Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Why Reported Inflation Seems Different Than Reality
Zero Hedge ^ | 20 December 2012 | Tyler Durden

Posted on 12/23/2012 10:30:36 AM PST by arthurus

But the manipulation of the data did not stop there. Aside from the weighting changes the BLS instituted a system of “hedonic” adjustments. Hedonics adjusts the prices of goods for the increased pleasure the consumer derives from them.

“That new washing machine you bought did not cost you 20% more than it would have cost you last year, because you got an offsetting 20% increase in the pleasure you derive from pushing its new electronic control buttons instead of turning that old noisy dial, according to the BLS.

When gasoline rises 10 cents per gallon because of a federally mandated gasoline additive, the increased gasoline cost does not contribute to inflation. Instead, the 10 cents is eliminated from the CPI because of the offsetting hedonic thrills the consumer gets from breathing cleaner air. The same principle applies to federally mandated safety features in automobiles. I have not attempted to quantify the effects of questionable quality adjustments to the CPI, but they are substantial.”

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


TOPICS: Business/Economy; Government
KEYWORDS: bls; cpi; hedonic; hedonicadjustments; hedonics; iglation; inflation

1 posted on 12/23/2012 10:30:40 AM PST by arthurus
[ Post Reply | Private Reply | View Replies]

To: arthurus

Is this satire? I can’t tell anymore.


2 posted on 12/23/2012 10:33:42 AM PST by BipolarBob (I survived the Lindsay Lohan Bar, Grill and Fight Club.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
S.S. says that inflation was 01.7% in 2012. Anybody believe that?
3 posted on 12/23/2012 10:36:22 AM PST by Graybeard58 ("Civil rights” leader and MSNB-Hee Haw host Al Sharpton - Larry Elder)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus

When the GDP is adjusted for actual inflation, it is negative.

The unions have already begun the push for higher wages.

They will get them and then the inflation will be to big to ignore. The wage rise in the face of unemployment will spread to the whole economy


4 posted on 12/23/2012 10:40:48 AM PST by bert ((K.E. N.P. N.C. +12 .....The fairest Deduction to be reduced is the Standard Deduction)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Graybeard58
for years i've bought five candy bars at Wally's for an afternoon work snack for five bucks, last month they sent to $1.26 each...
5 posted on 12/23/2012 10:42:55 AM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
[ Post Reply | Private Reply | To 3 | View Replies]

To: arthurus

The same reason that reported unemployment seems different than reality?


6 posted on 12/23/2012 10:48:24 AM PST by jospehm20
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
In the "new reality" of Post Modern rubbish, this is not Bath House Barry, a cheap narcissistic racist Marxist.

Oh no. This is the Nobel Prize for Nothing Emperor for Life.

In the same way, our masters lie to us and tell us there "is no inflation!" And our obese, entitlement check collecting immoral masses nod their low information voting noggins, and surf for porn.

7 posted on 12/23/2012 10:56:45 AM PST by SkyPilot
[ Post Reply | Private Reply | To 1 | View Replies]

To: SkyPilot

what kind of hedonic improvement can be done for Big Ears? i am so overjoyed at the idea of having to put up with 4 more years of lord haw haw.


8 posted on 12/23/2012 11:02:19 AM PST by HiTech RedNeck (How long before all this "fairness" kills everybody, even the poor it was supposed to help???)
[ Post Reply | Private Reply | To 7 | View Replies]

To: arthurus

This is an excellent article, but it can be boiled down, a lot, to: Your government lies to you - constantly.


9 posted on 12/23/2012 11:03:57 AM PST by Truth29
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
Feed them GobblyGook. 54% will believe it. At least 10% just smile and keep on keeping on. The other 36% don't matter. they are just disgruntled conservatives.
And Broncho and his merry men just carry on with the party.
10 posted on 12/23/2012 11:06:27 AM PST by Tupelo (I'm an old man and most people hate me, but I don't like them either so that makes it all even.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus

They’ve been lying out their @sses, hiding, covering up, finagling, adjusting, manipulating, massaging, and doing whatever it takes to keep the lid on the country/economy until the election was over. Well, the election is over and all the mess they repressed is about to blow sky high. Personally, I’d rather have a calm, competent, Conservative (not talking Mitt here) who understands the economy and that big government has to be majorly downsized and spending must stop; however, we are stuck with Emperor Barry “I have no clothes” & Michelle “Antoinette Let Them Eat Vegetables” Obama at the helm and when all hell breaks loose and the country comes down around their ears, it couldn’t happen to a more deserving ‘couple’ of anti-American, anti-Christian, baby killing, pervert-loving,Constitution trampling, lawless Communists/Marxist/Muslims or whatever the heck they are.

Hopefully, there will be an American Phoenix to rise out of the ashes and the country will come back in some form other than a third world dictatorship, but ... that remains to be seen.


