Alternative Economics started after I read an Floyd Norris’ article in the New York Times examining Consumer Price Index (CPI) inflation using housing price data. Prior to 1982, we actually did use housing prices as a component of CPI, but we replaced it with a concept called “Owners’ Equivalent Rent” after ’82. My immediate thought after reading the article was how would this change have affected monetary policy. The answer surprised me and was enough to shake an entire economic paradigm. The 00′s housing boom, examined under this alternate lens, should’ve been termed “the Great Stagflation.” More importantly, the Alternative CPI and Alternative monetary policy rules exposed the folly involved several years before the reality of the situation became apparent.
Our goal here at Alternative Economics is to find flaws in official economic statistics and showcase how this might have an adverse affect on economic and investment decisions. We calculate an Alternative CPI based on housing prices and we use this figure to calculate monetary policy guidelines, such as the Taylor Rule and the Mankiw Rule. With this, we hope to showcase where monetary policy might be too tight or too loose, even if official statistics might obfuscate the issue.
We do not believe there is a vast conspiracy theory to create inaccurate statistics. Rather, economic statistics are created and calculated by humans and there will always be flaws with the perspective and data employed. We want to challenge the official statistics and showcase how they might be off, so that investors, economists, and business owners can make better decisions.
Thank you and please, don’t be afraid to give us any suggestions on how we can make the website more useful to you.
Founder of HJ Huney’s Alternative Economics