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Why You Can't Trust the Inflation Numbers (Real # is 10%)
Wall Street Journal ^ | 26 January 2011 | Brett Arends

Posted on 01/29/2011 6:30:05 AM PST by Erik Latranyi

A surprising number of people on Wall Street will tell you not to worry too much about inflation.

After all, they'll say, just look at the numbers. The inflation picture is incredibly benign. In the past 12 months the Consumer Price Index has risen just 1.5%—a remarkably low rate. And when you strip out volatile food and energy costs, they'll say, it's even lower—a meager 0.8%.

It doesn't stop there. Many economists will point out that wages are also rising by less than 2% a year. With so many people still out of work, goes the line, labor costs are going to stay low for a long time too. So what's the worry?

(Excerpt) Read more at online.wsj.com ...


TOPICS: Business/Economy; Crime/Corruption; Government; Politics/Elections
KEYWORDS: cpi; govt; inflation
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From the article:

According to one rogue economist, John Williams at Shadow Government Statistics, if we still calculated inflation the way we did when Jimmy Carter was president, the official inflation figures would look about as bad as they did when ... Jimmy Carter was president. According to Mr. Williams's calculations, if we counted inflation under the old system the official rate wouldn't be 1.5%. It would be closer to 10%.

1 posted on 01/29/2011 6:30:07 AM PST by Erik Latranyi
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To: Erik Latranyi
Stagflation: unemployment + inflation. We're close to 30%, if people used honest numbers.

But the media tells us that the economy is improving, so it's all good.

2 posted on 01/29/2011 6:38:00 AM PST by ClearCase_guy ("Borrowing a trillion is compassionate, cutting a billion is heartless." -- VDH)
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To: Erik Latranyi

any guy who can pen the theme to star wars and be a rogue economist is pretty impressive.


3 posted on 01/29/2011 6:38:09 AM PST by beebuster2000
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To: Erik Latranyi

I go to the grocery store, and I know that the “zero inflation” is bunk.


4 posted on 01/29/2011 6:39:56 AM PST by Fido969 ("The hardest thing in the world to understand is income tax." - Albert Einstein)
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To: Erik Latranyi

The Federal Government plays with inflation numbers because they are tied to cost of living raises in Social Security and many retirement systems. A low number saves them billions. Meanwhile, as taxes, food, and energy prices skyrocket, the retiree struggles.


5 posted on 01/29/2011 6:40:59 AM PST by Citizen Tom Paine (An old sailor sends)
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To: Erik Latranyi
I remember the Carter years. I was one of the working poor back then. Let me tell you, I was working but, those prices hit hard. I had to walk or ride my bike to work about half the time, couldn't afford the gas. I would not have enough money sometimes to eat. Luckily I was young and didn't eat a lot anyway. I remember some of the poor elderly eating cat and dog food. Sugar went from a 1lb. bag being something around 29 cents, it went to a dollar. I remember there was a run on toilet paper and paper towels. People would hoard them because it wasn't always easy to get. I remember gas prices jumping from something like 29 or 39 cents a gallon to a dollar and having to wait in long lines for gas. I remember every other day you could get gas, depending on the last number of your plate. Odd numbers would be certain days and even numbers would be the other days. Hunger was my middle name at the time. Luckily those days were short lived.

To many people don't realize just how fragile we are right now. Our whole economy could collapse into the dust. Obama and his ilk are h*ll bent on spending, spending, spending, government can fix everything. This is what will push us over the edge. Thank GOD for the last election.

6 posted on 01/29/2011 6:43:32 AM PST by MsLady (If you died tonight, where would you go? Salvation, don't leave earth without it!)
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To: Erik Latranyi

That’s ok... Obama’s going to build a high speed rail. /sarc


7 posted on 01/29/2011 6:43:49 AM PST by Skeez (O)
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To: Erik Latranyi

Since government is always willing to fudge to both make itself look better and to “At all costs, we don’t want to start a *panic*!!!” (that would make us look bad), the alternative is to privatize the statistics.

This can be as simple as a website. Ask volunteers to go “shopping” where they normally go shopping, and note the prices for a given type of merchandise.

Importantly, in food right now, a lot of manufacturers are using smaller packaging, or putting less food in the same size packaging, so this has to be taken into account. The grocery stores can help in this, as some of them put “price per ounce” on shelf tags.

