Economy Sinking Government Knows & Giving Bad Info

reply to post by LightinDarkness


You have asked for evidence that the government is being deceptive in their reporting fo data. There is the proof.

Your opinion as to why the entire basis of the CPI was changed is meaningless. The fact remains that they changed it, and the resulting figures were more favorable to them. If you choose to believe the explanation spoon fed to you by a deceptive government, that is of no concern to me. Believe what you want to. That is exactly why they changed it in the first place. So people would not see the truth. I for one, do not choose to believe lies that are told to me.

To members who may not understand what I have shown, the graph represents three different measurements of the Consumer Price Index. This is basically a measure of the purchasing power of Americans, or more accurately, the decline of purchasing power.

You can see that in the original method of computing change in the cost of goods to consumers, the CPI was at about six and a half percent in 2001, and climbed to nearly eight percent by the end of 2007. This measurement is diplayed in blue.

You can see that in the "official" measure displayed in orange, that the change in the cost of goods is displayed as being far less. This is because the government had decided to change how they measure the cost of goods to consumers, reflecting numbers that appear to be more favorable to consumers.

The yellow line represents an "experimental" method of measuring the CPI. As you can see, those figures are even lower than the official measure, and are therefore even more favorable in appearance. I expect this measure will soon replace the official measure, to further enhance the falsehood of less increase in the price of comsumer goods.

reply to post by jackinthebox


Great Find.

Originally posted by LightinDarkness
The CPI index measures the cost of a market basket of goods and offers FULL DISCLOSURE of what it measures in every government publication.
CPI measure changes because the market basket of goods that the average American buys changes over time.

Statistics are like enemy combatants...they'll tell you anything you want to hear if you just torture them long enough.

Since Clinton/Greenspan, Fed monetary policy only responds to 'Core CPI' datam. As we all know, Core CPI excludes the consumer costs of food & energy. Basically, this exclusion and policy change, is the crux of the popular debate over the CPI's reliability as an accurate inflation indicator.

But there were other 'modifications' under Clinton/Greenspan as well...they read kinda like Bill Maher's 'New Rules'. Remember, first & foremost, the Fed is a bi-partisan political tool...a harlot...loyal to which-ever administration happens to hold the power. The real incentive for creating artificially weak inflation numbers was political as well as fiscal: balance the federal budget deficit at all costs, and simultaneously put a feather in the admins' hat. Reduce massive payments on rising, inflation adjusted entitlements (i.e. social security & pension benefits), by hiding real inflation, even if it means throwing loyal, unsuspecting, fixed-income Americans under the financial bus.

Traditionally, the CPI was measured against a fixed, weighted basket of goods & services. This is another practice that changed. Now for example, the inflation stats can be manipulated by simply replacing more expensive goods with less expensive components. But this is really a lessor evil, since the actual index components are only changed-out once every decade or so (approx). What is adjusted however is the amount of weight each component receives. Here's how it works hypothetically; if the price of beef is rising, the BLS can make the assumption that most consumers will substitute hot-dogs...the less expensive item receives a higher index weighting than the more expensive item...and Viola!...inflation moderates. Like one guy said..."What do they expect us to do when gasoline prices go-up...throw a few hamsters and a tread-mill under the hood?"

Originally posted by LightinDarkness
....disinformation agent rule #1: distort reality with pretty pictures.

Right. Here's a reality-tweaking snapshot right out of the BLS family album...their most egregious method for under-reporting inflation called; “Hedonic Regression.” No kidding! They attempt to offset price increases against improvements in quality that add to your pleasure. So if a given car costs 5% more this year than last year, because the manufacturer added padding to the upholstery...the increase in your pleasure will be calculated at 5%...therefore offsettting the price increase...no change on the index...no inflation...it's a wash! Same for stereos, computers etc.

BLS website: Hedonic Regression Models

reply to post by OBE1


Thanks for the post, I was wondering when you will step in, I love the way you present the way government legally can play with consumer minds to Let them think that this the way things are and has always been.

