Looking at the American crisis of second mortgage bonds, described how the Federal vaahaka Reserve

Looking at the American crisis of second mortgage bonds, described how the Federal vaahaka Reserve (Fed) hiding information about growing broad money (M3). Now stop the second important mechanism by which the authorities hid the audience inflatable bubble: vaahaka the manipulation of inflation. From the mid-90s of the last century the Labour Bureau changed the methodology for calculating inflation, and on top of everything change it so that it became flexible, that each year may be different, making it impossible to compare data for different years . The reason for the change in 1996 were increased federal payments for social programs. Their size is correlated with inflation, it should therefore be reduced. Senate committee Boskin recommended to introduce changes in the methodology for measuring the consumer price index (CPI), ie inflation and its recommendations were accepted. 1. Substitution (replacement) The essence is that the goods in the consumer basket, whose price has risen significantly, vaahaka disposed of the basket and instead vaahaka are considered cheaper goods. The idea of substitution cynical directly explained by the then head of the Federal Reserve Alan Greenspan: If the price of steak rises, people who eat steak will replace them with hamburgers, should therefore consider the price of hamburgers. As a result of this grip of the basket "disappear" catalog with the changing prices - food and fuel. 2. Geometric mean instead of weighing Until 1996 the weight of a product in the basket is an arithmetic proportion to the quantity in the basket, and then calculated geometrically, that the more expensive the product, the less it has a share in the basket. A graph illustrating the difference vaahaka between the two methods: It is evident that the CPI of the first graph (using geometric weighting) has shown a lower level. 3. And here we come to the biggest hocus-pocus - hedonic adjustment. I do not know how to translate it, maybe assessment of pleasure? The idea is that the rise in prices of goods order is not usually increase, but is the result of an improvement in quality. Sounds a little vaahaka magical, so to see this example: televisions. Plain color TV worth $ 369 at the store. However, this TV has a screen two inches larger than the previous model of the same company with a widget in more remote. In drastic cases cynical assess and change in design. It is therefore concluded that the price increase reflects the increase in quality, ie should not be considered vaahaka all of the increase. And here you leave a phenomenal prestidigitation to calculate vaahaka the cost of the improvement. The final result in the example our TV it appears that in the consumer basket it is considered as $ 280 and obviously inflation decreases. It is true that the store still have to pay $ 369 and the seller will chuckled, vaahaka if he mention something like hedonic adjustment. There are also several smaller tricks, but these basic indicative. Just imagine that in BG inflation is calculated by geometrically weighting vaahaka and hedonic adjustment - but it would not directly available. So I have a suggestion to the ruling coalition - to introduce US methodology for calculating inflation, not the United States are our new big brother, and thus to stop any ill effects vaahaka at present placed in their population-that inflation had been increasing. For masochists - detailed explanation vaahaka of hedonic adjustment of college textbooks Hedonic Quality Adjustment Methods for College Textbooks in the US CPI and basic info on the methodology - Quality Adjustment of Goods Price Index Using Hedonic Regression Model
The article is completely neobusnovana think! Well, the truth is that all three measures are needed to calculate the CPI !!! Substitution - that with steaks and hamburgers stupid example, but people really change their mind what products to buy depending on the price, if the lens for viewing triple become cheaper and people start massively down the glasses, why the glasses vaahaka remain in the shopping cart? Or if airfares down in price a lot and I decide to go more often to BG, because I can do it for 50 euros instead of going to the club every weekend - then you need a plane ticket to have more space in the basket, because over them people use !!! This is the substitution and if no substitution in consumer baskets today would not have his cell phone, computers, digital cameras ... 2. The geometric weighting course that is geometrically, when it comes to growth. Must be geometrically because the arithmetic here just does not make sense. That geometrical scale shows constant absolute appreciation lessen perhaps supports your thesis, but the geometrical scale is accurate! 3. Hedonic regression is well grounded theory. It makes sense that, just because I really improving the quality vaahaka of certain goods so far as inflation is estimated that just Mr.