[lucozade]

That's not what he's arguing. He's saying that restricting money supply as a solution to inflation only makes sense if the average price inflation represented price movements well. His contention is that it doesn't so restricting money supply isn't a solution.

I find that argument reasonably persuasive. His other point about inflation indices themselves being effectively useless, because of the inter price variability, I find less so. He skirts over the weightings which are key to the meaning of the index. They are weighted in such a way as to approximate the relative spending on each commodity. So the net effect of the index should be the inflation rate that you feel.

So average measures of inflation are valuable. The standard cures likely less so.

[pakitan]

> His contention is that it doesn't so restricting money supply isn't a solution.

Restricting money supply may not be the solution. I don't think the author claims that restricting money supply can't be a part of the solution and a major part even. If he does, we have evidence to the contrary - 1980s in US. The inflation variation was even bigger then.

[yxhuvud]

The points made about variance being a measure of structural change in society, and that it is what actually is painful about inflation, was also very interesting.