Just go out there and keep spending the money that you don't have with confident

[edit on 7-1-2008 by marg6043]

Yup that is a good post. Thanks for your input.

Merryl Lynch coming out today and saying finally what I have been saying for a few months we are in a recession. I find it odd only one news org printed it the BBC. CNBC or Fox Business or any of the others I didnt see it at all. Hmmmmm

More CEOs resigning their post as the morgate mess hit closer and closer, so far 90 thosuand jobs been lost within the morgage financial institutions.

My morgage company took a dive today in the markets and now is rumors of banckrupcy, I will like to know what that means for people like me that have their morgages with them.

U.S. Leaders See Time of Crisis

The United States is experiencing a crisis equivalent to World War II in slow motion, says a former governor.

An air of impending crisis filled the speeches of 17 prominent U.S. politicians from across the political spectrum at a forum on bipartisanship at the University of Oklahoma Monday.

www.thetrumpet.com...

reply to post by marg6043


You will still have to pay your mortgage that is the bad news It doesnt go away some other bank buys it out or the government sells it in the form of bonds. The only thing that will change is who you make your check out to. Yes I heard this has been a rumor for a while Countrywide tanked today. I was told 6 months ago by someone lets say close inside that they might go under this year. Its scary.

reply to post by mybigunit


Yes, now that the interest rates may be taking another cut to below 4 percent we are seriously thinking to refinance with another mortgage company. Our rates are 7.25 so right now anything under 4 looks mighty good.

See good news after all...I just wish Bernenke would quit beating around the bush and do a 1 point cut. Hell Id do some refinancing at that point

The CPI functions as a proxy measure of consumer inflation. The explanation several posts above distorts what CPI is and why it must change from time to time. The CPI MUST change if it is to actually be a VALID measure of consumer inflation. If it DID NOT CHANGE, then it WOULD BE deceptive.

CPI is an index which measures the changes in prices for a selected market basket of goods that represents goods which the "average household" purchases. I know of no economist or public policy analyst who believes CPI the best way to measure inflation, me included. This is because the overall status of the economy cannot be generalized from a select market basket of goods, and even trying to figure out what the average market basket of goods consists of is incredibly complicated and error prone.

Nonetheless, it is a case where CPI represents the "best we've got" when measuring consumer inflation. No one is happy with it, but no one can propose anything better. But the index must change because consumers do not continually buy the same thing. What most people bought ten years ago is different today, with the exception of some food staples. The market basket of goods changes over time, so the impact of inflation on the consumer changes as most people drop or add items to their market basket. The CPI changes when BLS notices that a material threshold has been reached to where consumers have deviated from the previously measured market basket of goods.

Every CPI report explains in detail exactly what the measure means and what is included in the market basket of goods. Every change to the CPI includes in painstaking precise detail what was changed, and why. Please tell me how this is a lie? All you've shown is that the CPI measure changes, and have incorrectly called it a measure of purchasing power - which is factually wrong - that is GDP (which of course is going up, which is why you did not include it). The CPI is a proxy measure of consumer inflation, and it SHOULD change as consumers buy different things. The government tells us exactly why it changes and what items were added/droped - so please tell me how this is a government "disinformation" attempt.

This all comes down to actually analyzing the data. People can choose to believe what mass media hype and conspiracy websites tell you, or analyze the data and come to your own conclusions. I analyze the data.

I for one am happy that the government spends the massive time and resources it takes to update and improve their own measures. I would indeed suspect a conspiracy if the government set up a measure and did no further research to improve it to make it more reflective of reality.

Now, where is this proof of some government lie on statistics again? After all, if the government was intentionally trying to be deceptive HOW IS IT that the BLS even publishes an experimental CPI measure and compares it to the current one? How is it that the BLS publishes reports explaining when and why the measure is changing? If its all a huge conspiracy to cover up and cook the numbers, how is it that any of this information is available? If something deceptive was actually going on, why not just change it and never mention it?

