The fed's version is the PCE/PI, which is the most general measure of inflation that is theoretically possible. You might have that confused with the CPI, which is a different index, the one you usually see in the news.
Finance is pretty easy to understand, relatively speaking, but the signal-to-noise ratio is far too high. The average finance news site tends to be a wretched hive of investment advice nuts and unreliable emotional opinionators.
The Fed's version of core inflation is the core PCE price index as you stated. The "core PCE price index [...] excludes the more volatile and seasonal food and energy prices" [1].
While you may reasonably take issue with my wording of "quite narrow" as I perhaps wasn't choosing my words carefully enough, core inflation/core PCE certainly isn't "the most general measure of inflation that is theoretically possible". I assume you weren't meaning to refer to "core PCE" - but never the less it is clear from federal reserve speeches that it is this measure that has been playing significantly into federal reserve monetary policy.
Core inflation makes sense in trying to smooth out seasonal or short term moves. However, the effects on global food and oil commodities that are traded in US dollars seem to far exceed any seasonal or short term influences. In that case discounting food and fuel influence on actual inflation rates seems unwise.
Bernanke seems to be acknowledging this. The WSJ reported on the 13th of March in an article titled "To Avert Criticism, Fed Avoids Saying 'Core'": Now, Mr. Bernanke is taking another tack in his public communications. In two days of testimony on Capitol Hill earlier this month, the Fed chairman never uttered the words "core inflation" while explaining the central bank's aims and policies. [2].
As a side note, as I've noted I'm in no way trying to put myself forward as an expert on these subjects. I get a significant amount of my financial news and analysis from the WSJ and Marketplace (public radio) (and Morgan coverage, which admittedly is not particularly hawkish here). I'm not above admitting that I could be making some serious mistakes, so if you'd like to suggest better sources of information I am all ears.
Core inflation is not the main measure of inflation used by the Fed, so your previous statement is false. But you don't have to take my word for it--read the article you yourself linked.
Nevertheless, overall inflation remains quite low: Over the 12 months ending in December, prices for all the goods and services purchased by households increased by only 1.2 percent, down from 2.4 percent over the prior 12 months. To assess underlying trends in inflation, economists also follow several alternative measures of inflation; one such measure is so-called core inflation, which excludes the more volatile food and energy components and therefore can be a better predictor of where overall inflation is headed.
The takeaway is that core inflation is an "alternative" measure used when volatile components are obscuring long-term trends. The intent is to get a good feel for what the real inflation number will look like in the future. This is a big difference from "using" core inflation as the primary measure, and I don't know what you gain from confusing my statements about the PCE/PI with core PCE. I never claimed that core PCE was the most general measure.
Anyway, this is far from the original point, which is that you have some silly conspiracy theory about printing "rule-the-world money", and you won't tell us what it is. But at least I got you to stop citing MarketWatch.
I think you may have confused me with another poster regarding "rule the world money".
I did link to an opinion piece from the Journal that suggests that the Fed is exporting unrest to MENA via inflationary monetary policy. Whether this is intentional or accidental is hard to determine, but it would make a certain amount of sense if it was on purpose. None the less, I didn't write the piece nor is it my theory.
Note that the marketwatch article is a direct reprint from the Wall Street Journal (which I noted). The WSJ version is behind their paywall.
You seem to suggest that I hold a lot of fringe conspiracy views, yet the theories you take issue with come from the Journal editorial pages. Does that mean you hold the WSJ to be a fringe conspiracy paper?
I think you may have confused me with another poster regarding "rule the world money".
You're right, I'm sorry.
But it's curious that you cite the WSJ editorial pages specifically. One of the things the WSJ is known for is how incongruously stupid the editorial section is, compared to the rest of the paper.
Finance is pretty easy to understand, relatively speaking, but the signal-to-noise ratio is far too high. The average finance news site tends to be a wretched hive of investment advice nuts and unreliable emotional opinionators.