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