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How and Why the CPI Was Destroyed as an Accurate Measure of Price Inflation
EPJ - Shadowstats ^ | July 23, 2014 | John Williams

Posted on 07/25/2014 3:11:11 PM PDT by george76

In the early-1990s, political Washington moved to change the nature of the CPI. The contention was that the CPI overstated inflation (it did not allow substitution of less-expensive hamburger for more-expensive steak). Both sides of the aisle and the financial media touted the benefits of a “more-accurate” CPI, one that would allow the substitution of goods and services.

The plan was to reduce cost of living adjustments for government payments to Social Security recipients, etc. The cuts in reported inflation were an effort to reduce the federal deficit without anyone in Congress having to do the politically impossible: to vote against Social Security. The inflation-calculation changes had the further benefit to government fiscal conditions of pushing taxpayers artificially into higher tax brackets, thus increasing tax revenues. The changes afoot were publicized, albeit under the cover of academic theories. Few in the public paid any attention.

...

By lowering the official inflation rate, such changes promised to reduce the annual cost-of-living adjustments for Social Security and other federal programs.

...

The drive here was as to get a lower inflation reading, irrespective of whether the data were “more-accurate.

(Excerpt) Read more at economicpolicyjournal.com ...


TOPICS: Business/Economy; Government
KEYWORDS: cpi; electricity; energy; food; inflation; obamafail; obamanomics; prices; socialsecurity

1 posted on 07/25/2014 3:11:11 PM PDT by george76
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To: george76

And the irony is that hamburger is now as expensive as was steak. Then you can throw gasoline on the fire ...


2 posted on 07/25/2014 3:12:33 PM PDT by NonValueAdded ("Kerry, as Obama's plenipotentiary, is a paradox - the physical presence of a geopolitical absence")
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To: Toddsterpatriot
The contention was that the CPI overstated inflation (it did not allow substitution of less-expensive hamburger for more-expensive steak).


3 posted on 07/25/2014 3:18:15 PM PDT by 1rudeboy
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To: NonValueAdded
Just another reason - which we already knew about - that the Klintoon 90's looked better than they were.

Republican Congress.

A very real peace dividend.

Tech Boom.

Rise of the Internet.

Boomers in their prime earning and spending years.

Fudged General Fund accounting.

Screwing the military.

There are more....
4 posted on 07/25/2014 3:21:50 PM PDT by 98ZJ USMC
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To: NonValueAdded

Wait until they introduce Soylent Green as a substitute for hamburger.


5 posted on 07/25/2014 3:24:08 PM PDT by ViLaLuz (2 Chronicles 7:14)
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To: george76

And, now, I believe, the CPI excludes such unnecessary
volatile expenditures such as food and energy, so we now measure CPI on items that we may purchase every three to five years, and exclude 2/3rds of your wallet.


6 posted on 07/25/2014 3:26:54 PM PDT by Noob1999 (Loose Lips, Sink Ships)
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To: Noob1999
I'll just go ahead and post this here now, in case I need to come back to it.

Common Misconceptions about the Consumer Price Index: Questions and Answers

7 posted on 07/25/2014 3:30:15 PM PDT by 1rudeboy
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To: george76; Patton@Bastogne; Oldeconomybuyer; RightField; aposiopetic; rbmillerjr; Lowell1775; ...

Shadowstats is the Ron Paul goofball TEOTWAWKI website.

A better, more accurate effort can be found at: http://bpp.mit.edu/usa/


8 posted on 07/25/2014 3:30:18 PM PDT by narses (Matthew 7:6. He appears to have made up his mind let him live with the consequences.)
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To: ViLaLuz

Soylent Red - it’s made out of Tea Partiers!!!!!


9 posted on 07/25/2014 3:32:31 PM PDT by Salgak (Peace through Superior Firepower. . . .)
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To: george76
Pure and simple, it was a cut to Social Security and that'd what it accomplished.

At the end of March, I posted an article about the average food price in the US being up 22% for the year.

10 posted on 07/25/2014 3:33:55 PM PDT by blam (Jeff Sessions For President)
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To: narses

Seriously? Is Ron Paul behind all this? Please say it isn’t so . . . I always people stumbled-upon the “info” on a website that sells gold.


11 posted on 07/25/2014 3:37:33 PM PDT by 1rudeboy
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always assumed
12 posted on 07/25/2014 3:38:00 PM PDT by 1rudeboy
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To: george76

LOL! I have tried to explain to people this trick...they just think I am crazy because I even know what the CPI is....amazing...they could care less that math tricks are used to trick them....

It is no wonder that con artists can so easily take folks for all they have....


13 posted on 07/25/2014 3:42:18 PM PDT by eeevil conservative (GIVE ME A PLACE TO STAND AND I WILL MOVE THE thatEARTH....Archimedes)
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To: 1rudeboy

Very interesting: Carefully considered and calculated models and figures that completely miss the economic situation for the average family.


