Ep. 72: Chapwood Index vs CPI – Which is the Better Inflation Index?
Cents and Sensibility: the Inflation Guy Podcast
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The Consequences of Chappwood
CPI has been picked over by armies of people, economists and otherwise. There's a multi-trillion dollar bond market linked to CPI which if CPI really understated inflation would cause investors to pay a lot less for those bonds. In countries that do cook their official inflation rates like Argentina, the real yields on their inflation link bonds are much higher than in countries with legitimate official rates. So there are lots of reasons to think that CPI isn't terrible even if it isn't perfect.
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