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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Jim McMannis who wrote (19861)10/13/2004 2:39:33 AM
From: Elroy Jetson  Read Replies (2) of 110194
 
I don't understand where you're coming from in your assertion that under-estimating inflation makes the economy seem weaker. Quite the opposite is true.

If the growth in income and GNP is say 4% and inflation is 4.6%, then actual real growth is a negative 0.6%.

On the other hand if we under-estimate inflation from 4.6% down to 2.1%, then the growth rate is magically 2.5%.

2.5% definitely sounds a lot stronger to me than a negative 0.6%.

How do you see under-estimating inflation doing the opposite.
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