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Title: Obama Economy Worse Than 1970s
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URL Source: http://patriotupdate.com/articles/obama-economy-worse-than-1970s
Published: May 29, 2011
Author: Floyd Brown
Post Date: 2011-05-29 08:53:25 by CZ82
Keywords: None
Views: 121589
Comments: 113
Obama Economy Worse Than 1970s Written on May 28, 2011 by Floyd Brown The worst economic conditions in recent memory were during the Jimmy Carter era of stagflation. Stagflation was a term coined in the 1970s to describe high unemployment with high inflation. Stagflation is back. Translation: America’s middle class is getting poorer; a record number of middle class workers are out of work. If you are lucky enough to have a job, your wages aren’t going up, but you are facing higher prices for everything. “Recent data suggests that the current economic recovery is both sluggish and slowing with unemployment stubbornly high,” this from a page one story in Investor’s Business Daily. The Obama/ Bernanke partnership has been a bust. The Fed is winding down Ben Bernanke’s experiment in money printing called “QE2”. He trumpets his success saying that QE2 has pointed the U.S. economy “in the right direction.” But did it really? It turns out that QE2 has created maybe 700,000 full-time jobs, but at a cost of about $850,000 for each job. All QE2 did was create a boom in the stock market. Wall Street bankers reaped millions while the average investors barely madeback some small amount of the money that they lost during the 2008 crash. We believe this boom is an easy money mirage, as MarketWatch.com reports, “But even the stock market boom hasn’t been what it appears. An analysis shows that most of the rise in the Standard & Poor’s 500 Index under QE2 has simply been a result of the decline in the dollar in which shares are measured.Measured in hard currencies, the stock market boom has been much less impressive. In Swiss francs, the S&P has risen by just 8.4% since Aug. 27. In currencies like the Swedish krone and Australian dollars it’s even less. Measured in gold, the S&P 500 is up just 4.5%.” QE2 has had little visible effect on the real economy. Over the same period, the number of part-time workers has gone down by 600,000. In other words, we’ve basically shifted 600,000 or 700,000 workers from part-time jobs to full-time jobs. Marketwatch.com continues: “The percentage of the population in work is actually lower today – 58.4%, compared to 58.5% last August. The percentage of the work force in actual work, the so-called ‘participation rate,’ has fallen by half a percentage point.” Housing is no better because of QE2, April housing starts fell 11%. Marketwatch.com says, “Housing is double-dipping. According to the National Association of Realtors, the average price of an ‘existing’ home was $177,300 in August, just before QE2. Now it’s $163,700 – or 8% less.Economic growth has slowed. It was 2.6% last summer. It’s a miserable 1.8% now.Meanwhile inflation has risen, from 1.2% before QE2 to 3.1% now.” We all wish for better news, but Obama’s policies are pointing us in the wrong direction. Regulation of business is growing. One CEO of a mining firm we talked with said he is looking for new projects abroad. “I have been fighting for nearly a decade to open a new mine in Montana, and at every turn the government places roadblocks in my way. How am I to create any jobs?” If Obama’s tax policies are enacted then we could see marginal income tax rates of 60% in some states. Obama clings to socialism and his new programs in healthcare and welfare. They all retard growth. Unemployment taxes are at record highs in most states and this further depresses hiring. The Fed has invested nearly $2 trillion in Treasury debt since 2008. The investment hasn’t paid off, but when the relentless buying of US Treasury debt ends, we have no similar experience to guide us. One result could be even further collapse and a full blown depression.
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#74. To: Biff Tannen (#73)
"We'll give 'em the old number 6...where we go a-ridin' into town, a-whompin' and a-whumpin' every livin' thing that moves within an inch of its life. Except the women folks, of course."
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." They come into town rapin' our cattle and stampedin' our women.
------------------------------------- GREAT movie...
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Not once were you able to defend anything that you have posted. And here we are again... As usual, you're a fucking LIAR. I have provided a plethora of links and data. If you're too fucking lazy to get off your fat ass, and educate yourself, the problem is yours, NOT mine. Oh, and shithead Tannen pointed out... your latest tactics fall under: Rule of Disinformation #18. Emotionalize, Antagonize, and Goad Opponents. If you can’t do anything else, chide and taunt your opponents and draw them into emotional responses which will tend to make them look foolish and overly motivated, and generally render their material somewhat less coherent. Not only will you avoid discussing the issues in the first instance, but even if their emotional response addresses the issue, you can further avoid the issues by then focusing on how “sensitive they are to criticism”. Rule of Disinformation #20. False evidence. Whenever possible, introduce new facts or clues designed and manufactured to conflict with opponent presentations as useful tools to neutralize sensitive issues or impede resolution. This works best when the crime was designed with contingencies for the purpose, and the facts cannot be easily separated from the fabrications. Rule of Disinformation #13. Alice in Wonderland Logic. Avoid discussion of the issues by reasoning backwards with an apparent deductive logic in a way that forbears any actual material fact. Unsurprisingly, you and Biff are busy sucking each other off... to notice that you're being robbed blind, by the imposter POTUS, who you happily (and stupidly) voted for. You're both truly pathetic. I truly hope I get the chance to piss on your rotting corpses, at some point.
