Ever since Governments have existed they have found ways to fleece their bond holders. They control the rules and so they can pretty much decide what CPI number they use. Of course this isn't without consequences as many governments have found when the bond vigilantes turn up demanding much higher nominal and real returns.
My original post was meant in terms of "hardnosed practical politics", not in terms of the self serving nonsense most actuaries believe and the sort of stuff you have to turn out to pass these exams.
Last edited by a moderator: Nov 24, 2009