Do you think the G manipulates the inflation numbers?

cohodk

What do you think?

rgCoinGuy

A good Primer Article

And to immediately bring to to be PM related, from the article:

"Whether you are a general investor or inflation-indexed beneficiary, the first and most obvious step is to choose to invest in the reality of tangible assets rather than symbols. These tangible assets could be gold, silver, real estate, energy or farmland, to name some of the most prominent examples."

MPLunatic

Obviously it would be in their interest. I'm sure they do to some degree or another, I wouldn't put it past them.

PerryHall

<< <i>Obviously it would be in their interest. I'm sure they do to some degree or another, I wouldn't put it past them. >>

PreTurb

I'm admittedly cynical and largely ignorant regarding all the different economic data that is presented to the public, but my suspicion is that most of it is tweaked for the purpose of scre*ing (or misleading, at the very least) regular folks and enriching the well-connected, the investment banks, etc. I think the behavior of the government/FED/Treasury and "Wall Street" over the last year has been, and continues to be appalling. Fortunately for the us, the rest of the world is reeling, and somehow the USD is still king of the hill.

Please continue with the intended thread & thought process, I'm just ranting a bit.

percyb

Manipulate? No. They outright lie about the inflation numbers.

cohodk

These are the inflation numbers reported this morning and showing there is some inflation out there. In fact they show inflation actually increased on a month over month basis. Do you believe these numbers?

Core CPI Y/Y +1.9% vs +1.8% consensus, prior +1.8% :
April Core CPI M/M +0.3% vs +0.1% consensus

mhammerman

I have an inflation linked bond as one of my "funds" in one of my retirement accounts. The yield is based on the govt provided inflation index, updated on a daily basis. This year to date this part of the fund has gained about 3% eventhough gold has risen about 12%, and TARP and the bailouts have added over a trillion in national debt and this is pure unsecured debt. In my daily watching of things I can say that when the stock market falls in a day, the inflation linked bond gains that day and when the stock market gains, the ILB falls. No correlation to gold close or POO or the TARP or the billions of bailout dollars, just the stock market correlation. The government can literally flood the economy with FRN's on a daily basis and gold can gain 5% in a week and half a million people can go on unemployment but the inflation linked bond doesn't even twitch. It seems odd that this parity exists...market down, inflation bond up...market up, inflation bond down...it seems kind of simple until you ask yourself if the DOW index and the rate of inflation are directly related somehow.

All the fund managers have in their prospectus that the inflation numbers are based on numbers provided by the government and that's what they use. The govt has gamed every number from unemployment to inflation and unfortunately many of the index funds are tied to these numbers. So, we're just one happy family after all...the govt. provides the numbers, the fund yields are based on these numbers but the inflation bonds have nothing to do with actual inflation, it is based on just what number the govt. puts out; yet the big institutional managers just keep pouring cash into these funds. So, the OP question...are the inflation numbers gamed...well, yeah. The follow up question is...so, just who is making out with this little arrangement...it sure as hell ain't us.

Gold is good, cash is king.

TheNoost

I think the numbers are correct, but the formulae the numbers come from has been chenged. Kind of like how the calculations for the unemployment rate have changed. Looks better, but reality shows otherwise.

roadrunner

I've listed many references here on how the CPI has slowly evolved over time to give the politicians what they want. Search for "CPI" and you will find detailed changes. John Williams keeps track of several series of CPI numbers, such as those from 1980, 1990, and present day. They are radically different. You can see the charts on his link in my sig line: "stats."

The first major change was in 1983 when the cost of homes was replaced with imputed rents. With home prices beginning to soar it was imperative to get them out of there considering they make up about 40% of the CPI. The goal was to install an "anchor" in the CPI making it 2X resistant to change. With rents stable for decades while home prices soared this was a big score for the govt. But now that home prices are falling and rents may be rising, this may kick back at them.

In the early 1990's Rubin and Clinton began massaging the CPI further. By the end of the 1990's we had subsitution and quality effects as well as hedonics. If the price of beef went up, the govt figured you would buy more hamburg, hence the CPI would be lowered. This basically changed the CPI from being a constant cost of living tool to one of an ever decreasing standard of living. If a computer's memory was tripled and had more gadgets but it's price stayed the same, it's "effective CPI" price would be lowered by approx 50% to show this "quality" improvements. This kind of logic was done for autos, washing machines and dryers, and a host of consumer goods. It doesn't matter if you use those features or get any real benefit from them, the govt assumes you did.