List of those unable to think: Bumper sticker on DwarF's car: REPEAT THIS UNTIL YOU GET IT: NONE OF WHICH YOU HAVE EVER BEEN ABLE TO DEFEND
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." It's the only way you'd ever be able to get near me, pussywillow.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." NONE OF WHICH YOU HAVE EVER BEEN ABLE TO DEFEND LOL. You rely on your old play-book... which, BTW, I POSTED FOR EVERYONE TO SEE. Rule of Disinformation #4. Use a straw man. Find or create a seeming element of your opponent’s argument which you can easily knock down to make yourself look good and the opponent to look bad. Either make up an issue you may safely imply exists based on your interpretation of the opponent/opponent arguments/situation, or select the weakest aspect of the weakest charges. Amplify their significance and destroy them in a way which appears to debunk all the charges, real and fabricated alike, while actually avoiding discussion of the real issues. Rule of Disinformation #5. Sidetrack opponents with name calling and ridicule. This is also known as the primary attack the messenger ploy, though other methods qualify as variants of that approach. Associate opponents with unpopular titles such as “kooks”, “right-wing”, “liberal”, “left- wing”, “terrorists”, “conspiracy buffs”, “radicals”, “militia”, “racists”, “religious fanatics”, “sexual deviates”, and so forth. This makes others shrink from support out of fear of gaining the same label, and you avoid dealing with issues. Rule of Disinformation #9. Play Dumb. No matter what evidence or logical argument is offered, avoid discussing issues with denial they have any credibility, make any sense, provide any proof, contain or make a point, have logic, or support a conclusion. Mix well for maximum effect. Rule of Disinformation #12. Enigmas have no solution. Drawing upon the overall umbrella of events surrounding the crime and the multitude of players and events, paint the entire affair as too complex to solve. This causes those otherwise following the matter to begin to loose interest more quickly without having to address the actual issues. Rule of Disinformation #13. Alice in Wonderland Logic. Avoid discussion of the issues by reasoning backwards with an apparent deductive logic in a way that forbears any actual material fact. Rule of Disinformation #15. Fit the facts to alternate conclusions. This requires creative thinking unless the crime was planned with contingency conclusions in place. Rule of Disinformation #19. Ignore proof presented, demand impossible proofs. This is perhaps a variant of the “play dumb” rule. Regardless of what material may be presented by an opponent in public forums, claim the material irrelevant and demand proof that is impossible for the opponent to come by (it may exist, but not be at his disposal, or it may be something which is known to be safely destroyed or withheld, such as a murder weapon). In order to completely avoid discussing issues may require you to categorically deny and be critical of media or books as valid sources, deny that witnesses are acceptable, or even deny that statements made by government or other authorities have any meaning or relevance. Rule of Disinformation #20. False evidence. Whenever possible, introduce new facts or clues designed and manufactured to conflict with opponent presentations as useful tools to neutralize sensitive issues or impede resolution. This works best when the crime was designed with contingencies for the purpose, and the facts cannot be easily separated from the fabrications. Thanks for playing!!!!!!!!!!!!
List of those unable to think: Bumper sticker on DwarF's car: NONE OF WHICH YOU HAVE EVER BEEN ABLE TO DEFEND America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Ping to: a k a stone, cz82, jwpegler, hondo68, Get Outta Dodge!, Coral Snake, socalv8, Wood_Chopper To DwarF, who is still using the rules of disinformation... Again, your "Alice in Wonderland" Logic. I present the data and links, YOU have to refute. Saying I "have never been able to defend" assumes that I NEED to defend something which is clear and self-evident. But..... Since you're too fucking lazy to go to the links I've previously provided, all of your answers (which YOU cannot refute) are posted together, below. Oh, and BTW, REAL economists have tried to refute Williams' numbers, and ALL have failed. That's the way the truth works, dummy... you can attack all you want, but reality is impervious to your tactics of disinformation. As a final note: ESAD. A Series Authored by Walter J. "John" Williams "Series Master Introduction" (Part One in a Series of Five) August 24, 2004 _____ In 1996 -- the middle of the Clinton economic miracle -- the Kaiser Foundation conducted a survey of the American public that purported to show how out of touch the electorate was with economic reality. Most Americans thought inflation and unemployment were much higher, and economic growth was much weaker, than reported by the government. The Washington Post bemoaned the economic ignorance of the public. The same results would be found today. Neither the Kaiser Foundation nor the Post understood that there was and still is good reason for the gap between common perceptions and government reporting: government data are biased in politically correct directions and increasingly have diverged from common experience and reality since the mid-1980s. Inflation and unemployment reports are understated, while employment and other economic data are overstated, deliberately. For several years, I conducted surveys among business economists as to how they viewed the quality of government economic data. The following were actual comments: · The senior economist of a major retail company told me, "Quality varies. The retail sales numbers are terrible, but money supply data are great." · The senior economist at a major bank offered, "There's a problem with money supply, but I think retail sales are pretty good." The point is that when an economist knows a sector well, he also recognizes the limitations and distortions of related economic reporting. Gathering and reporting accurate information on a timely (one-month) basis for components of the U.S. economy is nearly impossible. Nonetheless, most career government statisticians in Washington work diligently to provide the best information possible within the limits of the existing reporting system. A number of reporting distortions, however, are not accidental. What follows is brief background on the reporting system and how the numbers can be viewed. Separate installments will address the specifics of employment, inflation, GDP and budget deficit reporting. Other areas will be addressed upon request. The first regular reporting of now-popular statistics such as gross national/domestic product (GNP/GDP), unemployment and the consumer price index (CPI) began in the decade following World War II. Modern political manipulation of the government's economic data began as soon as practicable thereafter, with revisions to methodology often incorporating positive reporting biases. As a result, investors and most economists, relying on the government's