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Not just you, there's so much wrong about this article that I don't know where to begin. My father is a retired Statistician, and I know that the computation of

by sxcurry 13y ago

Not just you, there's so much wrong about this article that I don't know where to begin. My father is a retired Statistician, and I know that the computation of inflation is a seriously considered matter by a lot of smart people. The statement that "What’s important to note is that the government is incentivized to report as low of an inflation number as possible and to keep real inflation as high as tolerable." is completely false.

beagle3 13y ago
You appeal to vague authority. Inflation is looked at by smart people, but many of the smart people whose job it is to define inflation computation are appointed, paid and appreciated according to the perception of inflation. Bernanke is destroying the USD. It might even be the right thing to do, but he is definitely not frank about what and why he is doing it. Similarly, there might be good reasons to overinflate and underreport - but the official explanation and methodology around things like owner-equivalent-rent and hedonistic correction are ad-hoc, not verifiable or repeatable, aquifer random and somehow mostly reduce reported inflation.
- sxcurry 13y ago
  OK, I'll be more specific. The CPI is determined by the Bureau of Labor Statistics, a group of professional career civil servants. The article makes the vague claim that the "government" is incentivized to report as low as rate as possible. I guess if you believe in conspiracies this is possible, but I don't believe that the BLS is part of any such conspiracy. As far as Bernanke destroying the USD, the US Dollar Index is up substantially over the last year.
  - beagle3 13y ago
    > The CPI is determined by the Bureau of Labor Statistics, a group of professional career civil servants. Who get their instructions from congress and promotions for being politically helpful. http://www.investopedia.com/articles/07/consumerpriceindex.asp http://www.investopedia.com/articles/07/consumerpriceindex.a... gives a not-very-conspiration-theory view of this. The fact that revisions to CPI computations always originate in congress and always have the property of (on average) reducing the inflation rate supports the government manipulation thesis in a non-trivial way. > I don't believe that the BLS is part of any such conspiracy They are either part of some coordinated effort to make data look better, or are grossly incompetent at a level unseen anywhere else in the government. For example, every single job claims number in the last 2 years at least (perhaps more) is revised upwards about a month or two after publications (without getting any attention, whereas the original, wrong, numbers get a lot of media attention). Also, the BLS job birth-date model is not public, is officially stated to not apply except in times of economic calm, and yet is assumed to be correct 100% of the time. > As far as Bernanke destroying the USD, the US Dollar Index is up substantially over the last year. Well, other central bankers can play the "drive your fiat currency to zero game", and they started to do that too around 2007. If you start looking at 2000 (Greenspan, granted, Bernanke wasn't the first), the DXY has dropped 30% or so. (Not that I agree with DXY as a measure of USD strength, but that's what you chose).
- saalweachter 13y ago
  CPI closely matches every other inflation index, like the Billion Price Index. In my experience people who claim The Man is lying about inflation usually are just saying "zomg oil" or another small handfuls of commodities, and don't really have any evidence beyond "everyone knows the government is a bunch of lying liars". Oil may be rising faster than inflation, or not, and energy costs could even be rising faster than inflation. That would probably have profound implications for the economy, but it don't make it inflation.
  - beagle3 13y ago
    The BPI was apparently constructed to track CPI - there is no chance it would track as closely as it does otherwise. But I can't find any documentation about how its weighting is set or updated - can you point me to such documentation? Lets ignore subtle semantics, shall we? Definitions of inflation differ - some restrict it to discussions of money supply (in which case, CPI is not inflation), and some to cost of living (in which case, CPI is a measure of inflation, but not necessarily a good or unbiased one)

by sxcurry 13y ago

beagle3 13y ago

You appeal to vague authority. Inflation is looked at by smart people, but many of the smart people whose job it is to define inflation computation are appointed, paid and appreciated according to the perception of inflation. Bernanke is destroying the USD. It might even be the right thing to do, but he is definitely not frank about what and why he is doing it. Similarly, there might be good reasons to overinflate and underreport - but the official explanation and methodology around things like owner-equivalent-rent and hedonistic correction are ad-hoc, not verifiable or repeatable, aquifer random and somehow mostly reduce reported inflation.

sxcurry 13y ago
OK, I'll be more specific. The CPI is determined by the Bureau of Labor Statistics, a group of professional career civil servants. The article makes the vague claim that the "government" is incentivized to report as low as rate as possible. I guess if you believe in conspiracies this is possible, but I don't believe that the BLS is part of any such conspiracy. As far as Bernanke destroying the USD, the US Dollar Index is up substantially over the last year.
- beagle3 13y ago
  > The CPI is determined by the Bureau of Labor Statistics, a group of professional career civil servants. Who get their instructions from congress and promotions for being politically helpful. http://www.investopedia.com/articles/07/consumerpriceindex.asp http://www.investopedia.com/articles/07/consumerpriceindex.a... gives a not-very-conspiration-theory view of this. The fact that revisions to CPI computations always originate in congress and always have the property of (on average) reducing the inflation rate supports the government manipulation thesis in a non-trivial way. > I don't believe that the BLS is part of any such conspiracy They are either part of some coordinated effort to make data look better, or are grossly incompetent at a level unseen anywhere else in the government. For example, every single job claims number in the last 2 years at least (perhaps more) is revised upwards about a month or two after publications (without getting any attention, whereas the original, wrong, numbers get a lot of media attention). Also, the BLS job birth-date model is not public, is officially stated to not apply except in times of economic calm, and yet is assumed to be correct 100% of the time. > As far as Bernanke destroying the USD, the US Dollar Index is up substantially over the last year. Well, other central bankers can play the "drive your fiat currency to zero game", and they started to do that too around 2007. If you start looking at 2000 (Greenspan, granted, Bernanke wasn't the first), the DXY has dropped 30% or so. (Not that I agree with DXY as a measure of USD strength, but that's what you chose).
saalweachter 13y ago
CPI closely matches every other inflation index, like the Billion Price Index. In my experience people who claim The Man is lying about inflation usually are just saying "zomg oil" or another small handfuls of commodities, and don't really have any evidence beyond "everyone knows the government is a bunch of lying liars". Oil may be rising faster than inflation, or not, and energy costs could even be rising faster than inflation. That would probably have profound implications for the economy, but it don't make it inflation.
- beagle3 13y ago
  The BPI was apparently constructed to track CPI - there is no chance it would track as closely as it does otherwise. But I can't find any documentation about how its weighting is set or updated - can you point me to such documentation? Lets ignore subtle semantics, shall we? Definitions of inflation differ - some restrict it to discussions of money supply (in which case, CPI is not inflation), and some to cost of living (in which case, CPI is a measure of inflation, but not necessarily a good or unbiased one)