11 posted on 12/23/2012 11:13:24 AM PST by MissMagnolia
[ Post Reply | Private Reply | To 1 | View Replies]

To: Truth29

The Ministry of Truth is alive and well in Washedup, DC


12 posted on 12/23/2012 11:15:31 AM PST by faithhopecharity
[ Post Reply | Private Reply | To 9 | View Replies]

To: MissMagnolia

Taking America out of the heart of Americans is a task too difficult even for Big Ears.


13 posted on 12/23/2012 11:17:30 AM PST by HiTech RedNeck (How long before all this "fairness" kills everybody, even the poor it was supposed to help???)
[ Post Reply | Private Reply | To 11 | View Replies]

To: arthurus

Got a new washing machine a few months ago - lots of gee whiz stuff - but truth be told the ‘pleasure’ of pushing new buttons faded quickly...


14 posted on 12/23/2012 11:22:45 AM PST by GOPJ (Detroit should be renamed 'Michael Mooresville'...)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
However, as the pressure of increasing deficits weighed on political parties, the need to find solutions to reducing spending, without actually cutting spending, led to several substantial changes in the calculation of inflation.

This is just a fancy of saying, "the need to fool the voter with smoke and mirrors"

15 posted on 12/23/2012 11:27:29 AM PST by YankeeReb
[ Post Reply | Private Reply | To 1 | View Replies]

To: Graybeard58

My trips to the grocery store show a lot higher inflation than 1.7%. I think the gub’mint changed the rules on how they report inflation just like they did for unemployment.


16 posted on 12/23/2012 11:37:07 AM PST by Little Ray (Get back to work. Your urban masters need their EBTs refilled.)
[ Post Reply | Private Reply | To 3 | View Replies]

To: arthurus

Technological advances are also poorly accounted for. I can buy a more computer power now for a few hundred dollars now than I could have bought for a billion dollars a few decades ago. Intel and others have managed to print silicon faster than the government prints money, a remarkable fact in itself.


17 posted on 12/23/2012 11:40:21 AM PST by AZLiberty (No tag today.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
This has been an interesting subject of conversation here on FR in the past. There's some truth to the manipulation the BLS does to the inflation numbers. Here's a case in point:

A new car costs X% more than it did ten years ago, and that price increase can be substantial. The reality, though, is that the new car you buy today is not the same as the new car you bought ten years ago. It's a much better car, which means a one-to-one comparison would not be an accurate measure of inflation.

The same holds true for almost any product or service that involves technology that has advanced considerably over time. Medical care is another good example. Your medical insurance plan costs a lot more than it did 20 years ago, but it also covers many medical treatments that didn't even exist 20 years ago.

18 posted on 12/23/2012 11:44:40 AM PST by Alberta's Child ("I am the master of my fate ... I am the captain of my soul.")
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus

Obama’s Ministry of Truth. Reality is what they tell you it is.

Now shut up and pay your taxes, you degenerate capitalist pig.


19 posted on 12/23/2012 11:52:07 AM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Alberta's Child

Right, and tuition is up because the quality of education has improved so dramatically. Same with milk, eggs, bacon... they now must come with magic marshmallow yellow moon, red hearts and green clovers.


20 posted on 12/23/2012 11:52:49 AM PST by Sirius Lee (Sarah Palin - "Republicans like Rove... are said to be concerned she will win.")
[ Post Reply | Private Reply | To 18 | View Replies]

To: Sirius Lee
Tuition is up because most people don't pay the full cost of a college education. If you were to eliminate every form of financial aid, I can pretty much guarantee you that the cost of a college education would decline -- because schools would be out of business otherwise.

Same with milk, eggs, bacon ..

Maybe you missed this part of my post:

The same holds true for almost any product or service that involves technology that has advanced considerably over time.

21 posted on 12/23/2012 12:02:27 PM PST by Alberta's Child ("I am the master of my fate ... I am the captain of my soul.")
[ Post Reply | Private Reply | To 20 | View Replies]

To: arthurus

The government learned the lessons of the Carter years well. We will never again see inflation, unemployment, and other numbers that accurately tell us the state of the economy.
The labor stats are outright lies. The inflation numbers are outright lies. Money supply is incleasng at an exponential rate. Prices on most everything have doubled from 2000. yet, we have almost zero inflation.
And gold has also exploded in price from 2000 because there is no inflation./


22 posted on 12/23/2012 2:37:06 PM PST by DesertRhino (I was standing with a rifle, waiting for soviet paratroopers, but communists just ran for office.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Graybeard58
S.S. says that inflation was 01.7% in 2012. Anybody believe that?

I believe the blue line in the following chart:


23 posted on 12/23/2012 2:39:49 PM PST by khelus
[ Post Reply | Private Reply | To 3 | View Replies]

To: arthurus

That’s why the Baraqqi Coalition has been so successful.
Combine hard left ideology, the tactics of the Chicago political mob, and the full fledged support of the MSM and you have a formidable force.

