is using the old CPI, nothing more nothing less. It's just not adjusting the method every year. Comparability over time is one of the basic principles of statistics. If you change the method and the composition, you lose comparability and you can stop recording data anyway.
2. Hedonics is a flawed trick to reduce the cost of a good, because it assumes that people would still buy an old version of a good. Nobody buys a 486 PC anylonger. This "let them eat ipads" argument which was famously coined by NY FED chairman Dudley is just a trick to have "deflationary" components in the basket of goods. Quality improvements can only be taken into account if consumers still demand the lower quality. The whole consumer electronics market is specifically funtctioning contrary to that idea. So e.g. claiming that the new iphone is 50% "cheaper" because it's performance is double of the previous version is bogus.
3. Reducing the food component when people are consuming more at the same time (result: increased obesity numbers) has nothing to do with "new products". It's just another trick to limit the impact of rising food prices. So is the usage of a core CPI.
4. You don't understand all the functions of money: standard medium of exchange (1), unit of account (2) and
STORE OF VALUE (3). You're probably to young to having experienced the times of the gold standard (so am I), but money should actually be able to store value. If it doesn't, it is partially disfunctional. Naming bonds as the better store of value means essentially you're thinking
money is debt. That's true for fiat money only, it's money with a counterparty. And that's the most fundamental problem we have in economics. If you can only store value in debt or equity and not in money, your freedom to decide the timing you're investments is taken away. Your money has no "time value" as Boehm-Bawerk called it with regards to interest rates:
http://mises.org/pdf/asc/2002/asc8-reisman.pdf. The current ZIRP environment is the icing on the cake. Now money doesn't even have a price at all. Bond rates are negative in real terms.
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