Re: Fraud in the CPI
- From: "John Galt" <whoisjohngalt@xxxxxxxxxxxxxx>
- Date: Fri, 30 Nov 2007 23:10:09 -0600
"mg" <mgkelson@xxxxxxxxx> wrote in message
news:d756388d-d476-4360-ad70-cf8dfc6da1b2@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Nov 30, 12:47 pm, phil scott <p...@xxxxxxxxxxxxx> wrote:
FRAUD IN THE CPI and other govt measures.
US govt spins the stats to achieve ends that are decimating the US
middle class, as it collapses it own tax base and national
viability.
My comments on just part of the stat spin.
- CPI leaves out key cost factors such as fuel, food and medical
care, all into high double digit inflation as the CPI reports just
2.3% lately... to keep social security adjustments deep into the
starvation band.
- On the opposite side of this, the GDP, gross national product
*includes the things left out of the CPI ! so that the GDP is
inflated within that context... a deliberate deception.
- tax rates are increased as people and businesses go into
progressively higher tax rate driven by hyperinflation..lied about you
see. So that real tax rates, and living expenses are rising, as real
income declines.... And that is being hidden from the people.
- These higher tax rates are Not deducted from either the GDP or
individual income stats, nor the nations Net domestic product. ..
- That NDP is being eaten alive by guess what? Government and money
govt gives to corporations on many different vectors... the no bid war
support contracts for instance.
All this distorting the picture to look rosy, when in fact the middle
class in the US is being destroyed, and the lower classes, starved....
Govt collapse always happens next, as it decimates its productive
base.
We, here in the USA are a nation run by criminally insane sociopaths.
Sorry, that's just how it is... a good share of other nations see it
that way also.. including many of our allies The worlds greatest
nation, prior to WW2, is now the worlds biggest debtor nation, with
its mney going worthless fast, its productivity move to china...and its
middle class begging for mercy.
Phil Scott
Just on an intuitive basis, I would guess that the real rate of
inflation is somewhere around 7%, or higher, while the government is
reporting figures of about half that much.
I think the difference can
probably be attributed to one or both of the following causes:
1. Modification of the calculation method in 1996/1997.
As a result of the "Boskin Commission" study several changes to the
CPI index were made that lowered the the CPI index. These included:
*abandon the fixed-weight formula for CPI goods
*change the weight of items in the index from arithmetic
weighting to geometric weighting
This is mathmatically more accurate for compounding calculations. It does
decrease the value in the area of 3 to 5% of the arithmetic mean. For
example, I use geometric means for all my investment calculations, as it is
the accepted standard for such things. So, if an arithmetic mean
*introduce substitutions in the index
And for good reason. You want the index to reflect actual buyer behavior. If
the price of Coca-Cola is at $whatever, and suddenly an (to you) identical
knockoff called "Sam's Club Cola" appears on the market at 60% the price,
you start buying the other.
This REALLY matters when goods are available from overseas at significantly
less. When I bought my first business suit back in 1980, I went to Men's
Wearhouse and bought some suit for $180. I can STILL buy a suit of the same
material and quality for about $180. Now, if I I was silly enough to buy the
same material and quality and LABEL, I'd pay about $500.
Since most consumers aren't silly, you need to be able to substitute in the
CPI in the same way a consumer would.
*seasonal adjustments to account for price increases that occur
on a seasonal basis, which would smooth out the fluctuations
*Reduce prices by quality improvements
http://www.financialsense.com/stormwatch/2005/0624.html
Like most things in this vein, the truth is someplace in between.
JG
2. Fraud by the Bush Administration
To be perfectly honest, I can't remember any cases where the Bush
administration has told the complete truth about anything of
importance since they took office. As a result, I don't see any
particular reason to trust them with inflation numbers.
I think the price increase of commodities is one indicator that there
is something going on that's not evident to the ordinary person. Gold,
for instance, has gone from about $300/oz in 2000 to about $800/oz
now. Compare that to the S&P 500 index, for instance, which is at
about the same price it was in 2000.
http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx
One could argue that the rising price of commodities (like Gold) don't
necessarily indicate inflation, but instead merely indicate
speculation or increased demand and I don't know how to refute that.
However, there are well-respect equity and commodity analysts and
investors who do claim that the inflation numbers are fraudulent.
Here's an excerpt from an interview with Jim Rogers, for instance:
"The government says that we don't have recession, but the way that
the government reports, as you know, they adjust for inflation. But
their inflation adjustments are fraudulent numbers and, therefore,
they say that we're not in recession. But if you use real inflation
numbers and real population numbers, the numbers would come out
recession."
http://www.discursivemonologue.com/2007/09/26/transcript-jim-rogers-interview-bloomberg-18-september-part-2/
.
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