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To: Jerry in Omaha who wrote (1095)	12/4/1998 10:31:00 AM
From: Robert Douglas	Respond to of 3536

Jerard, I don't have any answers to your questions on inflation, but I will offer one observation coming from years of trying to understand how they are computed. They are awful numbers. From the CPI to the PPI to the worst of all the GDP deflator numbers, each one is riddled with specious assumptions and indefensible logic. Did you know that the CPI calculates the cost of living as if you sold your home each month and rented it back? The problems you mention are only the tip of the iceberg. -Robert

To: Jerry in Omaha who wrote (1095)	12/4/1998 9:53:00 PM
From: Frodo Baxter	Read Replies (1) \| Respond to of 3536

The strength of evidence should always be proportional to the claim made. A claim of deflation requires much higher stringency of proof than a claim of inflation. Regarding the query on deflation, I was just saying, in my own flippant way, that I have yet to find any real evidence for anything other than benign disinflation. I could provide the links for CPI, PPI, GDP deflator, but I assume everybody know them and I thought that was going a bit overboard. Besides, the real deflation cognoscenti are immune to data (actually, the lack thereof) anyway. The reason I didn't answer you before was because I was puzzled by your question. First, I'm asked, hey, is deflation around the corner? I say no. Then you go on about hidden inflation. It's an interesting phenomenon, but doesn't really contradict my point, now does it? For the record, I think it happens, but competition and consumer choice prevents it from being widespread or abusive. BTW, if P&G makes a roll of TP using thinner paper, does that count as a productivity improvement?