And also, entries need to have a “sale” tag to indicate if an item was offered at a sale rather than regular price, and a “list” and “store club” price. This can be amusing, as some stores will have a substantially higher, even artificially high, list price than store club price, to encourage customers to provide personal information for the store club.

But, as I was saying, a website could easily plot accurate inflation or deflation statistics with just a few hundred volunteers around the US. Then, by discarding the jokers who want to abuse the site by posting wildly incorrect numbers, you would get some reliable national statistics, uncorrupted by spin doctor economists.


8 posted on 01/29/2011 6:46:32 AM PST by yefragetuwrabrumuy
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To: ClearCase_guy

The economy is improving but only by less than three percent. To have an economy to thrive, it has to be at least six percent. We are in a dead zone. It’s tough getting or maintainimg a job, and we know why.


9 posted on 01/29/2011 6:47:31 AM PST by DWC (historian)
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To: Erik Latranyi

Just like current Unemployment numbers, they change the accounting method to make this Regime look better than it actually is.

This is almost a carbon copy of the Old Soviet Union propaganda machine. They are literally sweeping this disaster under the rug, thinking we will never notice!


10 posted on 01/29/2011 6:48:11 AM PST by PSYCHO-FREEP (Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
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To: Erik Latranyi
And when you strip out volatile food and energy costs, they'll say, it's even lower

Yep. Just quit eating and driving to work and watch the old bank account THRIVE!

11 posted on 01/29/2011 6:48:16 AM PST by N. Theknow (Kennedys: Can't skipper a boat, Can't drive, Can't ski, Can't fly. But they KNOW what's best!)
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To: PSYCHO-FREEP

I don’t think it flies.

Watching Baraq campaign on a record of 10% unemployment, plunging real estate prices, and $4 (maybe $5 after Egypt)gasoline should be fun.


12 posted on 01/29/2011 6:50:16 AM PST by nascarnation
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To: Erik Latranyi

It is the obamaniton math that the communist democrats have used to deceive the simple minded who go to the stores and pay inflated food and article prices that have increased at least 10% and know the man is lying. The democrats also rigged the unemployment numbers as every laid off worker who wants a job knows.


13 posted on 01/29/2011 6:50:28 AM PST by kindred (Come Lord Jesus, rule and reign over all thine enemies.)
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To: Erik Latranyi

In the past 12 months the Consumer Price Index has risen just 1.5%.

A third of it came in one month: December 2010


14 posted on 01/29/2011 6:51:41 AM PST by proudpapa
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To: MsLady

With the 150 point drop in the market yesterday, many are reminded of this crisis. We cannot forget the biggest bubble of all is about to burst. The US is at serious risk of losing it’s status of the world’s reserve currency.

We need to dramatically cut spending to levels that will cause pain and discomfort to all. We need to start taking some of our lumps now or be bludgeoned to death later.


15 posted on 01/29/2011 6:52:08 AM PST by Skeez (O)
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To: Erik Latranyi
10%?

Yeah, right...


16 posted on 01/29/2011 6:53:12 AM PST by null and void (We are now in day 739 of our national holiday from reality. - 0bama really isn't one of US.)
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To: PSYCHO-FREEP
This is almost a carbon copy of the Old Soviet Union propaganda machine.

Also note that the most recent unemployment numbers were bad, but blamed on "the weather". The Soviet Union had a failed economy because they had "bad weather" -- 74 years of it.

We have become them.

17 posted on 01/29/2011 6:58:04 AM PST by ClearCase_guy ("Borrowing a trillion is compassionate, cutting a billion is heartless." -- VDH)
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To: MsLady
Too many people don't realize just how fragile we are right now.

Even more so now than ever.

The current business model is to not "tie up capital in inventory", but have it delivered "just in time", loading dock to factory floor.

No safety stock. None.

Any disruption anywhere in the supply chain puts people out of work in hours.

18 posted on 01/29/2011 7:01:34 AM PST by null and void (We are now in day 739 of our national holiday from reality. - 0bama really isn't one of US.)
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To: Erik Latranyi

This kills the Cornyn-Hatch Balanced Budget Amerndment for me.

The Amendment would cap federal spending to 20% of GDP.

Of course, how they calculate GDP would be open to shenanigans!


