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To: Sam who wrote (2143)	9/30/1999 11:18:00 AM
From: SofaSpud	Respond to of 3536

Your traditional economist may say that "ex-food & energy" there is no inflation, but I don't know too many people who live "ex-food & energy." It depends on your definition of "inflation". Is anything that causes an increase in the level of the consumer price index "inflation"? If so, then inflation is a pretty meaningless word. It is abundantly true that increases in the consumer price index are strongly correlated, with a lag, with increases in commodity prices. Should higher commodity prices provoke an anti-inflationary policy response? All other things equal, once the higher input price has worked its way through the system, you are left with a higher level of the CPI, not a permanently higher growth rate of the CPI. Isn't it more reasonable to define inflation as a tendency toward continually rising prices? This could be Freidman's 'monetary phenomenon', where you have expansion in the money supply beyond the rate of real economic growth. It could be resonance effects among cost-push and/or demand-pull factors that would perpetuate rising prices. But if your energy cost increase is a one-time thing that will work its way through the system and be done, why have a policy response?