Correspondence - #33 - Laserfiche WebLink

Home Browse Search

DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTO R N EYS AT LAW City Council of the City of Santa Ana City of Santa Ana September 16, 2021 Page 7 2. CPI FAILS TO ACCURATELY MEASURE INFLATION. THE CONSUMER PRICE INDEX IS A WOEFULLY DEFICIENT MEASURE OF ACTUAL INFLATION. RELIANCE ON CPI WILL BRING FORTH A FLOOD OF PETITIONS FOR RENTAL ADJUSTMENTS The proposed ordinance provides for 80% of CPI. For a host of reasons, utilizing an unrealistic measure for annual rent adjustments will simply spike the number of rent increase applications and cause taxpayer cost to skyrocket. Throughout recent history, every administration has caused changes to be made to the definition of the consumer price and in order to advance political goals, a practice common to both major parties. It is the consumer who suffers. A basic summary of these changes is based upon the following facts. Over the past several decades, technical changes have been made in the way the consumer price index is calculated: CPAs Little Better than An Ouija Board to Determine Proper Rent Increases. The measurement of inflation is a technical business. But CPI is a political tool that is historically attenuated to reduce the impact of rising prices. On the other hand, the M2 index published by the Federal Reserve is perhaps the only index produced by government that measures, to the dollar, the loss in value measured against the money in circulation at any given time. The printing of money reduces the value of the dollar. The more dollars printed into circulation the less the dollar is worth. The M2 index measures that difference. The CPI is a political measurement which is redefined, over the course of time, by both parties, to yield more politically popular results based on changing prices having nothing to do with housing. CPI is no indicator for determining pricing for a prevailing market in housing. Long ago, the index dispensed with any real measurement of housing, because inflation and housing was outpacing other sectors of the economy. Now, it measures a market basket of goods and services having nothing to do with construction materials, market housing rates, and land. Will CPI determine the appropriate rent increase for a property tax reassessment at the time of sale of an apartment house? The CPI is a political tool that is historically attenuated to reduce the impact of rising prices. It serves the interests of politicians of all stripes. Low inflation measures make politicians look good.2 CPI is a tenuous fact on which to set rates of return. Consider that: z http://www.investopedia.com/articles/07/consumerpriceindex.asp. A lower CPI provides at least two major benefits to the government: "Many government payments, such as Social Security ... are linked to the level of the CPI; therefore, a lower CPI translates into lower payments - and lower government expenditures. ¶The CPI deflates some components used to calculate the real GDP -7-