19 posted on 01/29/2011 7:04:04 AM PST by Erik Latranyi (Too many conservatives urge retreat when the war of politics doesn't go their way.)
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To: MsLady

Your experiences (minus the gas lines) is pretty much the same as mine. Prices haven’t jumped quite as much as they did back then.


20 posted on 01/29/2011 7:12:30 AM PST by BenKenobi (one of the worst mistakes anybody can make is to bet against Americans.")
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To: Erik Latranyi

Inflation is more than evident to all of us who live in the real world. Groceries and fuel are the two daily reminders. The economists can report that the economy is improving because of increased consumer spending - not by choice for most consumers. When the buying power of the dollar is diminished, what is the obvious result?

If anyone believes the absurd reports generated by the government, I’ve got a bridge for sale. The method of calculation for everything from unemployment, inflation, GDP, and manufacturing activity have been tweaked so many times that they no longer report reality - all in the name of achieving the desired pie in the sky numbers to feed the talking heads in the MSM. Unfortunately, most of the population lack the capability to recognize this fact and adjust accordingly.


21 posted on 01/29/2011 7:12:36 AM PST by RobertClark
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To: Skeez

“The US is at serious risk of losing it’s status of the world’s reserve currency.

We need to dramatically cut spending to levels that will cause pain and discomfort to all. We need to start taking some of our lumps now or be bludgeoned to death later.”

Well spoken. When the world stops accepting dollars, our economy will have a crisis. We are not too big to fail. External forces are plotting now to replace the dollar. We only have limited time to change. I am pessimistic about the political will to change. Democrats have no intentions about reducing government spending except for the military. They want to tax the rich to fund their social spending. Democrats will not admit that entitlement programs are bankrupt. The baby boom generation has paid large amounts of payroll taxes so they will not accept reductions in entitlement benefits. Government employees have influenced legislators to enact elaborate legal protections for their bloated benefits.


22 posted on 01/29/2011 7:16:59 AM PST by businessprofessor
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To: MsLady

Yep, the economic level of the Great Depression maybe a further reach, but the backward movement of the Carter years is here—and that Carter-era standard of living lurks menacingly.


23 posted on 01/29/2011 7:20:44 AM PST by 9YearLurker
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To: Erik Latranyi

The part about “Hedonics” is very interesting, it explains how if a computer costs the same as it did a year or more ago but has more features or more capacity etc. they say that it has fallen in price. This keeps the inflation figures down. What really happens in too many cases is simply that a person is forced to pay for a lot of stuff they don’t really want or need. Washing machines with so many cycles that you have to read and study the manual to figure out how to use the one or two out of eight that you really need. Cell phones that are a mystery to those of us who just want to be able to make or receive calls and don’t need a qwerty keyboard, a video camera etc. I have a microwave that has so many buttons on it that I have to put on reading glasses to see how to operate it. In a lot of cases these things would be worth more to most of us if they DIDN’T have all the unwanted features.

Now that my memory is not as good as it used to be if I don’t use something every day I soon forget how to use it and sometimes need to have a refresher course before I can use it again. It wouldn’t be so annoying except that mostly I am trying to figure out how to avoid setting off something that I never wanted in the first place.


24 posted on 01/29/2011 7:21:41 AM PST by RipSawyer (Trying to reason with a liberal is like teaching algebra to a tomcat.)
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To: Citizen Tom Paine

Right, if they hadn’t changed the calculation a person really COULD live on social security, in fact many of us would be doing better on that kind of SS than most full time working people are doing now.


25 posted on 01/29/2011 7:23:33 AM PST by RipSawyer (Trying to reason with a liberal is like teaching algebra to a tomcat.)
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To: Fido969
I go to the grocery store, and I know that the “zero inflation” is bunk.

I get more irritated at 'produce deflation' than inflation. I hate when they cut the content size.

I WANT to purchase a 3-lb can of coffee! I don't want to have to buy two 27.8-oz cans.


26 posted on 01/29/2011 7:25:25 AM PST by TomGuy
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To: Skeez

WTF....0bamanomics is a bullet train to bankruptcy.


27 posted on 01/29/2011 7:26:56 AM PST by spokeshave (WTF....the only thing 0bambi's investments will get us is a bullet train to bankruptcy.)
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To: PSYCHO-FREEP
"This (USA media) is almost a carbon copy of the Old Soviet Union propaganda machine."
28 posted on 01/29/2011 7:28:02 AM PST by jpsb
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To: null and void
The current business model is to not "tie up capital in inventory", but have it delivered "just in time", loading dock to factory floor.

