5 ms·

so the BPP people are part of this conspiracy too?

by jshen 15y ago

beagle3 15y ago
>> The BPP was constructed to be similar to the CPI. If you constructed it to be close to the CPI of 30 years ago, it would have been higher. > so the BPP people are part of this conspiracy too? You insist on not reading what you are replying to. I see no point in this discussion.
- jshen 15y ago
  I read it, the problem is that you imply things rather than stating them directly. I can't read your mind, so I don't always get what you are implying. Example: You assert that the CPI is essentially fraudulent, and chosen for political gains and that their is a conspiracy afoot. I point out that the BPP shows numbers much closer to the CPI than to shadowstats. You reply that it's constructed to be similar to CPI. This implies something, right? It either implies that it's part of the conspiracy, or the people are incompetent, or something ... but I don't know what your point is. Also, your point doesn't mean that it's wrong. Also, can you please show some evidence that the BPP was constructed to be similar to CPI. Right now we have 3 sets of numbers, two of them roughly agree. I'm inclined to believe that the BPP and CPI are more likely right than shadowstats given their agreement and the fact that they use different data sources. Also, this http://www.bogleheads.org/forum/viewtopic.php?f=10&t=88460&p=1272041#p1271387 http://www.bogleheads.org/forum/viewtopic.php?f=10&t=884...
  - beagle3 15y ago
    > I can't read your mind, so I don't always get what you are implying. I try not to imply anything, but I do assume that you have some background, formal or informal, in statistics and economics (if you don't, I'm surprised by how strong your opinions are given that you would be missing the tools to evaluate them). For example: > can you please show some evidence that the BPP was constructed to be similar to CPI CPI and BPP are both a weighted average over a list of prices (several thousands or millions of them, with CPI averaging only a few carefully selected hundreds, and BPP supposedly averaging a few tens of thousands or millions). Statistically, it is impossible for these two averages to be in such close correlation as they are, unless: a) essentially _all_ billion numbers sampled from have the same exponential evolution (that is, they all increase by 0.1%+/-0.01% per month, every single month) -- which is demonstrably false (oil prices have gone up and down several times last years, food prices have only gone up), or b) these averages were constructed to track each other (or a common underlying, but the CPI is defined to track some abstract underlying which is often revised and not perfectly documented or repeatable, so it has to be that BPP tracks CPI). The probability that the BPP index was independently constructed and yet tracks the CPI so low that one would need evidence to believe it. That's how statistics works, and you're welcome to consult a stats person if you don't believe me. What I'm saying is not that they are trying to do the same thing that CPI is doing. What I'm saying is that they did a regression of the prices they collect against the CPI officially published CPI, and as a result, they have a good approximation to the officially published CPI, without ever having to have an opinion of whether the official CPI is a good way to gauge customer expenditures. > You assert that the CPI is essentially fraudulent Yes, I assert that, as a measure of the growth of consumer expenditures, it is wrong (in the sense that it is inaccurate), and that it is fraudulent (in the sense that it is underestimating the price increases, and that it is intentional). > their is a conspiracy afoot These are your words, not mine. The thing is, your belief that there needs to be a large number of conspiring people in order to mislead others (intentionally or unintentionally) is not supported by evidence. Take medicine for example - for tens of years, long after the "evidence based medicine" came around, 99.9% of doctors (scientists! with diplomas!) believed stomach ulcers were caused by stress. Warren's claim that it is caused by a virus was considered craziness to the point that he had to infect and heal himself for others to take him seriously (later earning him a nobel prize in medicine). A recent survey showed that 40% of US doctors still believe the ulcers are caused by stress, despite never seeing any evidence for that and having evidence that it is caused by a virus. Now, how do you explain that? Were all those doctors, 99% of practitioners in the US and elsewhere, dishonest? No. Just misled. And I can assure you it didn't take more than 5 people a century or two ago to establish that "ulcers come from stress" for that to be accepted. Do you see the analogy? [And if you find that interesting, you're welcome to ask doctors, and then look for evidence, that salt intake increases your blood pressure, or that cholesterol intake increases your serum cholesterol, or that serum cholesterol is bad for you for that matter. You'd be amazed at what doctors believe without any evidence, and often evidence to the contrary. And they are not dishonest, they are just misled] > This implies something, right? It either implies that it's part of the conspiracy, or the people are incompetent, or something ... but I don't know what your point is. Also, your point doesn't mean that it's wrong. No. It does not imply anything other than what I said: it was constructed to track the CPI (the officially published number called "CPI", not anything else). It is not wrong in that sense that it IS a good approximation to the CPI, derived from independent other sources. And it does not make anyone who works on it part of a conspiracy, or incompetent. But it does mean they accept the CPI as gospel (which I explicitly claimed). Is there any reason to believe the BPP tracks the