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CPI

Lies, Damn Lies and Statistics

Submitted by Roanman on Sun, 04/03/2011 - 07:57

 

The official, published chart for the Consumer's Price Index located on page 5 of the Bureau of Labor Statistics' "Detailed Report for January 2011" looks as follows.

"Core Inflation" as they like to call it is running at about 1.5%.

  That's not so terrible.

I personally would like to see it at 0% or even negative, but what the hell do I know?

Except, as many of us know, "Core CPI" doesn't include food and fuel.

Hmmm ..... I'm thinking government economists must not eat or drive.

 

 

The other day at the facebook page for this site, someone plugged John Williams' outstanding site, Shadow Government Statistics.

Despite the fact that we've known about this site for a long time, we've never really explored it thoroughly, mostly because so many of the people that we read, are reading it for us.

Once again, big mistake.

Anyway, to begin with the primers are free, mostly 12-15 paragraphs, easy to read and enormously worthwhile.

The following short excepts from Mr. Williams' primer on the Consumer Price Index offer some insight into the hows and whys of those items and calculations that do go into the CPI, and in so doing go a long way toward explaining how it is that government economists neither eat nor drive.

 

Inflation, as reported by the Consumer Price Index (CPI) is understated by roughly 7% per year. This is due to recent redefinitions of the series as well as to flawed methodologies, particularly adjustments to price measures for quality changes.

The CPI was designed to help businesses, individuals and the government adjust their financial planning and considerations for the impact of inflation. The CPI worked reasonably well for those purposes into the early-1980s.

In recent decades, however, the reporting system increasingly succumbed to pressures from miscreant politicians, who were and are intent upon stealing income from social security recipients, without ever taking the issue of reduced entitlement payments before the public or Congress for approval.

In particular, changes made in CPI methodology during the Clinton Administration understated inflation significantly, and, through a cumulative effect with earlier changes that began in the late-Carter and early Reagan Administrations have reduced current social security payments by roughly half from where they would have been otherwise.

That means Social Security checks today would be about double had the various changes not been made.

 

 

As always, click on the above chart to link up to the entire piece.

Way, super double, highly recommended.

 

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