Thursday Outlook: The Inflation Con Game 19 comments
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The Fed minutes released Wednesday afternoon stated that they’re going to do what they can to stimulate growth now while leaving inflation concerns for another day. So the dye is cast.
Yesterday's release showed “official”
inflation data running over 4% but of course that’s a joke.
The table below courtesy of Shadow
Government Statistics shows CPI calculations using today’s method, another
experimental method [in the works no doubt] and the method before Clinton & Co.
changed the methodology.
So, based
on the old method inflation is running near 8%.
The next table shows inflation measurements using methods as they stood in 1980 and by that measure inflation is running at nearly 12%!
Why do they make these changes? Use your imagination. But, certainly making things look better than they are is one reason and another is entitlement benefit [Social Security, etc.] costs would be adjusted higher under the older methods. Is this con game a scandal? It damn well should be but most are unaware of it.
After watching the opening I couldn’t think of many reasons investors would bid stocks higher. But that’s just silly ol’ me. There is cash on the sidelines as investors’ fund their 401K’s and so forth. Evidently some bought into the idea that the Fed will cut interest rates again soon [aren’t you tired of this chant?] and then will raise interest rates “quickly” once economic growth returns. One headline suggested stock investors believe the Fed doesn’t think inflation is a problem while another suggested the opposite. Rigging the data can confuse headline writers.
Anyway, stocks did rise after another 200 point intraday swing. Breadth and volume wound up being 'good'.
click to enlarge
More important really is the reaction of bonds and other sectors to both inflation data and Fed minutes.
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This article has 19 comments:
Why is it that blame always goes to the one who finally signs what's been hashed out on Capitol Hill. There are over 400 members in the House and 100 more in the Senate, all supposed to be smart people who make the laws. Clinton, Bush - I don't really care. Congress is the real culprit who taxes and spends recklessly.
Presidents get all the credit and all of the blame when in fact the only true "control" that they have is in the defense department.
It has surely been disappointing how Bush the Younger could not control his allies in DC. But I suppose he had to in order to continue funding defense in that wacky world of give-and-take politics.
And write all you want...Bush's legacy will be Iraq, and saving the US from a terroristic onslaught. Clinton's will always be Lewinsky. Funny how history works.
Sure, we can quibble all we want, about congress, republican, democrat, iraq, lewinsky, terrorism and the whole shebang. The truth is, that the truth is known to just about 20 people at a time, who have a close knowledge of any situation. The rest of 300 million people are just being manipulated by interpretations and hearsay, and the worst one - the tube. The more one watches the tube, the more misguided (happily self-perceived knowledgeable) one will be. The Sacred Cow #2 should be extended to beyond the market hours and specify what channels to block out permanently! Enlightenment comes from books, not from the tube.
For the record: Shadow stats is a legitimate and respectable website that I have much confidence in. In the governments cpi figures:none
Humor me and estimate something: how much have prices increased--for real--since 1980? Then apply this back of the envelope calculation to gold, oil, silver.
First: Look at the shadow stats graph of inflation for 1980 through 2008. Look at the SGS alternate line blue) and estimate inflation over that 28 years.
I get 7% if I'm generous,(give or take, no?)
That means, roughly, that prices double every 10 years.
Second, take the high for Gold in 1980 ( chose 850, or 875).
Third, project, (always dangerous) to the end of 2009. Thats 30 years from 1980 to 2009.
30 years divided by 10 years to double and you have three doublings which equals--up by a factor of 8. Yikes!
Fourth, take 8 times 850 and you get $6800 for gold/ounce or if you prefer 8 times 50/ ounce for silver and you get $400.
I don't pretend to predict what will happen--I'm aware of multiple faults in my methodology--I'm merely stating what is possible, given the current environment. People aren't panicked because theyve been lied to, and the media isn't savvy or courageous enough to report it.
But the tsunami of dollars that are circulating in the world will eventually hit our shores (as US Dollar loses its reserve status ever so gradually) and we will see much higher inflation for a decade or more. That is a prediction.
Interesting eh?
According to the NY Times, “Mr. Greenspan's proposal was greeted enthusiastically by Republicans on Capitol Hill. He appeared to offer a way out of one of their biggest quandaries: how to cut spending on Federal entitlement programs without a specific vote that would clearly tamper with politically sacrosanct Social Security benefits. It would also allow Congress to increase tax revenues at a faster rate without requiring a political death wish: a vote to increase income taxes. …Indeed, House Speaker Newt Gingrich went so far as to threaten to withhold financing from the Bureau of Labor Statistics -- responsible for compiling the monthly consumer price report since 1919 -- unless it changed its approach. (NY Times, Feb. 22, 2008)
Truthfully, it was Speaker Gingrich and the 1990’s Republican Congress who were responsible. Does David Fry intentionally misrepresent the facts or is he just uninformed? Those who would undertake journalism at the very least have an obligation for the truth; and hyperbolic slander has no place in legitimate publications, even if they are online. One should only hope that Mr. Fry is not as cavalier with his investing advice as he is with the truth.
HOW TO BRING DOWN INFLATION WE OUT OF GOLD STANDARD
FED FREE TO PRINT MON AND ISSUE BOND EASY TOOL IN HAND OF POLITICS HOW WE BRING PRICES DOWN FISCAL POLICY SOLUTION
MANY WAYS AND MEANS DIRECT AND CONTROL EFFECT MONETARY
NOT EFFECTIVE POLICY . thanks Dr B
And hence, there is one almighty who knows it all, and can veto? Sorry, doesn't stand to reason, because there IS no perfect human, and must not be allowed to overturn the will of the people, supposedly represented by the republic office holders [congress].
"... recklessly invaded Iraq on his false data ..."?
Greed is more appropriate. All the facts point to that. It was a planned act of greed. Just look at the beneficiaries and the act is hard to miss, if one is willing to see.
Mr. Fry has really touched on some sensitive nerves by mentioning the CPI. Now, it's all politics. We cannot change the system through blog reviews and comments. We need some serious change in how we think. One soul at a time, I suppose. OK, now we get back to the CPI. :-)
The problem with facism and socialism is that they lead to lower standards of living because of the systematic destruction of free markets by monopolies. With socialism you get government monopoly and fascism government endorsed monopolies. Furthermore governments in both economic systems control production through spending decisions. Supply is also centrally controlled manly through spending decisions. This leads leads to misappropriation of resources and hence lower standards of living. If price is set to high to much of something is produce. If price set to low than their is a shortage. When people start standing in lines for government issued toilet paper they get upset. Than the Fascist or Socialist (both have done this throughout history) identify a scapegoat for the people to distract them. Than they throw the innocent into furnaces.
FDJ10595 your on the right track...but Christians are as upset about the very things you cite as everyone else. In fact more so because they tend to think more than the avg American. In polls Christians are split up favoring all kinds of Candidates. I for one support Ron Paul.
Careful because your comments about extremist Christians (you fail to cite any extremism...unless disagreeing with your ideas qualifies) makes you sound like a soon to be Nazi. If and when our economy falls apart our Facist and Socialist leaders will blame each other. Once one party controls will you be so easily lead.
I suppose the democrats pandering to the Christian left is OK. More welfare, government forced morality, etc... The point is that Christian influence is as diverse as the rest of the Americans. You sound foolish
At this point I really don't like any of the presidential candidates. I'll be voting for gridlock.
Thats what was missing from the back and forth above guys. Spending is only somewhat abated when the power is split between the parties. They bicker and nothing gets done which is usally a good thing relatively speaking.