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So you been to school for a year or two
And you know you’ve seen it all
What have you seen today?
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There is a bitter and unconscionable irony in the person who has said:
Of President Obama:
“If Barack Obama becomes the president in November, again, I will either be dead or in jail by this time next year…”
Of illegal immigrants:
“In an unauthorized entry, armed like they are right now, invading our country, I’d like to shoot ‘em dead”
“I’m a black Jew at a Nazi-Klan rally. And there are some power-abusing, corrupt monsters in our federal government that despise me because I have the audacity to speak the truth.”
On gun control advocates:
“Anybody that wants to disarm me can drop dead. Anybody that wants to make me unarmed and helpless, we’re gonna literally create the proven places that where more innocents are killed called ‘gun-free zones,’ we’re gonna beat you. We’re gonna vote you out of office, or suck on my machine gun, you can take it whichever way you want.”
On candidates Obama and Clinton:
“Hey, Obama,” he said, guns in hand. “You might wanna suck on one of these, you punk.”
He continued, “Hillary, you might wanna ride one of these into the sunset, you worthless b—-.”
On South Africa:
“Apartheid isn’t that cut and dry,” Nugent said. “All men are not created equal. The preponderance of South Africa is a different breed of man. I mean that with no disrespect. I say that with great respect. I love them because I’m one of them. They are still people of the earth, but they are different. They still put bones in their noses, they still walk around naked, they wipe their butts with their hands … These are different people. You give ‘em toothpaste, they f—ing eat it … I hope they don’t become civilized. They’re way ahead of the game.”
Now believing he has anything worthy of being heard. Unbelievably, he does:
“The ugly and dangerous truth is that we live in an embarrassing, politically correct culture that exalts and rejoices in the bizarre; aggressively promotes an “anything goes” value system; and vilifies, condemns and mocks traditional societal values and customs at every opportunity.
We’ve embraced a culture of contempt that attacks the very institutions that make for a healthy and strong society, and then we’re shocked when it spirals out of control. The only thing I’m shocked about is that anybody is shocked.”
How could America go wrong with such stalwarts?
Lies, Damned Lies, and Statistics…
Why Reported Inflation Seems Different Than Reality
For one thing…“The government produces a measure of inflation called the consumer price index (CPI) which is generally broken down into two reports: Headline and Core. The only difference between the two measures is that the core reading strips out the volatile food and energy components. It is this core reading that economists, and the Fed, focus on much to the aggravation of average consumers who quickly point to the fact the food and energy are big part of their daily lives.”
But why? WHY?
“Shortly after Clinton entered the White House the Bureau of Labor Statistics (BLS) altered the calculation of inflation by changing the weighting of goods in the CPI fixed basket. Then, over subsequent years, the method of weighting the underlying components was changed from a straight arithmetic weighting method to geometric. The primary result of the switch to a geometric weighting was a lower weighting to CPI components that were rising in price, and a higher weighting to those items dropping in price which led to lower reported inflation.
According to John Williams:
“…the net effect was to reduce reported CPI on an annual, or year-over-year basis, by 2.7% from what it would have been based on the traditional weighting methodology. The results have been dramatic. The compounding effect since the early-1990s has reduced annual cost of living adjustments in social security by more than a third.”
“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.”
“…there is “intervention analysis” in the seasonal adjustment process. Intervention analysis is critical to the highly volatile areas of food and energy. When a commodity, like gasoline, goes through periods of violent price swings the BLS steps in and uses “intervention analysis” to smooth out the volatility. As a result, sharply rising gasoline prices are never fully reflected in the reported headline inflation number. However, declining prices, which are never adjusted, do show an impact to reducing inflation.”
But wait! There’s more!
“In the latest attempt to save the economy from the “fiscal cliff” a grand bargain is being crafted that will possibly include a relic from the debt ceiling debate in 2011 called “Chained CPI.” As with the Clinton Administration, once again the need to reduce government spending has given rise to a proposal to further suppress the measure of inflation to reduce the cost of living adjustments for social security recipients. The issue with “Chained CPI,” as with the current measure of CPI, is that it will further misrepresent what the average consumer is living with from day to day.
The Washington Post stated:
“Economics and policymakers generally make the assumption that when prices rise, people will turn to a less expensive product. They’ll buy chicken instead of more expensive beef, iceberg lettuce instead of arugula, store-brand, instead of name-brand cereal. The chained CPI attempts to account for how people react to inflated prices.
It’s an arcane detail in the ongoing budget debate, but the chained CPI is appealing to budget experts and some Republicans and Democrats, because it only slightly tweaks the inflation formula, while building significant savings over time, perhaps more than $100 billion over a decade.