[edit on 10-1-2008 by LightinDarkness]

...that is GDP (which of course is going up, which is why you did not include it). -LightinDarkness

The Gross Domestic Product has little to no impact on the average consumer, when the increase is absorbed by the wealthiest top 3% of Americans. "Trickle down" is a theory at best, and deliberate disinformation more likely. That's why I didn't include it.

reply to post by jackinthebox


CPI is not purchasing power, GDP is. Have a better measure?

reply to post by LightinDarkness


CPI reflects the purchasing power of a dollar. GDP measures the total number of dollars spent. Which inflation index to use is more of a class issue than anything else. The increased costs of food and gas hardly makes a dent in the cost of living for the upper wage earners, while it makes a significant difference to the lower wage earners.

On a macro level the differences between the new and old methods becomes statiscally small, though on a micro level the lower class is getting killed.

Good news is fed is ready to act in a big way. Bank of America is going to buy Countrywide, which should lead to more expanded lending. Rumor is that the Gov may be giving every citizen $1000. If this occurs it should more than make up for the higher cost of food and energy for the lower classes. Best of all, everything combined should mean a booming stock market for the balance of 2008. Sell your gold and buy stocks.

reply to post by disgustedbyhumanity


I'm sorry, thats just factually incorrect. The CPI is and only has ever been advertised as a measure of consumer inflation. Inflation does not measure raw purchasing power, it is one component in a much larger economic picture that is taken into account when considering purchasing power. CPI is a even smaller component of inflation overall, as it only measures consumer inflation. Using it in any other way than to measure average consumer inflation would be playing games with statistics - although I know people do it anyways. You are also factually incorrect about GDP. The GDP is a comprehensive measure of the value of all goods and services that are produced in a geographic area within a period of time. It takes into account the value of innumerable things which are not directly impacted by cash transactions - such as production materials that are not yet final products.

I agree through, the index you use is highly dependent on the target population. For example, I know local governments use a government-specific index that measures inflation for average purchases of certain government goods and services.

I hope the government does not intervene, and that $1,000 thing - I think - was one of Hilary's early campaign appeals to the radical left. She was going to give $1,000 to everyone to start out their retirement savings before it was pointed out what a bad, bad idea that would be. I think she's retracted that now - but even if she hasn't, it would never go through until several months after she gets in...assuming the Democrats continue to hold Congress. Government spending only slows down the inevitable cyclical recession, and increases debt.

reply to post by LightinDarkness


I am amazed that I have found something that I can agree with you on, but probably for very different reasons. I think handing out checks to people is a bad idea as well. Not that I couldn't use a thousand dollars, but it's a clear sign of much deeper problems. After all, Bush mailed a check to everyone when he got in, and then ran the country into the ground in more ways than economic. We don't need cheap politicians trying to buy us off like the prostitutes that they are. We need real solutions.

$1000 check is not going to do anything for our economy, it will be nice to have but people are hurting right now they will use that money to play catch up or hoard it in case the sky falls.
Most people who are scraping by due to INFLATION are not going to take that money and go out and buy the latest flat screen, they will pay their utilities, catch up their mortgages or car payments, buy groceries and top off their tanks. And they will put that money towards all the things previously mentioned before paying unsecured credit card payments.
The poor, lower middle and middle class make up the majority in this country and as another poster put it they have been thrown under the bus.
As inflation and gas prices continue to rise, the dollar takes a nose dive, unemployment will continue to rise and forclosures and repos will become an epidemic far worse than the "subprime" debacle, we are already seeing conventional loans start to fold.
We can talk about stocks and rate cuts all we want but the damage has already been done.

reply to post by jackinthebox


Actually I think we do agree - offering people checks equates to prostituting our votes. Sadly, I think many people would take it though. I am unsure of what your referring to by Bush sending a check out to everyone though...

reply to post by LightinDarkness


You didn't get one? When he first got in he mailed everyone a check. I think it was for overpayment of taxes, or something along those lines, based on his new method of taxation I think. It's been a while. I only got a Benny or two, but I did cash it. I would cash the grand too, bashing the politician who gave it to me all the way to the bank. The only way I wouldn't cash it is if there were an actual movement to not cash them. One big flip-off to the you-know-whos.