data, often miss underlying economic reality. Consider: · During the Kennedy administration, unemployment was redefined with the concept of "discouraged workers" so as to reduce the popularly followed unemployment rate. · If Lyndon Johnson didn't like the growth that was going to be reported in the GNP, he sent it back to the Commerce Department, and he kept doing so until Commerce got it right. The Johnson administration also was responsible for gimmicking the accounting that hides most of the federal deficit. · Richard Nixon had a highly publicized war with the Bureau of Labor Statistics on the unemployment data. Nixon wanted to report the unemployment rate as the lower of the seasonally adjusted or unadjusted number, at any given time, but not specify same to the public. While that approach was unconscionable at the time and never used, basically the same methodology was introduced in 2004 as "state-of-the-art" by the current Bush administration. · The Carter administration was caught deliberately understating inflation. · Systemic changes were introduced during the Reagan administration to boost reported GNP/GDP growth on a regular basis. The wildest manipulations, however, happened at the time of the 1987 liquidity panic. In addition to intervention in the futures markets by the New York Fed to help prop the stock market after the October 19th crash, direct and heavy manipulation of the trade deficit data, under the direction of the Federal Reserve and U.S. Treasury, was used in conjunction with massive currency intervention to help bottom the dollar and to contain the currency panic at year-end 1987. · The first Bush Administration began efforts at the systematic reduction of the reported rate of CPI inflation, and worked an outside-the-system GDP manipulation aimed at helping with the failed 1992 reelection bid. · As former Labor Secretary Bob Reich explained in his memoirs, the Clinton administration had found in its public polling that if the government inflated economic reporting, enough people would believe it to swing a close election. Accordingly, whatever integrity had survived in the economic reporting system disappeared during the Clinton years. Unemployment was redefined to eliminate five million discouraged workers and to lower the unemployment rate; methodologies were changed to reduce poverty reporting, to reduce reported CPI inflation, to inflate reported GDP growth, among others. · The current Bush administration has expanded upon the Clinton era initiatives, particularly in setting the stage for the adoption of a new and lower-inflation CPI and in further redefining the GDP and the concept of seasonal adjustment. As a result of the systemic manipulations, if the GDP methodology of 1980 were applied to today's data, the second quarter's annualized inflation-adjusted GDP growth of 3.0% would be roughly three percent lower (effectively netting to zero percent or below). In like manner, current annual CPI inflation is understated by about 2.7% against the pre-Clinton CPI methodology (would be about 5.7%), and the unemployment rate is understated by about seven percent against its original design and what many people would consider to be actual unemployment (would be about 12.5%). As to the financial results of federal operations, the application of accrual accounting and generally accepted accounting principles to federal operations shows an actual fiscal year 2003 deficit of $3.7 trillion, as reported by the U.S. Treasury, versus the reported cash-basis $374 billion. Key Factors to Consider with Any Economic Release Hearing or reading an economic statistic in the financial media is of little value, unless the context of the reported number is clear, detailing the type of change, any inflation adjustment, seasonal adjustment and revisions. Seasonal Adjustment -- Widely followed data often are adjusted to remove patterns of distortion that recur regularly, year after year, or that are tied to business or trading days. For example, retail sales are strongest during the holiday season; February 2003 had 28 days, February 2004 had 29 days. While seasonal adjustment is a legitimate tool for enabling month-to-month or quarter-to-quarter comparisons of data that might otherwise be biased by calendar trends, more often than not, the government has problems with its adjustments. Areas that usually do not adjust well: weekly unemployment claims and employment seasonals related to holidays and the school year. One way to avoid many seasonality questions is to look at growth on a year-over- year basis, July 2004 versus July 2003, for example. Trends in annual growth are largely free of seasonal distortions. Seasonal factors typically are calculated annually, based on recent years' patterns of activity. The Bureau of Labor Statistics, however, went to revising and recalculating its employment seasonal factors each month, as of January 2004. Inflation Adjustment -- If inflation is up 3.0% for the year, and sales are up 2.0% for the year, then sales fell 1.0% after adjustment for inflation. Deflating dollar numbers is a legitimate approach to viewing data with the effects of inflation removed. Terms that mean data have been adjusted for inflation include real, constant dollars, in 2000 dollars, in chain weighted 2000 dollars. Beyond no inflation reference, terms that mean data have not been adjusted include nominal, and current dollars. The most popularly followed inflation-adjusted economic statistic is the GDP, which reflects the growth in dollar economic activity minus the growth in inflation. If inflation is understated, which it is, then the resulting real GDP is overstated. Type of Growth -- Is the reported growth month-to-month, year-to-year or annualized? Most monthly economic releases are reported showing month-to-month change. Quarterly numbers are shown either with quarter-to-quarter growth (i.e., the Employment Cost Index) or at an annualized rate of change (GDP). (SAAR means seasonally adjusted annualized rate.) As discussed earlier, more meaningful trends usually are seen in year-to-year change, although such patterns rarely get publicized. Year-to-year change (the way most businesses look at their sales -- How am I doing against last year?) usually eliminates seasonal distortions in unadjusted data or residual seasonal distortions in adjusted data. Revisions -- Most economic series go through regular and often significant revisions, typically for the next several releases and then annually in some form of a benchmark revision, as the government gets better or more complete data. A monthly number can appear to be strong or weak due solely to prior period revisions. Two series that do not get revised on a not seasonally adjusted basis are the CPI and the unemployment rate, unless a mistake is made or the series is redefined. In such instances, often the new series is not comparable to the old series, but the financial media rarely pay any attention to those details. "Employment and Unemployment Reporting" (Part Two in a Series of Five) August 24, 2004 _____ The Bureau of Labor Statistics (BLS), U.S. Department of Labor, conducts two monthly surveys of U.S. employment and