DavyJ

Inflation Fears Are Overblown

You said: "As a result, if one were to substitute the actual change in housing prices into the CPI calculation, the U.S. inflation rate would turn decisively negative and the dialog would likely shift away from concerns about inflation to much greater worries about deflation."

That would only be proper if the CPI had included "the actual change in housing prices" while they were on the way up. You can't exclude them when rising and then include them when falling. Had they always been included, the price inflation picture over the last ten years would be significantly different. And not pretty.

You also said: "Thus, higher oil and food prices end up serving as a deflationary tax on consumers instead of an inflationary spark." Then you went on to say: "Finally, any reversal in the direction of oil and food prices would be deflationary."

Well, which is it?