The CPI measures precisely what it is intended to monitor, a constantly changing basket of goods. Using 1980 govt methods, Williams calculates current CPI at +6.8% and with 1990 methods at +2.6%. The govt's current number is negative. All 4 are showing something different. It would take far higher real inflation today to reach those same CPI values seen in 1980 because of the index changes over the years.

Conspiculously absent from CPI are the multitude of taxes and interest rate payments that most Americans make. Those affect the cost of living as well.

John Williams explains basic CPI changes over the years

roadrunner

mhammerman

"Conspiculously absent from CPI are the multitude of taxes and interest rate payments that most Americans make."

We are being taxed and fee'd at about 50% of our income and that is significantly higher over the last 30 years since 1980 but that number is NEVER EVER mentioned in media, gov stats, or discussed on the 6 PM news. While the CPI or the managed inflation rate numbers have certainly been "massaged", there is no accounting for the tax/fee burden that has eroded our take home to where we actually do have fewer dollars to pay for the same goods and services than we did just a few years ago; maybe it's not inflation but it sure has the same effect because it takes more and more of your take home just to maintain your status quo...and the number of taxes and fees is scheduled to rise significantly over the next few years.

At some point in the near future we may be to the level of taxation that the Europeans now enjoy. If this was ever brought into national debate or if it even surfaced in media coverage, people would probably howl...you would think people would have some cognition of this situation but most folk have no idea and consequently they deserve exactly what they are getting. I'm sure that it's better if no one started griping about it. Folk should be outraged that we are hickied at half our incomes to pay for this abominably poor fiscal management by our leadership.

Quick taste:
Income taxes....about 28% off the top
Medicare taxes and social security taxes...add 9%
Realestate taxes...call it $500/month or maybe another 6%
Gasoline taxes, cigarette, liquor, and sales taxes...maybe a total of 4% or your income if you don't buy a new car or a boat or 3000 watt generator or anything bigger than a lawnmower.

So far...we're at 47% of your income right off the top and if you buy a fishing license, renew your car license, have any state registrations or permits, have a telephone or cable, any other thing including using the tollway or going to court...you are taxed/fee'd a little more. Some states even have a little state income tax to gnaw at youre take home just a little more...and what do you get in return for your greater than 50% usurping of your income? Well you get to pay for a bunch of folk to sit in air conditioned offices with nice computers and pensions and other little nice things...just to make sure you do pay your fair taxes and if you don't...hummmmmmm, it's gonna get worse.

So, maybe the CPI isn't moving much but you're taking home less and less and that little 3% annual raise isn't gonna touch it. Enjoy

SportsModerator

In response to the title. No worries, and yes, I believe their inflation numbers are the biggest load of horse crap bearing absolutely no semblence of reality. The game will soon be up.

PerryHall

<< <i>In response to the title. No worries, and yes, I believe their inflation numbers are the biggest load of horse crap bearing absolutely no semblence of reality. The game will soon be up. >>



Tell us how you really feel.

ProofCollection

I eat out every day for lunch (primarily at the same places), and a couple of years ago, I could get a meal with a drink for $5-6.50. Now the total is coming in at $6.50-8/day. It's hardly scientific, but I think it's a representative gauge.

ttown

Always have been and always will. You won't want anyone making money on Inflation Proctected Bonds would you? The game is ending, International players are noticing the game and it will end badly for the US. Sorry to say my country has fallen this far to the greedy.

cohodk

the CPI has slowly evolved over time to give the politicians what they want

This I mostly agree with.

I want to illustrate something with this months numbers as they showed very mild inflation. This was mostly caused by the increase in tobacco taxes. In fact, by some estimates this tax increase was responsible for 40% of the inflation increase. I think the G is trying hard to create inflation since there is no demand for money within the USA, unless you are a corporation trying to bail out a union. Raising taxes on goods/services is a great way to acheive inflation. I think we should expect more taxes in the coming year and not just on income. A VAT would be a great way to hammer home inflation.

