Monday Message Board

I’m travelling, so posting will be light to non-existent for a while yet. In the meantime, another Monday Message Board. Post comments on any topic. As usual, civilised discussion and no coarse language. Lengthy side discussions to the sandpits, please.

82 thoughts on “Monday Message Board

  1. Mad Max was just male fantasy…hero in a land of outlaws type stuff. Short of losing >99% of the world’s population, we’re going to look nothing like that.

    And there’ll always be animals around…we’ll just keep cockroaches as pets!

    That’s a neither for me, sunshine.

  2. @Ootz

    Since you raise the question of ethics here are some possible issues.

    Just watched McKibben – he made the comment about 200 problem companies which would be good to divest from. It could be a useful list but I couldn’t find it. However it wouldn’t include the banks and financial sectors that underpin the investment process – or the superannuation funds or investors who are still oblivious. Still its worth a try and it certainly makes sense long term.

    But to divest yourself you would probably have to open an SMSF as the superfunds don’t divulge full details of who they invest in.

    It was interesting to watch Tony Jones show no emotion whatever as McKibben described the current situation but merely trying schoolboy debating tricks. And then ABC switched straight to the business report without missing a beat. Balance is one thing but this smacks of continuing cognitive dissonance which is very troubling.

    The matter of ethics of course goes further in respect to ethics and superannuation. When dealing with superannuation/financial agents (along with charity sprookers, real estate agents and traders of all shades) the rule seems to be – assume they completely lack ethics and are simply after a sale/percentage or whatever. Now it arguable in the name again of balance they are merely doing what they were taught in upselling classes, they are subject to some official constraints now and they have KPI sales targets to meet to feed their dependents. But being a good salesperson is ultimately about leaving your ethics at home and using every trick at you legal disposal to con/cajole/seduce your target. Its about training in denial or if you prefer lying cheating and swindling (legally).

    So the second question regarding ethics and superannuation is whether realistically we can ever expect ethical advice on balance from a system that is an organised con? You might think you can beat them – but this is the logic of the mug punter at Eagle Farm Randwick or Flemington.

    Finally there is the question of what does ‘ethical’ actually mean? Rio20+, arguably a good guy, ignored the environment and came up with the oxymoron Green Growth. FOE and the Greens are now saying population growth is not a problem and implicitly are pushing growth for the worthy reasons of feeding the poor etc. Worthy indeed unless the planet cant manage this. Judging what is ethical is also a matter of figuring out priorities.

  3. @sunshine

    On the future?? Here is something maybe a little less silly than Mad Max polls though he does get an honourable mention in dispatches given the underpinning argument of energy depletion.

    Costanza R. 1999. Four visions of the century ahead: Will it be Star Trek, Ecotopia, Big Government, or Mad Max? The Futurist 33:23-28.

    Costanza is a well known ecological economist academic and this popular piece isn’t bad. Basically its saying the future is unknown but here are four commonly worked scenarios.

    [And don’t forget Mad Max was made on the outskirts of Melbourne (as Ava Gardner apocryphally put it in On the Beach – a great place to make a film about the end of the world, starting at Anarkie Road – its actual location and the location of a nice vineyard].

  4. ps I think there are links to downloadable copies that don’t require a subscription.

  5. Nick @50 “Mad Max was just male fantasy…hero in a land of outlaws type stuff.”
    I dunno Nick, just google Afghanistan and Mad Max.

    How about The Hungry Miles or other Aussie movies depicting the great depression?
    http://aso.gov.au/titles/documentaries/the-hungry-miles/clip3/

    In 2012, the FAO estimated that 868 million people are undernourished (12% of the global population) and that malnutrition is a cause of death for more than 2.5 million children every year (Wikipedia). Anyone read the Salvation Army survey reported two days ago?

  6. Financial Times are reporting that the US is placing a >30% tarrif on cheap chinese solar panels and the EU is looking at imposing a 47% tarrif. Now, I’m a longtime advocate of protectionism, but I don’t agree with imposing barriers to suppress the proliferation of technologies that help the fight against carbon emissions.

  7. Thanks for Constanza reference, Newtonian. Could’t find a link for the article, however a (pdf) rehash of it by himself is here http://www.capitalinstitute.org/sites/capitalinstitute.org/files/docs/Costanza%202001%20BioScience%20.pdf

    Interesting Constanza’s last point in above link:
    ” A cooperative, precautionary policy set that assumes limited resources is the most rational and resilient course in the face of fundamental uncertainty about the limits of technology.”