average growth of consumer expenditures? (averaged over consumers, of course)? > I'm inclined to believe that the BPP and CPI are more likely right than shadowstats given their agreement and the fact that they use different data sources. As I mentioned, from a statistical point of view, these can only agree if they are constructed to agree, so they shouldn't be considered independent. If you want the economic reasoning for that: The CPI switched in 1983 from including real estate home prices to using "owner equivalent rent". While one may argue whether this is justified, it definitely changes the meaning of CPI in many more ways than you'd expect (e.g. home prices were based on sales, OER is completely speculative). If you kept the old computation for just this component, this is how 2000-2010 would have looked: http://seekingalpha.com/article/45720-how-owner-s-equivalent-rent-duped-the-fed http://seekingalpha.com/article/45720-how-owner-s-equivalent... (which is much closer to shadowstats - and remember, this is just reverting one component back to 1983 computation, everything else the same); If you look at the BLS faq http://www.bls.gov/cpi/cpiqa.htm#Question_2 http://www.bls.gov/cpi/cpiqa.htm#Question_2 , they quote NAR data to show the BLS are saints. If you actually follow the NAR data, you'd be laughing at using it as reference. If the BPP used house prices, things would look very different. They cannot use speculative OER at all because only the BLS have that data. The fact that BPP agrees with CPI indicates that they try to track it, rather than figure out a true "basket". Furthermore, even if you take CPI as gospel, the BPP has 1% difference over 3.7 years it exists. Assuming that this difference remains, in 50 years, your government adjustment benefits will buy 15% less than what they officially should be able to buy. If you are really interested in challenging your world view, read Karl Deninger's blog for a month (the market ticker). Stuff you'll never see in the New York Times, CNN or CNBC.
    - jshen 15y ago
      You keep questioning my statistics skill, but you are the one who used the anecdote of your personal purchases as evidence. Your analogy makes sense, but again, you cherry picked one data point. For every case like this, there are 100 where the professional consensus was right, and the lone dissenter was simply a quack. Of course, there is a giant different between your analogy and what we are debating. You guys haven't proven beyond a doubt that inflation is significantly higher than the BPP or CPI. You are also accusing BPP of fudging their numbers, and admittedly they aren't open about their data sources, but here's the rub. You could easily create your own BPP type index, make it open with the code in the public domain, and show some real numbers to prove that the BPP is fudged. Right? side note: shadowstats is not transparent either. They haven't produced the data sources plus the code that generates their numbers.
      - beagle3 15y ago
        > You keep questioning my statistics skill, I have not done that anywhere yet. On the contrary, I keep assuming you have them; perhaps I should stop, as you ignore what I write, and your only arguments are "but CPI=BPP, and even krugman says so", completely disregarding everything I write. Is my explanation that CPI can only equal BPP if they were constructed to be so wrong in any way? > but you are the one who used the anecdote of your personal purchases as evidence. No, I brought this up as anecdote. I did bring independent evidence (from a seekingalpha author) that agrees with shadowstats analysis - which you conveniently ignore. > For every case like this, there are 100 where the professional consensus was right, and the lone dissenter was simply a quack. This is a meaningless statement of appeal to authority. I'm not debating thousands of cases. I'm debating one case, with some support, which you conveniently ignore. > You guys haven't proven beyond a doub Who are "you guys?" > You are also accusing BPP of fudging their numbers, and admittedly they aren't open about their data sources, but here's the rub. Sorry sir, you apparently lack both statistical skills and reading skills. I am not accusing BPP of anything of the sort. I would urge you to reread what I wrote, but I have done that already, and that is useless. For the benefit of others who actually read (if anyone still is) - the BPP index cannot have been constructed other than to have a value similar to the CPI. They do not have to be fudging or part of a conspiracy to be wrong (a fact jshen conveniently ignores) > You could easily create your own BPP type index, make it open with the code in the public domain, and show some real numbers to prove that the BPP is fudged. Right? "Easily?" Are you aware that BPP is the only (semi-)independent source of this data, and when they were about to close down there was a lot of outrage at the lack of any alternative. In fact, there are millions of dollars to be made in knowing the difference between the officially published CPI and the "analyst estimate consensus". If you think it's easy, do that and you can retire on the first time your CPI collection disagrees with estimate consensus. Similarly for NFP numbers, PPI and others. "Easily?" - one of us is living in lala-land, and it isn't me. > side note: shadowstats is not transparent either. They haven't produced the data sources plus the code that generates their numbers. Neither does the BLS, by the way, only very vague descriptions, and parts of the data are based on interviews asking people to speculate "if you were to do this, how much do you think you could earn / how much would it cost". There is NO WAY for anyone to independently verify significant components of the BLS' CPI number.

so the BPP people are part of this conspiracy too?

by jshen 15y ago

so the BPP people are part of this conspiracy too?