Yes. It is called "lean manufacturing."

In Oregon, with some of the highest chronic unemployment in the country, communist Peter DeFazio (D) got some government make work jobs for his buddies at OMEP...

Look it up...

29 posted on 01/29/2011 7:29:55 AM PST by Sir Francis Dashwood (Arjuna, why have you have dropped your bow???)
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To: Erik Latranyi
Are housing prices up 10%?

Are salaries up 10% a year like they were in the 70's?

Commodity prices are up due to government meddling in the economy, not inflation. There isn't any genuine inflation yet. There is deflation, which the government has been willing to spend trillions of tax dollars the American citizen hasn't even earned yet to try to stave off. Because deflation wipes out the indebted, including the powerful and politically connected.

In a truly free market these commodity-based price spikes in food wouldn't be happening, but nothing except trillions in spending to fake growth can stop the natural post-bubble deflation of housing prices, salaries, and securities back to the historical trend line.

30 posted on 01/29/2011 7:36:29 AM PST by Mr. Jeeves ( "The right to offend is far more important than any right not to be offended." - Rowan Atkinson)
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To: RipSawyer

I’ve taught myself how to use iTunes to load up my iPod — twice. Currently, I have no idea how to use iTunes to load up my iPod, and I don’t have any inclination to teach myself a third time.


31 posted on 01/29/2011 7:37:20 AM PST by ClearCase_guy ("Borrowing a trillion is compassionate, cutting a billion is heartless." -- VDH)
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To: BenKenobi
Your experiences (minus the gas lines) is pretty much the same as mine. Prices haven’t jumped quite as much as they did back then.

Yet.

32 posted on 01/29/2011 7:37:35 AM PST by null and void (We are now in day 739 of our national holiday from reality. - 0bama really isn't one of US.)
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To: Skeez
We need to dramatically cut spending to levels that will cause pain and discomfort to all.

The bankers loot the country and we "all" must pay.

33 posted on 01/29/2011 7:38:41 AM PST by Stentor ( "All cults of personality begin as high drama and end as low comedy.")
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To: MsLady
I remember there was a run on toilet paper and paper towels.

Actually, the inflation and shortages started under the Nixon-Ford administrations, but inflation skyrocketed under Carter.

I remember in the early/mid-70s the grocery store shelves being empty of sugar. I remember schools rationing duplicator paper to teachers. And that was the time fuel prices shot up astronomical prices -- like $0.45 per gallon and shortage lines/rationing showed up in large cities.


34 posted on 01/29/2011 7:38:41 AM PST by TomGuy
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To: N. Theknow

You have to quit a lot more than that! You have to stop heating or cooling your house, turn off the lights, cook on a fire outside using twigs that fall on the ground. Stop using a refrigerator or freezer, it goes on and on, all that takes energy you know. In reality you couldn’t even walk to the grocery store and buy food because it takes energy to get the food to the store but all that is already priced into the cost of groceries which are of course barely rising at all according to our minister of propaganda.

Don’t forget now, cold showers only.


35 posted on 01/29/2011 7:38:59 AM PST by RipSawyer (Trying to reason with a liberal is like teaching algebra to a tomcat.)
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To: Skeez

The stock market is in limbo, should it go up purely because of the inflation that the government insists isn’t happening or should it go down in response to the actual GREATER DEPRESSION that the government isists isn’t happening?


36 posted on 01/29/2011 7:41:19 AM PST by RipSawyer (Trying to reason with a liberal is like teaching algebra to a tomcat.)
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To: Skeez

The stock market is in limbo, should it go up purely because of the inflation that the government insists isn’t happening or should it go down in response to the actual GREATER DEPRESSION that the government insists isn’t happening?


37 posted on 01/29/2011 7:41:47 AM PST by RipSawyer (Trying to reason with a liberal is like teaching algebra to a tomcat.)
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To: Fido969
I go to the grocery store, and I know that the “zero inflation” is bunk.

Me too! And, I go to the gas station and I know that "zero inflation" is bunk.