  8. rog,

    Apart from the QE aspect I agree with the actuarial. But the QE comment just gave me an idea. I’ve been arguing (in my limited know ledge of economics that the US QE was justified because the huge amount of unpaid export product to Iraq and Afghanistan had depressed the economy and the QE addresses this imbalance.

    Now if that is true then there in is a mechanism to address extreme poverty in a number of third world countries. Simplistically if a country applied all of its resources to feeding a next door country not being paid for this effort that country would soon hit depression. However if you simply print the money in careful balance with the exported resource the supply country could be kept in balance while providing an external benefit to its neighbour. Obviously there are practical limits, but I wonder what that would be as a percentage of GDP?

    Ootz,

    Thanks for that link. I have saved the article for later reading. But picking up on the central idea I take a central position between technology and ecotopia.

    Technology is our saviour, but we need it to be far more advanced. From an energy point of view the SpectroLab Solar PV efficiency is the right level to solve our every energy need. From an information technology point of view we are heading in the right direction. The optimum is the fnatasy fiction “magic crystal”. This is totally do-able but we are not there yet. Light computers that can receive an external solar energy source and process information (situations) is the most robust permanent processor solution. At least 50 years away, but we just might make it before there is a mass human die off and global economic failure. The problem with high technology is that it is extremely vulnerable to supply failure due to the highly serial nature of the production train. Apart from that electronics have a weak link in the form of electrolytic capacitors. These capacitors age and can flip their polarity thereby destroying the circuit that they serve. So the notion of ultra condensed processing power and data (knowledge) storage in the form of a crystal structured block device is very appealing from a long term survival point of view (hold the crystal in a condensed beam of light and it projects an image onto the wall of your cave,…sort of idea).

  9. Shortly after the Lehman event in 2008, ‘asset price inflation’ was at least mentioned on this blog-site. What happened to this topic?

    The so-called ‘quantitative easing’ (QE) by the Fed in the US, then by Japan and, to a lesser extent, the ECB, was said by many (including Prof Krugman) to not have produced ‘inflation’. True, consumer price ‘inflation’ did not excellerate but what about asset price inflation (shares, real estate)?

    Real estate prices are on the move up in the US. In Australia, neither Keen’s prediction of a significant price level decline came true nor is there evidence of a real estate bubble across the entire country, although there are a few ‘hot spots’.

    Share markets (equity) are different. The US equity market as well as the major share markets in the EU, in Japan and in Australia had a bull run for about 12 months and a major ‘correction’.

    Think about it. QE means bonds are bought by the monetary authority in exchange for ‘cash’. The cash doesn’t go to the homeless, the minimum income earners, the under and unemployed. It goes to the bond holders. Who are they? A lot of the bonds are held by ‘agents’ (superannuation funds, financial institutions, banks, insurance companies) – ‘organisations’ which, for legislative reasons, have control over funds that are in some round-about very abstract way ‘owned’ by people like you and me. What are those agents going to do with the cash? It depends. In general it means QE induces major portfolio adjustments amounting to buying other ‘paper’ with the aim of generating bigger numbers called ‘returns’. Shares are such ‘paper’. Since the ‘paper(s)’ are internationally tradable, portfolio adjustment takes place internationally. The effect of QE in the US or in Japan spreads to many local economies, although not necessarily in a uniform way.

    So, while there was no consumer price inflation (not surprisingly because most of ‘the consumers’ didn’t get the cash), ‘asset price inflation’ re-emerged.

    PS: Terms in ‘single quotation marks’ signify words which have several meanings or are ill defined out of context. For example, the term ‘cash’ can mean notes and coins and it can mean a number changes in accounts.

    While I am on the topic of terminology, the word ‘contagion’ pops up every so often in the media. IMHO, ‘contagion’ is an unfortunate word; there is no infection anywhere. Is it really so difficult to say what actually happens, namely all prices are related and therefore when one price of a widely traded ‘thing’ changes (eg QE increases the price of bonds and lowers the ‘yield’, ie the ‘rate of return’) then other prices change too in ‘the global economy’)

  10. Not long ago I posted on the topic ‘tax havens’. Today there is an article in the smh on this topic. Apparently a non-trivial proportion of major stock exchange listed companies, including in the financial sector, have postbox subsidiaries in the said havens.