Making such a change also means paying out less in Social Security benefits over time — something liberal Democrats can’t stomach. Imagine, for example, a person born in 1935 who retired to full benefits at age 65 in 2000. People in that position had an average initial monthly benefit of $1,435, or $17,220 a year, according to the Social Security Administration. Under the cost-of-living-adjustment formula and 2012 inflation, that benefit would be up to $1,986 a month in 2013, or $23,832 a year. But if payouts were adjusted using chained CPI, the sum would be around $1,880 a month, or $22,560 a year — a cut of more than 5 percent and more as the years go by.”
All of “…these manipulations is…changed the measure of inflation from a cost-of-living adjustment to a reduction-of-living adjustment.”
Speaking of “reality” and what it can collide with:
“Randolph Linn, 52, accepted a plea deal in which he pled guilty to all charges in connection to setting a fire in the prayer room at the Islamic Center of Greater Toledo on Sept. 30. Under the deal, Linn is expected to serve 20 years in prison instead of 40.
Linn explained to the court that he had gotten “riled up” after watching Fox News.
“And I was more sad when Judge [Jack] Zouhary asked him that, ‘Do you know any Muslims or do you know what Islam is?’” one mosque member who attended the hearing recalled to WNWO. “And he said, ‘No, I only know what I hear on Fox News and what I hear on radio.’”
“Muslims are killing Americans and trying to blow stuff up,” Linn also reportedly told the judge. “Most Muslims are terrorists and don’t believe in Jesus Christ.”
Raw Story (http://s.tt/1xuMg)
My plain speaking pal, Barry Ritholtz did a good take down on that CPI mess. Interesting it is framed as “Shortly after Clinton entered the White House…“, when that is not precisely where the blame lies.
The Boskin Commission was formed by the GOP Senate in 1995 and the detritus has followed us since.
There is seldom a bad idea that was not served up by a Congress with members from both parties.
4 – thank you for the links, Sandi, Ritholtz is right on target.
And if you would kindly remove your partisan blinders when you read the piece that I linked, you will see that the author stated the tinkering with the formula began under Reagan, in the 1980s. The Clinton administration took them to the next level and codified some of the things that were happening behind the scenes, but no, they didn’t start with Clinton. Again, if you’d removed the partisan blinders, you’d have read that (assuming you read it at all). It makes a discussion with you so much more enjoyable to not have to constantly explain that I don’t care about parties.
All of which is beside the point. It is less critical WHO enacted the changes (as you noted, both parties are complicit), but that the changes were implemented at all.
And more distressing, to me anyway, is that normally rational people, when presented with the evidence, continue to use the “official” CPI as an indication that inflation is somehow under control…
…in spite of the documentation that the government has been monkeying with the statistics, and in spite of what they see with their own eyes in the grocery store.
That’s a faith in government that borders on fanaticism.
As an aside, the real catalyst of this need to tinker with inflation rates actually happened on August 15, 1971, under Nixon (a Republican, for those of you who care about such things).
Yes, it is beside the point but you never miss the chance to belabor it.
I have never made any bones about not being partisan. I am unabashedly partisan and I point out what I see when I see it. I have no plans to stop and you are under no obligation to have any discussion with me.
I have never professed any “faith” in government. I have faith in the Constitution, our nation of laws and our ability to pick our representatives. Not that we do a good job of it. We will never be more than an imperfect union, but there is no better country, no better way, no better place to be.
The CPI formula serves a purpose for the government and that is why they go with it. It does not change reality, it never has.
If you ended it tomorrow the payments through Social Security would do what?
Sandi, since SS (and some other things) are indexed to the CPI we can’t end it, and that’s not what I am advocating. What I want is to return to honest accounting, using the formula before they started monkeying with the formula back in the Reagan administration (a Republican for those who think it matters).
Impact on Social Security payments? Well, we would suddenly owe a lot more, because it would be revealed that we’ve been underpaying for 30 years or so.
Since we still can’t afford it, what do YOU think would happen?
I’m thinking one of four things:
1 – since we’re so far in debt anyway, Uncle prints more money (inflates the currency) and pretends to pay them…increasing the CPI and ushering on hyperinflation;
2 – Uncle realizes he can’t afford it and re-monkeys the formula to hide the fact that inflation is out of control (repeating history);
3 – some combination of 1 and 2;
4 – Uncle has an epiphany and realizes we need sound money and sound monetary and fiscal policies.
My best is on 3. What about you?
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Fri, 24 May 2013 22:01:28 +0000