unemployment. Results usually are released on the first Friday of the month following the survey: Household Survey (also Current Population Survey) -- The household survey generates the unemployment rate from a statistically designed monthly sampling of roughly 60,000 households. Other surveys, such as the annual poverty survey, often are piggybacked on the employment questions. The survey measures the number of people who have jobs. Payroll Survey (also Establishment or Current Employment Statistics Survey) -- The payroll survey generates an estimate of the number of nonfarm jobs in the U.S. economy, based on a monthly non-random sampling of payroll tax filings of about 160,000 U.S. corporations and government agencies. The survey measures the number of jobs (some individuals hold more than one job). The household survey is conducted during the week that includes the 12th of the month. The payroll survey is conducted as of the payroll period that includes the 12th of the month. Other than for seasonal factors, the household survey gets revised only with series or population redefinition. The payroll series is revised for two months following the initial release and then again in an annual benchmark revision. Where the household survey includes farm workers, the self-employed and workers in private homes, the payroll survey does not. The payroll survey counts jobs, making no adjustment for multiple jobholders. Yet, adjusting for all differences, the BLS never has been able to reconcile the two series within one million jobs. Conventional wisdom in the financial community is that the payroll survey is more accurate, given its larger sampling base. To the contrary, the household is scientifically designed, and the error can be estimated to any degree desired. The payroll data are haphazard at best, and the BLS has no idea of potential reporting error. The BLS estimates a 90% confidence interval for a change in the unemployment rate of ±0.22%, and a 90% confidence interval for the monthly change in payrolls of ±108,000. The BLS, however, admits the payroll survey's confidence interval is not solid, given built in biases and the lack of randomness in the monthly sample. The payroll survey used to include a regular monthly bias factor of about +150,000 jobs. Those jobs were added each month for good measure, as an estimate of jobs created by new companies. Companies that went out of business generally were assumed to be employing the same number of people as before they went out of business. In the last couple of years, the BLS has modeled and seasonally adjusted its bias factor; there is no more guesstimation. Accordingly, new monthly bias factors have ranged from -321,000 to +270,000 during the last year. This, combined with continuous seasonal adjustment revisions, has added to the volatility of recent monthly reporting. Suggesting that the household survey is more accurate than the payroll survey, however, does not mean household survey accurately depicts unemployment. While its measures have definable statistical accuracy, the accuracy is related only to the underlying questions surveyed and to the universe of people surveyed. The popularly followed unemployment rate was 5.5% in July 2004, seasonally adjusted. That is known as U-3, one of six unemployment rates published by the BLS. The broadest U-6 measure was 9.5%, including discouraged and marginally attached workers. Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%. The Clinton administration also reduced monthly household sampling from 60,000 to about 50,000, eliminating significant surveying in the inner cities. Despite claims of corrective statistical adjustments, reported unemployment among people of color declined sharply, and the piggybacked poverty survey showed a remarkable reversal in decades of worsening poverty trends. Somehow, the Clinton administration successfully set into motion reestablishing the full 60,000 survey for the benefit of the current Bush administration's monthly household survey. While the preceding concentrates on the numbers that tend to move the markets, the household survey also measures employment. The payroll survey also surveys average hourly and weekly earnings and average workweek. ______ Addendum to Installment One (Published 9/7/04) Bureau of Labor Statistics' Correction to Payroll Survey Description In response to my comments on the "non-random" and "haphazard" nature of the payroll employment survey in Installment One, the Bureau of Labor Statistics (BLS) advised that my information was outdated, that the payroll survey used scientifically designed probability sampling, which had been phased in over several years and completed as of June 2003. I was aware of the changes to the system, but did not think they improved the quality of the reported results much. I have just reviewed the BLS's current sampling methodology and have not changed my mind. While I may have used inaccurate terminology in describing the sampling method for the series, my general comments remain, and I still believe the household survey to be the more accurate of the two. The household survey is proactive in nature and designed and sampled so its results can be determined with measurable statistical confidence. While the payroll survey sampling approach may be sounder statistically than it was several years ago, it still is responsive, in nature, subject to whatever is reported or not reported by U.S. corporations. While individual companies are selected at random for following, the universe they are selected from still is not random and can vary meaningfully with changing times. An element of haphazardness is inherent in the universe of reporting companies. During a recession, for example, firms go out of business and stop reporting, but the BLS does not know whether a company is out of business or did not report for some other reason. This supposedly is accounted for by the business birth (creation)/death (going out of business) modeling of companies, which replaces the old bias factor system. There is no way to model these numbers with any meaningful accuracy, and the monthly swings in the birth/death data now often are greater than the reported monthly changes in total payrolls. The BLS has a Herculean task in trying to measure monthly payrolls with meaningful results, and it has expended significant effort to improve its system. Nonetheless, it is difficult to see noticeable improvement in monthly reporting quality. Contrary to BLS expectations of improved results, I would be extraordinarily surprised if revisions to the series don't get larger, as opposed to smaller, as a result of what now is probably over-modeling of the series. This already is evident in the monthly revisions to some individual industry series that I follow closely. It will be interesting to see how large the next several annual benchmark revisions are for the new system. U.S. Treasury Shows Actual 2003 Federal Deficit at $3.7 Trillion Deficit Moves Beyond Any Possible Tax Remedy Could U.S. Treasuries Face a Rating Downgrade? _____ The U.S. government’s fiscal ills have spun wildly out of control and no longer are containable within the existing system. As detailed in this article, the actual annual shortfall in U.S. government operations for fiscal year 2003 (September 30) was $3.7 trillion. Put in perspective, that means if the U.S. Treasury had seized all wages and salaries in 2003 with a 100% income tax, there still would have been a deficit! The outlook for fiscal 2004 numbers is even worse. Considering that the popularly reported 2003 budget deficit was $374 billion, one-tenth the number cited above, this installment on government reporting concentrates on where the incredulous $3.7 trillion number comes from, how and why the Treasury is reporting it, and why the financial press and federal politicians are ignoring it. Nonetheless, some implications of the current circumstance are touched upon briefly, here, conditioned by the promise of a full and separate analysis at a future date. As brief background, the $3.7 trillion number is from government financial statements prepared using generally accepted accounting principles (GAAP), and a large portion of the expanded deficit is from the annual increase in the net present value of unfunded Social Security and Medicare obligations. The impossibility of this circumstance working out happily is why lame-duck Federal Reserve Chairman Alan Greenspan suddenly has urged politicians in Washington to come clean on not being able to deliver promised Social Security and Medicare benefits already under obligation. He suggests, correctly, that there is no chance of economic or productivity growth resolving the matter. The funding shortfall projections already encompass optimistic economic assumptions. Even if the Administration and Congress heeded Greenspan’s advice, the unfolding fiscal disaster faces one of only two very unpleasant general solutions: · The first solution is draconian spending cuts, particularly in Social Security and Medicare, even if accompanied by massive tax increases. This appears to be a political impossibility, at present. · In the absence of political action, the second solution is the U.S. government facing some form of insolvency within the next decade or so. Shy of Uncle Sam defaulting on debt, the most likely outcome is the Fed eventually having to monetize U.S. debt heavily, triggering a hyperinflation. U.S. obligations eventually would be paid off in a significantly debased and devalued dollar. Implications for the United States’ sovereign credit rating is discussed more fully in a later section, but the unfolding fiscal crisis also opens the possibility of a credit downgrade for U.S. Treasury securities. This could happen before either of the two broad solutions discussed above comes into play. Accounting Gimmicks Mask Underlying Reality for Decades Misleading accounting used by the U.S. government, both in financial and economic reporting, far exceeds the scope of corporate accounting wrongdoing that has received partial credit for recent stock market turbulence. The bad boys of Corporate America, though, still were subject to significant regulatory oversights and the application of GAAP accounting to their books. In contrast, the government’s operations and economic reporting have been subject to oversight solely by Congress, America’s only "distinctly native criminal class."[1] Nearly four decades ago, President Lyndon Johnson’s political sensitivities led him and the Congress to slough off some of the costs of an escalating Vietnam War through the use of accounting gimmicks. To mask the rapid growth in the federal government’s budget deficit, revenues from the surplus being generated by Social Security taxes were added into the general cash fund, without making any accounting allowance for the accompanying and increasing Social Security liabilities. This accounting-gimmicked reporting was dubbed "unified" budget accounting. The government’s accounting then, as it is now, was on a cash basis, reflecting cash revenues versus cash expenditures. There were no accruals made for monies owed by or due to the government at some time in the future. The bogus accounting understated the actual deficit for decades and even allowed for claims of budget surpluses in the years 1998 to 2001. While there were extensive self-congratulatory comments between the President, Congress and the Fed Chairman, at the time, all involved knew there never were any actual budget surpluses. There hasn’t been an actual balanced budget, let alone a surplus, since before Johnson and his cronies cooked the bookkeeping. The doctored fiscal reporting complemented the short-term political interests of both major political parties. Additionally, the ignorance and/or complicity of Pollyannaish analysts on Wall Street and in the financial media-eager to discourage negative market activity-helped to keep the fiscal crisis from arousing significant concern among a dumbed-down U.S. populace. U.S. Treasury Owns Up to a Financial Nightmare In the mid-1970s, the then "Big Ten" accounting firms proposed setting up for the federal government an accrual accounting and reporting system similar to that used in the business community. Purchases of capital equipment, weapons and buildings would be booked as assets and depreciated, taxes receivable and accounts payable would better reflect near term cash needs. Accrued liabilities, such as Social Security payments due in the future, would reflect longer-term cash-flow needs. As the project progressed, GAAP accounting was applied to the government’s operations and prototype annual statements were published beginning in 1974. The appropriate accounting for Social Security liabilities, however, was discarded during the Reagan administration as being politically untenable. Under the eventual mandate of Congress, the accounting project culminated in the U.S. Treasury publishing its first formal Financial Report of the United States Government for fiscal year 2000, consistent with GAAP, except for Social Security and similar accounts such as Medicare, Medicaid and the Railroad Retirement Fund. To the credit of the Bush administration, later reports, published in April 2003 and April 2004 for fiscal years 2002 and 2003, indicated for the first time since the 1980s what the Social Security and related numbers would look like if they were included in the accounting, just as corporations need to account for pension and retiree health benefit liabilities. The gimmicked accounting standards, as established during the Johnson era, and as used today for official, unified budget reporting, show a 2003 deficit of $374.3 billion. Using GAAP reporting (without Social Security reporting), the official GAAP deficit for 2003 expands to $665.0 billion. Including accounting for Social Security and related areas, the 2003 deficit balloons to $3,702 billion, or $3.7 trillion.[2] The accounting reflects no adjustment for the new, more expensive Medicare program. As an aside, if you download[3] a copy of the financial statements, the GAO’s auditor’s letter as to why they won’t certify the statements is an exposé of significant financial mismanagement within the federal government. Beyond the $3.7 trillion deficit in 2003, however, the numbers get even worse, because the shadow deficit has been taking its toll ever since the Johnson era. According to the Treasury’s 2003 financial statement, the U.S. government has a negative net worth of $34.8 trillion. That $34.8 trillion reflects $36.2 trillion in financial liabilities offset by $1.4 trillion in assets, of which only $0.4 trillion are liquid. Part of the underlying reality-the actual operating cash shortfall-is reflected in the growth of the federal debt. During fiscal 2003, for example, gross federal debt increased from $6.2 trillion to $6.8 trillion, or by $600 billion, against the unified $374 billion deficit. As of the end of August 2004, the debt had increased to $7.3 trillion. While gross federal debt is at a record, relentlessly pushing against borrowing ceilings, the markets, press and politicians generally ignore that portion of the debt borrowed from Social Security and similar programs. So, the September 30, 2003 debt level commonly is reported as only the $3.9 trillion owed to the public, instead of the total $6.8 billion. Again, the more accurate GAAP estimate of total government liabilities is $36.2 trillion. 2004 Results Results for the official 2004 deficit will be published in the next several months, and the numbers are projected by the Bush administration to be significantly worse than in 2003, $445 billion versus $374 billion, with the actual deficit likely to near $4.3 trillion (my estimate). The 2004 GAAP financial statements on the government will not be published until March/April 2005. GAAP-Based GAAP-Based Fiscal "Official" Deficit Without Deficit With Year Deficit Soc. Sec., Etc. Soc. Sec., Etc. ———————————————————— 2004 est. $445 Billion $800 Billion $4.3 Trillion 2003 $374 Billion $665 Billion $3.7 Trillion 2002 $158 Billion $365 Billion $1.5 Trillion —————————————————— ——The credit markets were rattled slightly by the early official projections of an increasing shortfall in government finances, but only the surface problems have gained any market recognition. The full magnitude of the difficulties ahead is not recognized by the markets, yet. With 2003 gross domestic product (GDP) (annual average for the government’s fiscal year) at $10.83 trillion, that places the annual budget deficit and total government obligations at respectively 34.2% and 334.3% of GDP, negative extremes never before breached outside the environment of third-world, net- debtor nations. Is "AAA" Rating of U.S. Treasury Debt Sustainable? The major U.S. credit rating agencies, S&P, Moody’s and Fitch, issue credit ratings to sovereign states. The United States enjoys the top "AAA" rating, but that could change if the rating agencies apply their sovereign credit rating methodologies to the GAAP U.S. financial statements, instead of the gimmicked accounting accepted for decades. As an example of part of the ratings approach, Fitch[4] notes in its Sovereign Ratings Rating Methodology: Sovereign borrowers usually enjoy the very highest credit standing for obligations in their own currency. If they retain the right to print their own money, the question of default is largely an academic one. The risk instead is that a country may service its debt through excessive money creation, effectively eroding the value of its obligations through inflation. Such risks will come into play in the future article on possible hyperinflation. The question at hand is the top "AAA" credit rating held by the United States, home base of the U.S. dollar, the world’s primary reserve currency. In determining a sovereign rating, Fitch reviews, among other factors, "the orthodox indicators such as ratios of debt to exports and debt to Gross Domestic Product, providing a measure of the current and prospective ability to service debt." The United States is the world’s largest net-debtor nation, has the world’s largest current account trade balance and has the highest level of debt or financial obligations ever seen, irrespective of relative measure, for any major country, by at least an order of magnitude.[5] As of August 2004, Fitch gave the "AAA" rating to only 15 countries, including the United States. The other 14 are Austria, Canada, Denmark, Finland, France, Germany, Ireland, Luxembourg, Netherlands, Norway, Singapore, Sweden, Switzerland and the United Kingdom. Of those 14, five ran budget surpluses in 2003, including Canada, Denmark, Finland, Norway and Sweden. The worst deficit as a percent of GDP was for France at 4.1%, followed by Germany at 3.5%. In contrast, the not-generally-recognized GAAP U.S. deficit in 2003 was 34.2%. Similarly, the highest level of debt to GDP seen among the 14 other "AAA" countries is at 75.6% for Canada, followed by France at 71.1%, Germany at 65.1% and Austria at 64.9%, versus a GAAP ratio of total financial obligations to GDP of 334.3% for the United States. The low ratio among the "AAA" countries is Luxembourg at 4.9%. Where most of the other "AAA" countries have significant unfunded social insurance liabilities that are not included in the debt-to-GDP ratios, consistent 2003 numbers are not available. As a rough estimate, the high ratios mentioned for Canada, France, Germany and Austria would increase by two-to- three times, still well shy of the U.S. extreme. The ratings agencies are well aware of these circumstances and have noted the generally deteriorating credit quality of the major Western economies, particularly the United States. S&P seems comforted by expectations that most countries "will step up their efforts to more effectively confront the fiscal ramifications of aging …"[6] Of the 15 "AAA" countries, all but Austria, Ireland, the United Kingdom and the United States run current account trade surpluses. As a percent of GDP, the Austrian, Irish and U.K. trade deficits are 0.2%, 2.5% and 2.8%, respectively, versus 4.8% for the United States. At "AA," two credit notches below the U.S. (two notches taking into account the AA+ between AAA and AA), sits Japan. Japan’s deficit and debt levels as percentages of of GDP are 8.0% and 157.3%, respectively, worse than the "AAA" rated countries but still much better than the U.S. GAAP ratios. Japan also runs a current account surplus. In searching World Bank data, I couldn’t find any nation with a debt-to-GDP ratio worse than the United States’ GAAP obligations ratio of 334%. The closest found is for the West African state of Guinea-Bissau at 224%, but Guinea-Bissau is not rated. The twist here, of course, is the accounting method used in analysis. Based on the gimmicked, instead of GAAP, fiscal numbers, the U.S. deficit and debt ratios are a little high but relatively benign at 4.8% and 62.8%. Further, much more goes into a sovereign debt rating than the discussed ratios. Still, if any country but the U.S. had GAAP deficit and debt ratios of 34% and 334%, its debt most likely would be given junk-bond status by the rating agencies. Accordingly, a case can be made that the risks of the United States "servic [ing] debt through excessive money creation" are high enough so as to be inconsistent with a "AAA" rating. Political practicalities, though, likely will forestall any formal downgrade of the U.S. credit rating. Since a downgrade would trigger global financial-market and currency turmoil, action even could be delayed until the last minute. Nevertheless, Fitch had the United States on a negative rating watch in 1995, and there have been occasional rumblings by S&P and Moody’s when Congress has been slow to authorize raising the ceiling on federal borrowing limits. Minimally, a shift to a negative rating outlook by one or more of the major rating agencies is not out of the question. Irrespective of any credit rating actions, the credit markets usually catch up with underlying reality. That suggests there will develop a long-term higher floor under U.S. interest rates than has been seen previously. _____ Footnotes [1]Samuel Clemens. [2]Financial Report of the United States Government, 2003, Financial Management Services, U.S. Treasury, page 4, "Overall Perspective" table. The $3.7 deficit is the difference between "Total Assets minus Total Liabilities & Net Responsibilities," otherwise known as "Net Worth," in 2003 versus 2002, deficit net worths respectively of $34.8 trillion and $31.1 trillion. The $3.7 trillion deterioration is the actual shortfall in 2003 government operations. [3]PDF available at: www.fms.treas.gov/fr/03frusg/03frusg.pdf [4]Fitch Ratings website. [5]Based on analysis of data available in the Central Intelligence Agency’s The World Fact Book 2004, the International Monetary Fund’s World Economic Outlook April 2004, and the OECD and World Bank websites. [6]"The Western World Past Its Prime—Sovereign Rating Perspectives in the Context of Aging Populations," Standard & Poor’s, March 31, 2004, available at S&P website. "The Consumer Price Index" (Part Four in a Series of Five) October 1, 2006 Update (September 22, 2004 Original) _____ Foreword This installment has been updated from the original 2004 version to incorporate additional research on earlier changes to the CPI. The source for most of the information in this installment is the Bureau of Labor Statistics, which generally has been very open about its methodologies and changes to same. The BLS Web site: www.bls.gov contains descriptions of the CPI and its related methodologies. Other sources include my own analyses of the CPI data and methodological changes over the last 30 years as well as interviews with individuals involved in inflation reporting. ______ Payments to Social Security Recipients Should be Double Current Levels 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 concentration of this installment on the quality of government economic reports will be first on CPI series redefinition and the damages done to those dependent on accurate cost-of-living estimates, and on pending further redefinition and economic damage. 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. In like manner, anyone involved in commerce, who relies on receiving payments adjusted for the CPI, has been similarly damaged. On the other side, if you are making payments based on the CPI (i.e., the federal government), you are making out like a bandit. In the original version of this background article, I noted that Social Security payments should 43% higher, but that was back in September 2004 and only adjusted for CPI changes that took place after 1993. The current estimate adjusts for methodology gimmicks introduced since 1980. Elements of the Consumer Price Index (CPI) had their roots in the mid-1880s, when the Bureau of Labor, later known as the Bureau of Labor Statistics (BLS), was asked by Congress to measure the impact of new tariffs on prices. It was another three decades, however, before price indices would be combined into something resembling today's CPI, a measure used then for setting wage increases for World War I shipbuilders. Although published regularly since 1921, the CPI did not come into broad acceptance and use until after World War II, when it was included in auto union contracts as a cost-of-living adjustment for wages. The CPI found its way not only into other union agreements, but also into most commercial contracts that required consideration of cost/price changes or inflation. The CPI also was used to adjust Social Security payments annually for changes in the cost of living, and therein lay the eventual downfall to the credibility of CPI reporting. Let Them Eat Hamburger In the early 1990s, press reports began surfacing as to how the CPI really was significantly overstating inflation. If only the CPI inflation rate could be reduced, it was argued, then entitlements, such as social security, would not increase as much each year, and that would help to bring the budget deficit under control. Behind this movement were financial luminaries Michael Boskin, then chief economist to the first Bush Administration, and Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve System. Although the ensuing political furor killed consideration of Congressionally mandated changes in the CPI, the BLS quietly stepped forward and began changing the system, anyway, early in the Clinton Administration. Up until the Boskin/Greenspan agendum surfaced, the CPI was measured using the costs of a fixed basket of goods, a fairly simple and straightforward concept. The identical basket of goods would be priced at prevailing market costs for each period, and the period-to-period change in the cost of that market basket represented the rate of inflation in terms of maintaining a constant standard of living. The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival. The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that. The Boskin/Greenspan concept violated the intent and common usage of the inflation index. The CPI was considered sacrosanct within the Department of Labor, given the number of contractual relationships that were anchored to it. The CPI was one number that never was to be revised, given its widespread usage. Shortly after Clinton took control of the White House, however, attitudes changed. The BLS initially did not institute a new CPI measurement using a variable-basket of goods that allowed substitution of hamburger for steak, but rather tried to approximate the effect by changing the weighting of goods in the CPI fixed basket. Over a period of several years, straight arithmetic weighting of the CPI components was shifted to a geometric weighting. The Boskin/Greenspan benefit of a geometric weighting was that it automatically gave a lower weighting to CPI components that were rising in price, and a higher weighting to those items dropping in price. Once the system had been shifted fully to geometric weighting, 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. The BLS publishes estimates of the effects of major methodological changes over time on the reported inflation rate (see the "Reporting Focus" section of the October 2005 Shadow Government Statistics newsletter -- available to the public in the Archives of www.shadowstats.com). Changes estimated by the BLS show roughly a 4% understatement in current annual CPI inflation versus what would have been reported using the original methodology. Adding the roughly 3% lost to geometric weighting -- most of which not included in the BLS estimates -- takes the current total CPI understatement to roughly 7%. There now are three major