>> The BPP was constructed to be similar to the CPI. If you constructed it to be close to the CPI of 30 years ago, it would have been higher. > so the BPP people are part of this conspiracy too? You insist on not reading what you are replying to. I see no point in this discussion.

jshen 15y ago
I read it, the problem is that you imply things rather than stating them directly. I can't read your mind, so I don't always get what you are implying. Example: You assert that the CPI is essentially fraudulent, and chosen for political gains and that their is a conspiracy afoot. I point out that the BPP shows numbers much closer to the CPI than to shadowstats. You reply that it's constructed to be similar to CPI. This implies something, right? It either implies that it's part of the conspiracy, or the people are incompetent, or something ... but I don't know what your point is. Also, your point doesn't mean that it's wrong. Also, can you please show some evidence that the BPP was constructed to be similar to CPI. Right now we have 3 sets of numbers, two of them roughly agree. I'm inclined to believe that the BPP and CPI are more likely right than shadowstats given their agreement and the fact that they use different data sources. Also, this http://www.bogleheads.org/forum/viewtopic.php?f=10&t=88460&p=1272041#p1271387 http://www.bogleheads.org/forum/viewtopic.php?f=10&t=884...
- beagle3 15y ago
  > I can't read your mind, so I don't always get what you are implying. I try not to imply anything, but I do assume that you have some background, formal or informal, in statistics and economics (if you don't, I'm surprised by how strong your opinions are given that you would be missing the tools to evaluate them). For example: > can you please show some evidence that the BPP was constructed to be similar to CPI CPI and BPP are both a weighted average over a list of prices (several thousands or millions of them, with CPI averaging only a few carefully selected hundreds, and BPP supposedly averaging a few tens of thousands or millions). Statistically, it is impossible for these two averages to be in such close correlation as they are, unless: a) essentially _all_ billion numbers sampled from have the same exponential evolution (that is, they all increase by 0.1%+/-0.01% per month, every single month) -- which is demonstrably false (oil prices have gone up and down several times last years, food prices have only gone up), or b) these averages were constructed to track each other (or a common underlying, but the CPI is defined to track some abstract underlying which is often revised and not perfectly documented or repeatable, so it has to be that BPP tracks CPI). The probability that the BPP index was independently constructed and yet tracks the CPI so low that one would need evidence to believe it. That's how statistics works, and you're welcome to consult a stats person if you don't believe me. What I'm saying is not that they are trying to do the same thing that CPI is doing. What I'm saying is that they did a regression of the prices they collect against the CPI officially published CPI, and as a result, they have a good approximation to the officially published CPI, without ever having to have an opinion of whether the official CPI is a good way to gauge customer expenditures. > You assert that the CPI is essentially fraudulent Yes, I assert that, as a measure of the growth of consumer expenditures, it is wrong (in the sense that it is inaccurate), and that it is fraudulent (in the sense that it is underestimating the price increases, and that it is intentional). > their is a conspiracy afoot These are your words, not mine. The thing is, your belief that there needs to be a large number of conspiring people in order to mislead others (intentionally or unintentionally) is not supported by evidence. Take medicine for example - for tens of years, long after the "evidence based medicine" came around, 99.9% of doctors (scientists! with diplomas!) believed stomach ulcers were caused by stress. Warren's claim that it is caused by a virus was considered craziness to the point that he had to infect and heal himself for others to take him seriously (later earning him a nobel prize in medicine). A recent survey showed that 40% of US doctors still believe the ulcers are caused by stress, despite never seeing any evidence for that and having evidence that it is caused by a virus. Now, how do you explain that? Were all those doctors, 99% of practitioners in the US and elsewhere, dishonest? No. Just misled. And I can assure you it didn't take more than 5 people a century or two ago to establish that "ulcers come from stress" for that to be accepted. Do you see the analogy? [And if you find that interesting, you're welcome to ask doctors, and then look for evidence, that salt intake increases your blood pressure, or that cholesterol intake increases your serum cholesterol, or that serum cholesterol is bad for you for that matter. You'd be amazed at what doctors believe without any evidence, and often evidence to the contrary. And they are not dishonest, they are just misled] > This implies something, right? It either implies that it's part of the conspiracy, or the people are incompetent, or something ... but I don't know what your point is. Also, your point doesn't mean that it's wrong. No. It does not imply anything other than what I said: it was constructed to track the CPI (the officially published number called "CPI", not anything else). It is not wrong in that sense that it IS a good approximation to the CPI, derived from independent other sources. And it does not make anyone who works on it part of a conspiracy, or incompetent. But it does mean they accept the CPI as gospel (which I explicitly claimed). Is there any reason to believe the BPP