Article I of the U.S. Constitution includes a fundamental grant of power to the Congress, which reads (in part) as follows:
"To coin money, regulate the value thereof, and..."
Back in 1977, amidst accelerating inflation, Congress first stipulated the current goals for monetary policy in the Federal Reserve Reform Act, which are maximum employment (whatever that means), stable prices, and moderate long-term interest rates.
This link will take you to a picture of the Consumer Price Index since 1950. Check out how ‘stable’ the Consumer Price Index has been since 1977.
The links below will take you to you to a set of very interesting references that help inform us about the challenges in constructing valid measures of inflation and the “price level.”
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U.S. Bureau of Labor Statistics, “The Consumer Price Index,” BLS Handbook of Methods (2015)
U.S. Bureau of Labor Statistics, “Measuring Price Change for Medical Care in the CPI”
U.S. Bureau of Labor Statistics, “CPI-U for All Urban Consumers – Medical Care”
U.S. Bureau of Labor Statistics, “Guidelines for Quality Adjustment of New Vehicle Prices” (May 2014)
Clark Burdick and Lynn Fisher, “Social Security Cost-of-Living Adjustments and the Consumer Price Index,” Social Security Bulletin (2007)
Todd Clark and Christian Garciga, “Recent Inflation Trends,” Federal Reserve Bank of Cleveland (January 2016)
Phil Davies, “Taking the Measure of Prices and Inflation,” Federal Reserve Bank of Minneapolis (December 2011)
Ed Dolan, “Deconstructing ShadowStats,” Economonitor (March 2015)
Ina Kay Ford and Daniel H. Ginsburg, “Medical Care in the Consumer Price Index,” National Bureau of Economic Research (January 2001)
Chris Girod, Sue Hart, and Scott Weltz, “2016 Milliman Medical Index,” Milliman (2016)
Scott Gottlieb, “The Coming Healthcare Inflation,” Forbes (August 2015)
Fred Kaifosh, “Why the Consumer Price Index Is So Controversial,” Investopedia
Jeff Lemiuex and Chad Moutray, “About That Cadillac Tax,” Health Affairs (April 2016)
Laura MacCleery, Letter to U.S. House of Representatives, (March 2017)
Mises Institute, “The Federal Government’s Fake News,” Interview of John Williams of Shadowstats (December 2016)
Northern Trust Economic Research Department, “U.S. Health Care Needs Major Surgery,” FX Street (October 2016)
Mike Shedlock, “Diving into the Medical CPI: Are Your Medical Expenses Up Only 5% From a Year Ago?”(November 2016)
Jack Triplett, “What’s Different About Health? Human Repair and Auto Repair in National Accounts and in National Health Accounts,” Medical Care Output and Productivity (2007)
Sean Williams, “The Sad State of Social Security’s Cost-of-Living Adjustments,” The Motley Fool (July 2016)
Kevin Williamson, “Sneaky Inflation,” National Review (September 2016)
Scott Winship, “Debunking Disagreement Over Cost-of-Living Adjustments”, Forbes (June 2015)