Up is down, black is white, and there’s no inflation.


24 posted on 12/23/2012 2:39:49 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
[ Post Reply | Private Reply | To 1 | View Replies]

To: khelus

Yes as the old Hunkeys used to say in Cleveland:
Dat’s boolsheet!


25 posted on 12/23/2012 2:41:27 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
[ Post Reply | Private Reply | To 23 | View Replies]

To: Alberta's Child
t's a much better car,

Much better if you like "traction control" that brakes wheels randomly until it breaks. Or airbags that may injure seat belt wearers but otherwise do nothing except cost 1000's to replace after a minor accident. The 1000 miles of extra wiring that adds unreliability. Or the air pressure sensors in a tire (how hard is it to look at a tire?) which break and then cost $100+ a piece. Oh yeah, I should also point out almost all of this crap is required by federal law. Mini spare tire, much better, yeah right. Now cars come with a much better can of fix-a-flat and no spare at all. I won't even go into the much better pollution control so we can breath from the tailpipe.

26 posted on 12/23/2012 2:41:45 PM PST by palmer (Obama = Carter + affirmative action)
[ Post Reply | Private Reply | To 18 | View Replies]

To: bert
When the GDP is adjusted for actual inflation, it is negative. . . .

Blue line = GDP adjusted by the cost of a set standard of living, not a declining one.



Ain't globalism grand?
27 posted on 12/23/2012 2:44:58 PM PST by khelus
[ Post Reply | Private Reply | To 4 | View Replies]

To: Alberta's Child
Tuition is up because most people don't pay the full cost of a college education.

Yes only on FR do we talk about the "Big Education" cycle

1) Govt makes unlimited loans to students

2) Schools raise prices to soak up available funds

3) Schools pay profs and administrators excessive salaries

4) Profs and admins donate heavily to Democrats

and repeat

28 posted on 12/23/2012 2:50:17 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
[ Post Reply | Private Reply | To 21 | View Replies]

To: arthurus
So my taxes aren't really going up, I'm just getting a more enjoyable government for my tax dollar?

-PJ

29 posted on 12/23/2012 2:51:59 PM PST by Political Junkie Too (If you are the Posterity of We the People, then you are a Natural Born Citizen.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Chode
for years i've bought five candy bars at Wally's for an afternoon work snack for five bucks, last month they sent to $1.26 each...

I have to say that's a pretty substantial snack for one afternoon.

30 posted on 12/23/2012 2:54:59 PM PST by steve86 (Acerbic by Nature, not Nurture™)
[ Post Reply | Private Reply | To 5 | View Replies]

To: arthurus
The article makes inflation sound like some natural event that we must learn to live with like the weather. It isn't. It is a completely man-made phenomenon that needn't exist at all.

If the government didn't increase the number of dollars in circulation, inflation wouldn't exist.

31 posted on 12/23/2012 3:04:57 PM PST by BfloGuy (Workers and consumers are, of course, identical.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
The article makes inflation sound like some natural event that we must learn to live with like the weather. It isn't. It is a completely man-made phenomenon that needn't exist at all.

If the government didn't increase the number of dollars in circulation, inflation wouldn't exist.

32 posted on 12/23/2012 3:05:23 PM PST by BfloGuy (Workers and consumers are, of course, identical.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: arthurus
Any thinking American knows the truth: they walk out of a grocery store these days with very little to show for it except a massive bill. The increase in prices from just a few short years ago is almost astronomical. The media has nothing to say on the matter, because to do so would hurt Bath House Barry.

The EBT crowd doesn't know, and doesn't care. Why should they?


33 posted on 12/23/2012 3:12:59 PM PST by SkyPilot
[ Post Reply | Private Reply | To 1 | View Replies]

To: Alberta's Child
What you are failing to take into account is that inflation rates aren't based on what happened 40 years ago or what the prices were then. They are based on prices within the last few years, as opposed to what they are today. Taking this into account inflation is far higher than the government admits to. For instance, they do not factor the cost of fuel and food into todays so called inflation rates. As for the so called improvements on cars, many of them are unnecessary and arbitrary demanded by the government, improvements we could do without and be just fine. Plus the regulations and rules imposed on fuels are BS also and cost the consumer without any benefit to the consumer, Ethanol being a large case in point.

Bottom line is this, while their may have been some improvements on things over the years the main reason prices are so high is because the dollar is worth a lot less due to inflation, and the constant wage increase with corresponding price increases to offset them haven't helped either.

34 posted on 12/23/2012 4:31:59 PM PST by calex59
[ Post Reply | Private Reply | To 18 | View Replies]

To: HiTech RedNeck
Don't forget his minions, the teachers.

That is what they have been up to for the last fifty years.