Makes you wonder - has the growth in the DOW (until the last couple of days, that is) shown an increase in percieved value of the corporations that make up the index, or are we seeing devaluation of the dollar instead.

38 posted on 01/29/2011 7:42:45 AM PST by meyer (We will not sit down and shut up.)
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To: Citizen Tom Paine
AMEN!
39 posted on 01/29/2011 7:44:15 AM PST by upchuck (When excerpting please use the entire 300 words we are allowed. No more one or two sentence posts!)
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To: Erik Latranyi
Hold on to your hats.... John Williams at Shadow Statistics is rational and calm in his explanation of the data.

It's the main stream media and government that are misleading the unwashed masses.

40 posted on 01/29/2011 7:45:25 AM PST by pointsal
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To: Mr. Jeeves

I think you are right which is why I’ve paid off my debts and am holding currency.


41 posted on 01/29/2011 7:48:38 AM PST by BenKenobi (one of the worst mistakes anybody can make is to bet against Americans.")
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To: ClearCase_guy
Where are the jobs and new hires? Are the industrial buildings being rented?

Sorry, I just don't see the improvement in the economy.

42 posted on 01/29/2011 7:52:47 AM PST by pointsal
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To: Skeez
I'm willing to wait until I'm 65 to collect my SS. They should change that 62 years old to 65 unless you become disabled before then. Maybe even raising it to 66 years old. We have to start NOW. Everyone except the disabled and poor elderly should have to contribute. It's gonna hurt and in some cases hurt like h*ll. It's only going to get worse the longer we put it off. These riots around the world aren't helping either and are going to get worse.

The other thing we could do and I'm sick to death about hearing people saying, it'll take years to do this. SO START NOW.....DRILL BABY DRILL and start building more refiners.

43 posted on 01/29/2011 8:15:13 AM PST by MsLady (If you died tonight, where would you go? Salvation, don't leave earth without it!)
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To: BenKenobi
No they aren't as bad yet as they were then. But, if these riots in Egypt keeping going and spreading and they block the Suez Canal. We will be in a heap o trouble.

I have faith in the American people. What I don't have faith in is our government. If it would just move the heck out of the way, WE THE PEOPLE could fix the problems.

44 posted on 01/29/2011 8:17:46 AM PST by MsLady (If you died tonight, where would you go? Salvation, don't leave earth without it!)
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To: BenKenobi

You probably didn’t live in the DC area at the time. I don’t know if other metropolitan areas were dealing with the same thing but, we sure did. We had gas lines like you wouldn’t believe.


45 posted on 01/29/2011 8:19:55 AM PST by MsLady (If you died tonight, where would you go? Salvation, don't leave earth without it!)
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To: 9YearLurker

Yep it’s rearing it’s ugly head. I blame the government for most or all of the problem. If they would get the heck out of the way, maybe we could make some head way. With the government involved the best we can hope for is that it at least stays stagnant or sluggish.


46 posted on 01/29/2011 8:22:28 AM PST by MsLady (If you died tonight, where would you go? Salvation, don't leave earth without it!)
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To: TomGuy
I WANT to purchase a 3-lb can of coffee! I don't want to have to buy two 27.8-oz cans.

Try to buy a "half gallon" of ice cream. Down-sized packaging with no drop in cost is the new paradigm.

47 posted on 01/29/2011 8:24:17 AM PST by Right Brother
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To: TomGuy

I don’t remember about the schools but, I was out of school by then and didn’t have any kids. I remember the shelves being empty of certain items. TP, PT and sugar seemed to be the ones that ran out the most. I don’t remember much about other foods or items. I worked in a grocery store at the time :)


48 posted on 01/29/2011 8:24:38 AM PST by MsLady (If you died tonight, where would you go? Salvation, don't leave earth without it!)
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To: Erik Latranyi
do I really have to say it???

49 posted on 01/29/2011 8:54:29 AM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: Bullish; CJ Wolf; houeto; Quix; B4Ranch; Whenifhow; Silentgypsy; blam; FromLori; Lurker; ...
Hang-in-there ping.

"Economic Holocaust" ping.

Increasing volume ping list watching the slow motion Economic Holocaust.

FReepmail me if you want on or off
The Comedian's "Economic Holocaust" ping list...


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

50 posted on 01/29/2011 9:01:30 AM PST by The Comedian (It's 3am all over the planet.)
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