But to my point on why I started the thread. I do think the G in manipulating the inflation numbers to make them HIGHER than actual. They are doing this to entrain inflation expections into consumers psyche. If America thinks they can get something next month cheaper than they can today, they will hold off on consumption and push the USA deeper into Re-depression. This has been part of the housing depression. As a % of income, residential real estate is the most affordable in a decade. Granted real estate was GROSSLY overvalued in about 10% of the country, but the other 90% is now feeling the pinch because real estate deflation expections are high. This, I believe, is the driving reasoning behind the quantitative easing. The G is really pulling out all the stops to halt the real estate depression.

Producer prices--in the pipline to the consumer--are still running at negative numbers, but expect to see more "inflation" in the coming months. Hopefully producers will have better pricing power soon, or the G may have played its hand too long.


What do you think?

garsmith

I don't think the G manipulates the inflation numbers. I think the illuminate that manipulate the G manipulate the inflation numbers.

COINB0Y

They are trying to tell us that spending 3 Trillion Dollars in less than 6 Months will not ignite inflation...just look st the CPI !


This Link calls out the lie and says it all ! What a Trillion looks like. Now multiply it bt 5-8 Trillion and beteen the Fed and Congress that's what's happening, baby!

ttown

Well I for one think inflation is much higher than it reported and the G stats are just that they present the picture they want to spin.

Let's take food, utilties, and medical as examples. Noting that most Americans get a little raise if any in the last several years.

Paper towels, toliet paper - Go to Walmart and see how it's at least 10 % higher now than at the peak of comodies.
Food- have they decrease? No in fact they are now higher.
Medical- My company held the line on our cost but pay much less. Now instead of a copay it's 20% of the cost that is going higher and higher.
Guns/Ammo- these have doubled and tripped in price if you can even buy it. Some deflation
Electric/propane- Propane has dropped from it's high of 2.50 a gallon to around $2.25 even though the price of oil is 1/3 of it's peak. My electric bill is as high as ever not to mention trash pickup sewage cost have risen.

So where's the deflation? Oh over priced cars and housing that have been overbuilt for years. Both were high and the bubble has broke. Americans were buying cars for years and now they've had enough. I consider those items as over priced not a funtion of deflation. Funny a year ago everything was cheaper but we hit a bubble and it drops all of a sudden it must be deflation because the raw materials went way down, not in my mind the end user got very little benfit. Next time you go to the store notice everything is getting smaller for the same price or a little higher. I guess I just notice the games companies play. Even my little debbie are higher and less product. Get ready for the next round of taxing they are now thinking about throwing junk food like chips into health taxes like smokes and drinks.

The main question is are you better off today than last year? No one I know claims to be in fact our buying power with no raises have been chipping away my buying power for years. In my mind they want the inflation looking low so they can pick and choose how to get tax money from the people and a new round of taxes are upon us even though they won't call them that

cohodk

<< <i>They are trying to tell us that spending 3 Trillion Dollars in less than 6 Months will not ignite inflation...just look st the CPI !


This Link calls out the lie and says it all ! What a Trillion looks like. Now multiply it bt 5-8 Trillion and beteen the Fed and Congress that's what's happening, baby! >>



There is no misconception that a trillion is a HUGE number. In fact I have written about it.

We must keep in mind though that the USA is a $13 Trillion economy. Even the GDP of Spain is over a Trillion $.


Capacity utilization was reported last week at 69.3%. This means our 8 cyclinder economy is only running on 5.5. Inflationary forces usually do not begin to have an impact until we are over 83%. In other words we have room for a 20% increase in production before we have constraints on capacity. Does anyone see the economy expanding 20%?

roadrunner

As per Milton Friedman, inflation is always a currency event. And I would agree. That's not to say that inflationary or deflationary forces can be well-masked by deliberately manipulating the published statistics such that the masses believe one is happening when in fact it's just the opposite.

The business conditions that exist at the time of dramatic increases in the money supply (i.e. rising economy or falling economy) do not play a significant role. You can have strong inflation in a depression, recession, or during a boom. Any currency can be strongly debased in any type of business environment.

roadrunner