14 posted on 07/25/2014 3:42:23 PM PDT by Paul R. (Leftists desire to control everything; In the end they invariably control nothing worth a damn.)
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To: Paul R.
And yet another misconception: the CPI is an attempt to make a snapshot of an entire region.
15 posted on 07/25/2014 3:47:28 PM PDT by 1rudeboy
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To: 1rudeboy

Not sure if he is behind it, but his nattering nabobs of negativity pull the shadowstats website like a gunslinger pulls his smokewagon.


16 posted on 07/25/2014 3:47:48 PM PDT by narses (Matthew 7:6. He appears to have made up his mind let him live with the consequences.)
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To: eeevil conservative

Maybe their eyes glaze-over because they realize that you don’t know what the heck you’re talking about? Mine would.


17 posted on 07/25/2014 3:49:17 PM PDT by 1rudeboy
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To: narses

I do envy John Williams for one thing: he (probably) makes good money selling this compost.


18 posted on 07/25/2014 3:50:48 PM PDT by 1rudeboy
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To: 1rudeboy

wow? What happened to you? I am well aware of CPI..

maybe you need to go kick a dog? Years ago, you were a pretty cool FREEPer...

no need to reply, over ya!


19 posted on 07/25/2014 3:56:02 PM PDT by eeevil conservative (GIVE ME A PLACE TO STAND AND I WILL MOVE THE thatEARTH....Archimedes)
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To: eeevil conservative

Just go ahead and read the link I provided in #7.


20 posted on 07/25/2014 4:00:24 PM PDT by 1rudeboy
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To: 98ZJ USMC
that the Klintoon 90's looked better than they were.

Didn't they do the same thing under Carter? I seem to recall that then they excluded food, energy and housing from the CPI.

21 posted on 07/25/2014 4:05:33 PM PDT by maryz
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To: NonValueAdded

No kidding. An average pot roast cost $13 here inn my part of Georgia.


22 posted on 07/25/2014 4:05:37 PM PDT by autumnraine
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To: blam

Price Index for Meats, Poultry, Fish & Eggs Rockets to All-Time High.

In January 1967, when the BLS started tracking this measure, the index for meats, poultry, fish, and eggs was 38.1. -— in May, it climbed to a record 252.832.

http://www.cnsnews.com/news/article/ali-meyer/price-index-meats-poultry-fish-eggs-rockets-all-time-high


23 posted on 07/25/2014 4:33:13 PM PDT by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: george76

The CPI is a joke. They do crap like substitute even cheaper products that are not practically comparable and claim a savings. For instance: One year they may use Jiff Peanut Butter, but the next year they use a store brand that is not comparable in quality, then claim a price savings to offset the fact that Jiff went up 25% in cost.

If they bought one brand and compared it to the average cost the follow year, say best price over the same 30 day period, they would find inflation is significant.

Food, Fuel, Medical Insurance, Furniture, School Supplies, Education, Clothing, etc, are all up significantly.


24 posted on 07/25/2014 4:35:22 PM PDT by CodeToad (Arm Up! They Are!)
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To: CodeToad

and the Price of Electricity Hit Record for May.

http://www.freerepublic.com/focus/f-news/3168934/posts


25 posted on 07/25/2014 4:39:11 PM PDT by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
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To: Noob1999

It’s an accurate measure for those who don’t eat or drive or consume electricity.


26 posted on 07/25/2014 4:49:10 PM PDT by Ken H
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To: george76
The changes afoot were publicized, albeit under the cover of academic theories. Few in the public paid any attention.

I wish there was someone who calculated CPI the old way, so we could see the difference.

27 posted on 07/25/2014 5:13:17 PM PDT by Toddsterpatriot (Science is hard. Harder if you're stupid.)
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To: Ken H
It’s an accurate measure for those who don’t eat or drive or consume electricity.

IOW all those dead voters.

28 posted on 07/25/2014 5:16:13 PM PDT by OneWingedShark (Q: Why am I here? A: To do Justly, to love mercy, and to walk humbly with my God.)
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To: george76

Yet another example of how to lie with statistics.


29 posted on 07/25/2014 6:34:10 PM PDT by Some Fat Guy in L.A. (Still bitterly clinging to rational thought despite it's unfashionability)
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To: maryz

The pathetic thing is that, despite banging our collective heads against the wall in frustration for decades & preaching just THAT, now that ANOTHER report is out about the truth...

...it won’t change a thing.


30 posted on 07/25/2014 6:58:47 PM PDT by logi_cal869
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To: george76

Government Work-Camp: Arbeitsziehungslager

All a Front Man for the East India Company


31 posted on 07/25/2014 7:59:20 PM PDT by Varsity Flight (Extortion-Care is the Government Work-Camp: Arbeitsziehungslager)
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To: george76
Boy O Boy


32 posted on 07/26/2014 9:41:09 AM PDT by blam (Jeff Sessions For President)
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