    Lets see by how much the federal deficit is affected by the after tax profit motif of major players.

  11. @Jim Rose

    The problem to which you provide an ‘optimal’ solution does not exist in economics concerned with the material (as defined by natural scientists) welfare of humans.

    The ‘optimal’ solution you provide is merely a delusion entertained by those accountants who think of ‘tax’ as an ‘expense’. The delusion becomes evident when they produce numbers to lobby governments for hand-outs.

  12. @rog

    I did NOT call real estate “soft” and I would not agree with this description.

    I would say real estate markets in ‘the global economy’ are geographically more segmented than financial markets, across countries and even within countries, and prices in financial markets move faster than in real estate markets.

    You don’t say where and when real estate ‘valuations’ fell as much as 50%. Further, as you know, there is what is known as an index problem with all inflation measures.

    The relationship between financial markets and a real estate bubble is very clear in the US during the period prior to the Lehman event. The history in the EU provides a more complex picture. After the big bang event of financial market deregulation during the Thatcher years in the UK there was a real estate bubble in the UK, in the Netherlands, and in Finland but not in Germany and France. Similarly, there was no real estate bubble building up in Germany and France during the period prior to the Lehman event but there was one in Greece, Cyprus, Spain, but not in the Netherlands and Finland. While these examples are not comprehensive, I do believe they illustrate my critique of the orthodox macro-economic proposition that QE did not result in ‘inflation’ (because of the share market behaviour) and my reasons for my disagreement (interrelatedness of prices and, in addition, the complexity of this interrelationship as well as the effectiveness of regulatory measures under the control of national governments within an almost continuously changing ‘global economy’).

  13. We have a very loud, large, powerful, well co-ordinated, organised and resourced pro-vaccination lobby screaming about the importance of good science in the face of hoodoo quackery.

    And this pro-science movement has chosen Murdoch’s AGW-denial machine as its primary forum.

    I’m pretty sure that’s ironic.

  14. @Ernestine Gross Sorry, when I said “you” I didn’t mean you specifically I meant you in general. Figure of speech, as it were.

    RBA have recently said property boom is over and future prices are to grow slowly if at all. Once you take out inflation and transaction costs returns are sub optimal. Near me a bulky goods site which sold in 2008 for $36M just turned over for $18M.

  15. My personal belief is that there is a lot of unmeasured inflation in the system. Note, I have used the word “belief” and the vague unquantified words “a lot.” Without an economic method and without the appropriate mathematical skills and data gathering capacity, I cannot test my belief.

    Asset price inflation was an issue leading up to the Global Financial Crisis in 2008. After QE, asset price inflation might have received a second lease on life. However, government “money printing” or “quantitative easing” (whatever term is appropriate to the precise method used) is not the only source of inflation, in my opinion. I will come back to that point.

    HIA Economics Groups, “House Price to Income Ratios in Australia = 2010”, found the median house price to household annual income ratio moved from just under 2.5 to about 4.2 in the period Sep 1995 to Sep 2010. Australian Bureau of Statistics (ABS) data indicated that in August 2011 typical Australian home cost 6.3 times the average annual income.

    Which is the more important comparison? The one to annaul household income or the one to average annual income? The other point is that a longer data series (for example thirty years) might give us a better picture of changes than a mere fifteen yeas data series. Either way, it is clear that house prices have inflated significantly.

    Shares are often assessed by comparing P/E, the price to earnings ratio. Robert Shiller’s graph of P/E ratios and interest rates is interesting in this context. Hope I can get away with one link.

    An important point to note, I think, is that if the profits share of the economy has been pushed up (as it has over the last few decades) compared to the wages share of the economy, then this must have a distorting effect on the P/E ratio pushing it lower than it would otherwise have been. If corporates and share owners also pay less tax than they used to pay, whilst this might not affect the technical ratio, surely it increases willingness to buy shares at higher P/E ratios?

    Modern methods of assessing consumer inflation (inflation of goods and services for consumption) are debateable and open to political manipulation. The basket of goods chosen and what is included or left out is open to manipulation by governments with a vested interest in maintaining the appearance of low inflation. Are housing costs and interest costs properly reflected in the basket? Does the basket reflect what poorer people (those most affected by inflation in necessities) actually purchase? The questions could go on.

