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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: russwinter who wrote (27358)	2/28/2005 12:18:54 PM
From: CalculatedRisk	Read Replies (3) of 110194

Russ, Here is an interesting chart on inflation (from The Economist): infoproc.blogspot.com The Fed uses an "Equivalent Rent" in their calculation of CPI. If instead they used the price of housing, inflation would be substantially higher. Last year, the Fed acknowledged that CPI was probably somewhat understating inflation because of the rent calculation ... and interestingly, that if interest rates rose, CPI would go up at first as rents rose in relation to housing prices. The other way to look at this (other than understating inflation) is that this is more evidence of a housing bubble. Best Regards!

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