The transformation is complete - as the French say: "Ze joke, she is over."

35 posted on 12/23/2012 4:42:27 PM PST by Aevery_Freeman (The trouble with the "masses" is that they never achieve the "m")
[ Post Reply | Private Reply | To 13 | View Replies]

To: arthurus
Two points need to be made.

First, despite the name, hedonic price indexes attempt to correct price changes for improved quality, not for pleasure. It's hard to do, and I've discussed this with folks from the government who try to do it. However, it's necessary. If prices weren't adjusted for quality changes, the resulting price index would be completely meaningless.

Second, the current CPI is a flat-out lie, which has nothing to do with hedonic indexing. They've eliminated the things people buy most, such as food and gasoline, on the grounds that these prices are "volatile," and by eliminating them they're getting at so-called "core inflation." This is simply an excuse for fudging the data.

36 posted on 12/23/2012 4:43:57 PM PST by JoeFromSidney ( New book: RESISTANCE TO TYRANNY. Buy from Amazon.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Alberta's Child
The same holds true for almost any product or service that involves technology that has advanced considerably over time.

Do tell. What milk , egg and bacon technology has advanced over the past four years to justify its increase? I thought tech was supposed to create greater efficiencies. Or did you go to some business school where they teach you to increase efficiency in order to increase costs?

37 posted on 12/23/2012 4:58:30 PM PST by Sirius Lee (Sarah Palin - "Republicans like Rove... are said to be concerned she will win.")
[ Post Reply | Private Reply | To 21 | View Replies]

To: arthurus
Why Reported Inflation Seems Different Than Reality

It's because it is different from reality.

38 posted on 12/23/2012 5:33:13 PM PST by Hoodat ("As for God, His way is perfect" - Psalm 18:30)
[ Post Reply | Private Reply | To 1 | View Replies]

To: steve86
yeah, the first three go down easy, i gotta force the last two down... 8^)
39 posted on 12/23/2012 5:39:43 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
[ Post Reply | Private Reply | To 30 | View Replies]

To: nascarnation

That formula is now being applied to our food market.

1) Govt gives EBT handouts to increasing portion of population

2) Grocers raise prices to soak up available funds

3) Government pays Food Stamp administrators excessive salaries

4) Food stamp administrators and recipients donate to and vote for Democrats.

We have passed the point of no return


40 posted on 12/23/2012 5:41:28 PM PST by Hoodat ("As for God, His way is perfect" - Psalm 18:30)
[ Post Reply | Private Reply | To 28 | View Replies]

To: SkyPilot

We still fill two carts for a little over $250, at Winco Stores here in the PNW. Of course, the price isn’t based on weight or volume, but basic foods, store brands and avoiding processed and convenience foods helps keep the damage down.


41 posted on 12/23/2012 5:57:02 PM PST by steve86 (Acerbic by Nature, not Nurture™)
[ Post Reply | Private Reply | To 33 | View Replies]

To: Chode
or years i've bought five candy bars at Wally's for an afternoon work snack for five bucks, last month they sent to $1.26 each.

If it were just candy that increased 26%, I could live with it but my health ins. premiums are sky rocketing and everything else one needs to survive, including all groceries and other absolute necessities, fuel, utilities etc. My water bill alone increased by 15% in 2012.

I'm pretty much on a "fixed income", I know we all are, in reality. My income is fixed at a pretty nice number but won't stay "nice" with rampant inflation year after year and I have the distinct impression that "we ain't seen nothin' yet". Bronco has 4 more years to really "f" up our economy.

It isn't a Mayan calender that will crash civilization, it's a-hole liberals and their moronic policies, both social and economic.

42 posted on 12/23/2012 6:28:42 PM PST by Graybeard58 ("Civil rights” leader and MSNB-Hee Haw host Al Sharpton - Larry Elder)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Graybeard58
oh i hear ya, believe me, my ins went up too... it was merely a simple example that even kids will see when spending their allowance
43 posted on 12/23/2012 7:09:05 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
[ Post Reply | Private Reply | To 42 | View Replies]

To: JoeFromSidney

They systematically eliminate the things that rise in price sayint that they are “seasonal” or it is an unusual phenomenon or such. but when something like oil rises rapidly, if there is not inflation then other things must fall because there is not the money to pay the ole prices for the other things when oil is taking up more of the money. That doesn’t happen. of course, because inflation is actually pretty high and getting steadily higher. The official assumption is born of the official static analysis which posits that people do not alter their buying habits or their tax paying/avoiding habits because of decreasing assets. It is absurd on the face of it but it is Official Economics.


44 posted on 12/23/2012 8:57:43 PM PST by arthurus (Read Hazlitt's Economics In One Lesson ONLINE www.fee.org/library/books/economics-in-one-lesson)
[ Post Reply | Private Reply | To 36 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson