Thursday, June 23, 2011

Feds look for new ways to lie to us

WASHINGTON -(Dow Jones)- Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks.

According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically.

Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government.

The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report.

According to two congressional aides familiar with the budget negotiations, the shift is being "seriously discussed" as part of the ongoing talks to strike a budget deal, that would be used to ease the passage of a required increase in the country's debt limit.
Read the rest here.

Here we go again.  How many ways can Washington Pols lie to us and rob us at the same time?  The current methodology is already wildly inaccurate in its measurement of inflation.  (It has been changed several times since Jimmy Carter's tenure in order to lower inflation numbers.)  This is just more of the same financial repression and cooking of the books that Washington tries whenever the red ink gets a bit too thick.  They are printing money at record rates and now they want to hide the inflation they are creating while stiffing people to whom they promised benefits that would be indexed to inflation.  Most of those people would of course be the old and the very poor.

One group of people that will also get robbed will be those poor saps who were/are dumb enough to buy TIPS (Treasury Inflation Protected Securities).  Those are government bonds that are supposed to protect the holder from inflation.  You can kiss that money good-bye.

Yes ladies and gentlemen, Washington DC is inhabited by a pack of low life lying scoundrels.  But they are our low life lying scoundrels and we love them.  After all we keep electing the bums. 

P.S.  I had to rewrite that last paragraph about 5 times before I got it clean enough to post on a Christian blog.


Anonymous said...

US politicians have been lying to the American people for a very long time. This is nothing new. Just the level of outright depravity and barely veiled attempts at hiding the truth is what has changed. Each of the two political parties (two sides of the same coin) just keep selling us snake oil election after election, and finagle the numbers so that they can stay in power, hoping the American people don't wake up. Nothing will change until We the People realize that we've been sold a bill of goods, that the system is completely broke and that the government is feeding off of us, not helping us. I would argue that they haven't intended to help us for at least 40 years. This is not the America I grew up in and learned to love. I am very much afraid of the monster our government has become, all the while we've pretty much sat back and silently watched.

I used to think the French were nuts, always protesting and rioting in the streets, blocking highways with tractors, etc. Now I've learned that maybe they're the ones with the real guts: their government is truly afraid of their people (as it should be). Maybe the French can remind us a little about their roots in the French Revolution and help us recall that we put politicians in DC to work for us, and not to use their position for personal gain.

Visibilium said...

John, when your emotions settle down, you may want to examine the theoretical concept of a general price level and the difficulty of measuring a proxy pursuant to an economic policy. Calling politicians liars simply because the CPI measurement has changed over time is nonsense. To lend credence to your assertions, you would need to demonstrate that the changes in CPI measurement were falsifications of something more genuine.

Your hero, the clown who runs the shadow CPI website, describes the changes in CPI calculation over time, but simply asserts that the changes are wrong because they're lower.

Now, you may think that I'm taking an unusual position, given my anti-government predilections. Not at all. I'm just recognizing the reality that indexing the general price level is impossible. The only reason why people like indexing is because they're circus freaks who don't like a gold standard and want to feel secure in the Fed's management of fiat money.

John (Ad Orientem) said...

I would accept your response save for a few points.

1. In every instance where the Government has altered its methodology for measuring inflation, it has dropped. Coincidence? Maybe. And maybe pigs fly.

2. Those involved in the negotiations (currently suspended) were quite open in admitting that their motive has noting whatever to do with giving us a more accurate measure of inflation. It has to do with saving the government $220+ Billion.

3. Conceding your point that indexing inflation is at best subjective, removing from that equation items as basic and universally essential as fuel and food strikes me as blatant dishonesty and a manipulation of statistics.

Sorry. You can put all the lipstick you want on this pig. But it's still a pig and they are still liars.

Visibilium said...

The measure that excludes food and energy is the core CPI, to which nothing is indexed. It's simply an indicator of long-run price inflation. That's a straw man.

Of course the government wants to save money. If the CPI overstates price inflation, changing its calculation would save money. Is it a falsification?

Not all price increases are inflationary. One must account for relative price changes while trying to measure price inflation.