tracks the average growth of consumer expenditures? (averaged over consumers, of course)? > I'm inclined to believe that the BPP and CPI are more likely right than shadowstats given their agreement and the fact that they use different data sources. As I mentioned, from a statistical point of view, these can only agree if they are constructed to agree, so they shouldn't be considered independent. If you want the economic reasoning for that: The CPI switched in 1983 from including real estate home prices to using "owner equivalent rent". While one may argue whether this is justified, it definitely changes the meaning of CPI in many more ways than you'd expect (e.g. home prices were based on sales, OER is completely speculative). If you kept the old computation for just this component, this is how 2000-2010 would have looked: http://seekingalpha.com/article/45720-how-owner-s-equivalent-rent-duped-the-fed http://seekingalpha.com/article/45720-how-owner-s-equivalent... (which is much closer to shadowstats - and remember, this is just reverting one component back to 1983 computation, everything else the same); If you look at the BLS faq http://www.bls.gov/cpi/cpiqa.htm#Question_2 http://www.bls.gov/cpi/cpiqa.htm#Question_2 , they quote NAR data to show the BLS are saints. If you actually follow the NAR data, you'd be laughing at using it as reference. If the BPP used house prices, things would look very different. They cannot use speculative OER at all because only the BLS have that data. The fact that BPP agrees with CPI indicates that they try to track it, rather than figure out a true "basket". Furthermore, even if you take CPI as gospel, the BPP has 1% difference over 3.7 years it exists. Assuming that this difference remains, in 50 years, your government adjustment benefits will buy 15% less than what they officially should be able to buy. If you are really interested in challenging your world view, read Karl Deninger's blog for a month (the market ticker). Stuff you'll never see in the New York Times, CNN or CNBC.
  - jshen 15y ago
    You keep questioning my statistics skill, but you are the one who used the anecdote of your personal purchases as evidence. Your analogy makes sense, but again, you cherry picked one data point. For every case like this, there are 100 where the professional consensus was right, and the lone dissenter was simply a quack. Of course, there is a giant different between your analogy and what we are debating. You guys haven't proven beyond a doubt that inflation is significantly higher than the BPP or CPI. You are also accusing BPP of fudging their numbers, and admittedly they aren't open about their data sources, but here's the rub. You could easily create your own BPP type index, make it open with the code in the public domain, and show some real numbers to prove that the BPP is fudged. Right? side note: shadowstats is not transparent either. They haven't produced the data sources plus the code that generates their numbers.
    - beagle3 15y ago
      > You keep questioning my statistics skill, I have not done that anywhere yet. On the contrary, I keep assuming you have them; perhaps I should stop, as you ignore what I write, and your only arguments are "but CPI=BPP, and even krugman says so", completely disregarding everything I write. Is my explanation that CPI can only equal BPP if they were constructed to be so wrong in any way? > but you are the one who used the anecdote of your personal purchases as evidence. No, I brought this up as anecdote. I did bring independent evidence (from a seekingalpha author) that agrees with shadowstats analysis - which you conveniently ignore. > For every case like this, there are 100 where the professional consensus was right, and the lone dissenter was simply a quack. This is a meaningless statement of appeal to authority. I'm not debating thousands of cases. I'm debating one case, with some support, which you conveniently ignore. > You guys haven't proven beyond a doub Who are "you guys?" > You are also accusing BPP of fudging their numbers, and admittedly they aren't open about their data sources, but here's the rub. Sorry sir, you apparently lack both statistical skills and reading skills. I am not accusing BPP of anything of the sort. I would urge you to reread what I wrote, but I have done that already, and that is useless. For the benefit of others who actually read (if anyone still is) - the BPP index cannot have been constructed other than to have a value similar to the CPI. They do not have to be fudging or part of a conspiracy to be wrong (a fact jshen conveniently ignores) > You could easily create your own BPP type index, make it open with the code in the public domain, and show some real numbers to prove that the BPP is fudged. Right? "Easily?" Are you aware that BPP is the only (semi-)independent source of this data, and when they were about to close down there was a lot of outrage at the lack of any alternative. In fact, there are millions of dollars to be made in knowing the difference between the officially published CPI and the "analyst estimate consensus". If you think it's easy, do that and you can retire on the first time your CPI collection disagrees with estimate consensus. Similarly for NFP numbers, PPI and others. "Easily?" - one of us is living in lala-land, and it isn't me. > side note: shadowstats is not transparent either. They haven't produced the data sources plus the code that generates their numbers. Neither does the BLS, by the way, only very vague descriptions, and parts of the data are based on interviews asking people to speculate "if you were to do this, how much do you think you could earn / how much would it cost". There is NO WAY for anyone to independently verify significant components of the BLS' CPI number.