> I don't know where this 1.5% inflation figure is coming
> from.
For inflation expectations? TIPS spreads.
The actual inflation rate is determined based on a basket of goods, which may or may not match your consumption patterns. Of course things get complicated by substitution effects, hedonic adjustments, etc. I don't know that I believe the official number any more than you do. But the fact is that the official number is what the Fed is supposed to target.
Note that groceries are explicitly excluded from "core" inflation calculations in the US because they're subject to severe supply shocks which have nothing to do with the value of money or inflation, by the way.
> how could it be that it is only 1.5% inflation when the
> size of the money supply is doubled or tripled?
Trivially, if everyone keeps their money under a mattress. We're not quite that bad, but not much better off right now, either.
For inflation expectations? TIPS spreads.
The actual inflation rate is determined based on a basket of goods, which may or may not match your consumption patterns. Of course things get complicated by substitution effects, hedonic adjustments, etc. I don't know that I believe the official number any more than you do. But the fact is that the official number is what the Fed is supposed to target.
Note that groceries are explicitly excluded from "core" inflation calculations in the US because they're subject to severe supply shocks which have nothing to do with the value of money or inflation, by the way.
> how could it be that it is only 1.5% inflation when the > size of the money supply is doubled or tripled?
Trivially, if everyone keeps their money under a mattress. We're not quite that bad, but not much better off right now, either.