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To: JD who wrote (4204)	12/12/1997 6:43:00 PM
From: PaulM	Read Replies (1) \| Respond to of 116756

An article on Bloomberg today shed light on what "inflation" will soon mean in the the U.S. The article discussed a proposal to revise the CPI because it "overestimates" inflation (Translation: there's not enough social security money for benefits to keep pace with inflation, but it would look like renegging on a promise if benefits were no longer pegged to the CPI, so lets change the CPI instead). The proposal is based on the assertion that the CPI doesn't take into account that people may resort to substition fo goods. In other words, if Red Delicious s particularly expensive people can switch to macintosh or granny green, whichever is cheaper. The increase in Red Delicious prices, it is asserted, therefore does not proportionately raise the cost of living. The obvious problem with this is that a constant, fixed basket of goods will no longer be used to measure inflation. As far as I'm concerned, that would make the CPI a meaningless measure. Needless to say, if I can't afford something because of rising prices, and that forces me to buy cheaper goods, my dollars are worth less.