Confidence!!!

[cthulu2016]

13. The COLA problem is indeed real

A cost of living measure is not, or should not be, the same as inflation. Though inflation has been very low lately that does not mean that the cost of human subsistence has been very low.

This environment is perverse. Because India and China are moving closer to a western standard of living there is fierce global competition for precisely the things that constitute our standard of living.

If milk and gas go up while a house loses $100,000 of value that is anti-inflationary in the economy, but the average person buys milk ad gas a lot more often than they buy a house.

I am all for adjusting COLAs, but I would not want to do so by reducing the macroeconomic usefulness of CPI. I think CPI is a good economic measure, but perhaps a subsistence index would be useful... something to average with CPI to give greater weight to the unavoidable expenses of life.