Payroll employment increases by 164,000 in April; unemployment rate edges down to 3.9%

[jmy]

23. But Chained CPI, oh nos...

The GOP adopted chained CPI into their tax bill. This equates to a gradual tax increase. It is a tax increase on the illusionary gains in income caused by inflation.

We're experiencing the gradual tax increase now as a consequence of its adoption into their tax bill. The tax increase will not be realized until its full effect in 7 and half years from now. It's small now. Almost not noticable. Chained CPI will eventually drive Americans into a higher tax bracket while the 4 cent dollar's worth of current purchasing power dwindles to even less.
Chained CPI, of course, underestimates inflation's effect on the standard of living. For example, it understates the effect of inflation by assuming hamburger to be a full substitute for steak when steak is no longer affordable because of inflation. It measures inflation by assuming that we consider hamburger to be a full substitute for steak and whould have bought hamburger instead of steak even before inflation made steak unaffordable.

Inflation defined, for friends who do not know what it means - Inflation is the increase in the supply of money and credit. Rising prices are simply a consequence of that.

Politicians love these taxes on illusionary gainsin income because they don't have to vote for those tax increases.