    Modern mathematical and statistical methods of inflation assessment IIRC include formulas to adjust for substitutions and for “improvements” to goods and services over time. I forget the technical term for this area of mathematics and I do not understand how such mathematics work in any case. Thus a home computer of the same price as a previous model but with four times the computing power would be considered a deflating item if in the basket.

    I doubt that reverse effects get measured. For example, due to the decline in state high school education standards, more families feel compelled to pay fees for a good private school education. In my case (anecdotal evidence I know), I assess my children received about the same standard of education at a private high school that I recieved at a state high school in the 1960s and 1970s. My tertiary studies were also fee free and I was paid TEAS at the independent rate in the good old days. Now, my children at tertiary education are incurring fees which they must pay off one day. Is this measured in inflation? I wonder.

    The decline in the quality of meats, vegetables and fruits has been marked in my lifetime in my firm opinion. Again this is a subjective, anecdotal assessment. Is any attempt made to assess such declines in quality? I very much doubt it.

    To wind the argument up, much is made of the inflationary effect of government spending, deficit budgets and other measures such as Q.E. However, very little or nothing is said by most orthodox economists about the inflationary effects of unconstrained debt money creation by banks and about financial speculation of various sorts and instruments. This is the area which needs to be brought under much better control. Then, more policy space is available to government to deficit spend on targeted programs; for example reduction of unemployment and moving the economy back to full capacity producing enviornmentally and socially needed things (for example renewable energy, social services, infrastructure upgrades etc.)

    For example, it is passing strange that we can afford football palaces (stadiums) and beer palaces (taverns) all over the nation and yet we can’t fund tertiary education properly. The resources are there (for the time being as limits to growth does approach) but we are using the resources for the wrong things. The concrete pour and associated materials for a football stadium could build a hell of a good science wing at a university; maybe one dedicated to the science of renewables. The concrete pour and associated materials for the streets of high rises of luxury units on the Gold Coast could build one or several solar convection towers, each with the capaicty to provide electric power 24/7 to a city of 250,000.

    But we would rather spend on fripperies like football, beer and holidays, than try to save the world from catastrophic resource and climate collapse. And we send expensive, resource chewing armies half way round the world to kill people we should at a minimum simply leave alone.

  16. @rog

    o.k. It seems you bring water to my mill regarding real estate prices in Australia since the GFC.

    Note, the time series data on ‘the ASX’ you provide for a 5 year period is actually a sub-sub-index of all securities traded on the ASX (Australian Securities Exchange). The time series in your link is the ASX-50-reit index. REIT indices refer to securities issued by “vehicles” (another name for a type of organisation) that own property and derive income from rent. The 50-reit index is a sub-index of the ASX-200-reit index, possibly generated for a specific clientele. Nevertheless, the graph of 50-reit index is sufficiently similar to that of the ALL ORD and other share price indices in the major exchanges in the EU, the USA, Japan to capture the ‘deflation’ of the GFC and the recent ‘reflation’ and ‘correction’. (The size of the ‘correction’ in Japan is much bigger though).

    The 5 year period starts with the end of the previous price ‘inflation’ (prior to the GFC). A minimum time series to match my argument is 10 years.

    You write: “RBA have recently said property boom is over and future prices are to grow slowly if at all. Once you take out inflation and transaction costs returns are sub optimal. Near me a bulky goods site which sold in 2008 for $36M just turned over for $18M.”

    What is ‘inflation’? It seems to me many business people (and some macro-economists) are used to taking the CPI as a measure of ‘inflation’ without realising that their borrowing behaviour (leverage) is causing ‘inflation’ (pushing nominal prices up) in one sector somewhere in ‘the global economy’.

    (Someone made a bad investment in 2008. Happens more often than one may think. For example superannuation funds still pumped a bit of compulsory savings into securities markets (ie bought) in 2008 and the theoretical owners of these savings couldn’t get their money out to put into Term Deposits which offered 8% at the time.)

    Never a boring moment.

  17. see http://www.telegraph.co.uk/culture/hay-festival/10081785/Hay-Festival-2013-Hans-Blix-Some-Iraqis-think-the-war-was-my-fault.html

    Mr Blix candidly admits that, during the countdown to war, he agreed with Blair and Bush that Saddam probably did have poison gas and germs. Why else would Iraq have sabotaged earlier UN inspection missions throughout the 1990s?

    “As to chemical weapons and as to biological weapons, yes I too – like everybody else – thought why, if they had stopped the inspectors so much, wasn’t there something behind it?” says Mr Blix. “I thought ‘my God, would they really stop them if there wasn’t anything’. So I had a suspicion. However, that faded with more and more inspections.”

    By February 2003, after his experts had carried out hundreds of inspections and found nothing, Mr Blix’s suspicion had faded to the point that he actually cautioned Blair: “Wouldn’t it be paradoxical to invade Iraq with 250,000 men and not find anything?”

    a bit for everybody in this quote

  18. I note the ABS website indicates that from September quarter 1998 mortgage interest charges and consumer credit charges were taken out of the CPI calculation. There is no indication they have ever been added back in.

    House purchases were taken out in March quarter 1987 and reinstated in September quarter 1998.

    Here are two clear examples of blatant rigging of the CPI at different times. There can be no methodological justification for ever having such key expenses of many, if not most, households not retained in the calculation permanently.

    On another but related topic, complaints about deficit spending causing inflation are never matched by complaints about excessive credit and speculation causing asset inflation. This is a clear example of a double standard. It is OK to drive asset inflation with excess lending but it is not OK for the government to deficit spend to fund universitites properly. That is just one example.

    However, at the bottom of it all you cannot reform the economy without reforming political economy. Where the ownership of capital is vested in too few hands, government is bought and suborned and democratic demands are ignored and suppressed. If plutocratic and oligarchic power is not broken then nothing will change.

  19. Thanks for the Costanza link Newtonian .
    Almost 2/3 s of our top 100 listed companies use tax havens . News ltd is one of the worst offenders with 50+ such addresses . Its a similar situation in the U.S.
    Iko – it seems to me too that there is a super abundance of resources about but we are using resources for the wrong things .Whatever market is doing the allocation is thinking too short term . Im no economist so I tend to think of most of the hard big picture economics in simplistic psycho/social/pseudo-economic terms which I feel more comfortable with .We just arent making ourselves look like a very good long term bet ,and we havent grown citizens (or a politics)who are likely to change preemptively .Selfish aggressive people limit choice .
    Jeff Kennet has been saying we all are going to need to get used to working harder and longer because we’ve been living beyond our means .Why not readjust our expectations and work less ? Material wealth is not the only kind.

  20. Ikonoclast, I think your claim that the CPI has been blatantly rigged needs a bit of explanation.

    Why has it been rigged, and how has this alleged rigging affected the measurement of inflation?

    Who has ordered the rigging, and to what purpose?

    Why have no ABS emplyees, ever, blown the whistle on this alleged rigging?

    Where does the Bureau’s justificaiton for the changes and its current methodology fall down, in your eyes?

    How do you think housing and finance costs should be measured?

    Unless you can answer those questions, at last some of them, satisfactorily, your comment will look like nothing more than an unsupported smear against what, in my observation over the years, is a group of dedicated, skilled, honest and modestly paid public servants.

    If you have an way of justifiying your comments, let’s hear it.

  21. Gaz, if you think that bureaucrats are never put under political pressure to make things look better than what they actually are, then you are off in cuckoo land.

    Why has it been rigged, and how has this alleged rigging affected the measurement of inflation?

    I’m sure that CPI is a superbly measure of inflation for consumer items. The problem that I have is that I hardly ever go down to the local bank to take out a loan to buy my weekly groceries.

  22. @Gaz

    Q. “Why has it (CPI) been rigged, and how has this alleged rigging affected the measurement of inflation?”

    A. The government of the day has a political incentive to under-measure inflation. First, the claim of a low inflation rate earns points in the politics. Second, indexed payment rises made by government can be minimised by under-measuring inflation. Pensions, benefits and government super can thus rise slower than real inflation. Third, the capitalists (who donate to both major parties) can be given a free kick. Wages are suppressed, usually even harder, than the rigged under-measuring of inflation warrants. Fourth, asset inflation can be denied and ignored altogether. Again, banks, financiers, speculators and capitalists do well from asset inflation via leveraging and other strategies.

    Q. Who has ordered the rigging, and to what purpose?

    The government of the day orders the rigging for the purposes mentioned above. Of course, the term “rigging” is never uttered. The government has the final say on the basket of goods chosen and the statistical methods applied. Inflation measuring is complex and there are many valid areas of debate. The government of the day carefully controls and manipulates the debate (within the Public Service and the ABS) and has final choices on baskets of goods and services and metrics methodologies from a suite of arguably valid choices. You can be sure they mix, match and model to ensure they get the number closest to what they want. Obviously, they can’t be too blatant or the stink about rigging the CPI would become obvious and get out of hand.

    Q. Why have no ABS emplyees, ever, blown the whistle on this alleged rigging?

    A. The debate is subtle and couched in obfuscating neoliberalese, managerialese and officialese. Top heads of the Federal PS are now political appointees (have been since the Howard era at least). The culture of bullying and intimidation of ordinary workers is now intense in all our politicised public services. No ordinary punter dares raise his or her head. In any case, only a top statistician would have the capability to mount a credible whistleblowing case. The government could assemble 10 other top statisticians who are bought and suborned (essentially) to shoot the poor Don Quixote down.

    Q. Where does the Bureau’s justificaiton for the changes and its current methodology fall down, in your eyes?

    A. It is the brief that is wrong and not necessarily the methodologies used to meet the brief. Though I also suspect some statistical methods used to assess substitution effects and qualitative (usually technological) progress are significantly biased in a fashion that biases the inflation measure downwards. In summary, the government of the day gives biased directions and a biased brief, including cherry-picking of the methods required to get the answers desired. Anyone who does not comply with the dominant paradigm does not get promoted.

    Q. How do you think housing and finance costs should be measured?

    A. It is clear that they should be measured. They are common household (and business) costs. The selective shuffling of housing and finance costs into and out of the basket of goods and services at different times is the clearest possible evidence of the rigging of the inflation figure. There can be no valid reason for ever excluding these costs. IIRC, I remember Keating taking mortgage costs out of CPI when they were going up and putting them back in when they started to deline. That was a clear and blatant rig.

    Q. Unless you can answer those questions, at last some of them, satisfactorily, your comment will look like nothing more than an unsupported smear against what, in my observation over the years, is a group of dedicated, skilled, honest and modestly paid public servants.

    A. Well, I have answered them quite satisfactorily for the standards of a blog. There is no smear on public servants. They are ordered to do their jobs in a certain manner by the govt of the day. If they do not comply they are sacked. None of what they are ordered to do is illegal or inhumane. These would be the only defences under law for not complying with government and management direction.

  23. @Gaz

    I’ve never thought it important to be happy if the cost is to turn myself into a blind fool.

  24. @Ikonoclast

    The government of the day has a political incentive to under-measure inflation.

    do you remember the underlying inflation rate, which removed more and more volitile items.

    a fightback by law of large numbers eventually made the underlying inflation higher than the headline inflation rate.

  25. @Jim Rose

    No, I don’t actually remember that. Not sure what you mean by the statement “a fightback by law of large numbers eventually made the underlying inflation higher than the headline inflation rate.”

    My thinking is this.

    1. The government collects GST.
    2. All GST returns should contain the data items of GST amount and a goods and services type code.
    3. From this data, data from every legal sale in Australia could be processed.
    4. A very accurate CPI could be calculated from this data.
    5. Given modern technology, the processing volume from this data collection is eminently collectable and processable.

    After all, every GST amount is processed and passed on to the ATO. Add the goods and services code and compute the data. Not hard. Volatility would be swamped in volume giving a very good CPI measure IMO.

    The RBA site states;

    “Following the cyclone (Larry), prices of bananas increased by around 400 per cent, before falling by almost 80 per cent by early 2007, with these movements first adding and then subtracting about ¾ percentage point to the rate of inflation.”

    I find it inconceiveable that people buy enough bananas for a 400% increase in banana prices to affect the entire CPI basket by ¾ of a percentage point. Clearly, the basket is far too inadequate and limited if that effect occurs. The entire purchase of goods and services caught in the GST net, including fresh food at 0%) should be used to calculate inflation. Fixed assets should also be caught up in the calculation net.

    Modern processing power could easily accomplish this entire task. Of course, no government does it because they don’t want real answers. They want to compute distorted answers to suit the agenda of deception which lies at the heart of the system.

  26. @Ikonoclast the basket of volatile items taken out of the CPI became so large that the movements up and down within that basket cancelled each other out to yield a number similar to the underlying rate of inflation

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