CPI measures published by the BLS, CPI for All Urban Consumers (CPI-U), CPI for Urban Wage Earners and Clerical Workers (CPI-W) and the Chained CPI-U (C-CPI-U). The CPI-U is the popularly followed inflation measure reported in the financial media. It was introduced in 1978 as a more- broadly-based version of the then existing CPI, which was renamed CPI-W. The CPI-W is used in calculating Social Security benefits. These two series tend to move together and are based on frequent price sampling, which is supposed to yield something close to an average monthly price measure by component. The C-CPI-U was introduced during the second Bush Administration as an alternate CPI measure. Unlike the theoretical approximation of geometric weighting to a variable, substitution-prone market basket, the C-CPI-U is a direct measure of the substitution effect. The difference in reporting is that August 2006 year-to-year inflation rates for the CPI-U and the C-CPI-U were 3.8% and 3.4%, respectively. Hence current inflation still has a 0.4% notch to be taken out of it through methodological manipulation. The C-CPI-U would not have been introduced unless there were plans to replace the current series, eventually. Traditional inflation rates can be estimated by adding 7.0% to the CPI-U annual growth rate (3.8% +7.0% = 10.8% as of August 2006) or by adding 7.4% to the C- CPI-U rate (3.4% + 7.4% = 10.8% as of August 2006). Graphs of alternate CPI measures can be found as follows. The CPI adjusted solely for the impact of the shift to geometric weighting is shown in the graph on the home page of www.shadowstats.com. The CPI adjusted for both the geometric weighting and earlier methodological changes is shown on the Alternate Data page, which is available as a tab at the top of the home page. Hedonic Thrills of Using Federally Mandated Gasoline Additives Aside from the changed weighting, the average person also tends to sense higher inflation than is reported by the BLS, because of hedonics, as in hedonism. 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. Then there is "intervention analysis" in the seasonal adjustment process, when a commodity, like gasoline, goes through violent price swings. Intervention analysis is done to tone down the volatility. As a result, somehow, rising gasoline prices never seem to get fully reflected in the CPI, but the declining prices sure do. How Can So Many Financial Pundits Live Without Consuming Food and Energy? The Pollyannas on Wall Street like to play games with the CPI, too. The concept of looking at the "core" rate of inflation-net of food and energy-was developed as a way of removing short-term (as in a month or two) volatility from inflation when energy and/or food prices turned volatile. Since food and energy account for about 23% of consumer spending (as weighted in the CPI), however, related inflation cannot be ignored for long. Nonetheless, it is common to hear financial pundits cite annual "core" inflation as a way of showing how contained inflation is. Such comments are moronic and such commentators are due the appropriate respect. Too-Low Inflation Reporting Yields Too-High GDP Growth As is discussed in the final installment on GDP, part of the problem with GDP reporting is the way inflation is handled. Although the CPI is not used in the GDP calculation, there are relationships with the price deflators used in converting GDP data and growth to inflation-adjusted numbers. The more inflation is understated, the higher the inflation-adjusted rate of GDP growth that gets reported. SPECIAL COMMENT September 10, 2008 __________ ShadowStats.com Response to BLS Article on CPI Misconceptions The Bureau of Labor Statistics (BLS) published "Addressing misconceptions about the Consumer Price Index" in its August 2008 Monthly Labor Review, an article by John S. Greenlees and Robert B. McClelland that attempted to debunk "a number of longstanding myths regarding the Consumer Price Index [CPI]." Where there are many of critics of the BLS’s CPI methodologies and reporting, the government has a natural and significant interest in protecting the credibility of its CPI series. In fairness, much of what has become distorted in the CPI series has resulted from pressures outside of the Bureau itself, ranging from the perceived political needs of overseeing administrations, to Congress and the Federal Reserve. For some of the issues raised in the article, I have no argument with the BLS. For example, as to core inflation [pages 11 and 12], the concept of "core" inflation — CPI net of food and energy inflation — indeed is not used in current Social Security cost of living adjustments. The BLS went on to explain that it "makes no claims about the predictive or analytical value of that index." The article, however, also addressed issues directly tied to my writing and research, and where I otherwise have added fuel to the public controversy. Those areas are at least touched upon here, and most have been discussed previously in the SGS Primer Series on CPI, to which this text will be added as a supplement, as well as regularly in SGS newsletters. I stand by and am extremely comfortable with my previously expressed positions and published numbers. The following comments have been prepared quickly, in response the just-published article, of which I had no advance notice. More detailed discussion will be covered in a later, revamped Primer Report on the CPI. As to the SGS-Alternate Consumer Inflation series I publish (the article’s authors miscalculated the ten-year inflation rate), I shall make available to the public in the not-too-distant future the detailed series and calculations of same in collaboration with someone in academia (a search is in progress), who will have the opportunity to review and replicate or to challenge the alternate CPI data I have been publishing, and who will be free to publish those findings with peer review. As always, questions and comments are invited: johnwilliams@shadowstats.com. The Traditional CPI Concept Has Been Politically Mauled. At the heart of the differences over CPI reporting is the way CPI is viewed or defined. My basic approach to looking at CPI inflation is from the standpoint of common experience and traditional expectations that the CPI measures the cost of maintaining a constant standard of living, that reflects costs out of pocket to get a products or services in hand, not some nebulous benefits estimated by the BLS of having to pay for an expensive new gasoline additive when filling a gas tank. The reason for the preceding is that inflation measures commonly are used as an indication of how much income has to increase, in order for living standards to be maintained, or of how much return is needed on an investment in order to stay ahead of inflation. Changing BLS methodologies have caused CPI inflation reporting to stray sharply from those needs I contend that most people view inflation as being much higher than currently reported by the BLS, due largely to those methodological changes over the decades that have moved CPI inflation away from basic, traditional reporting. Changes tied particularly to quality, weighting and definitional issues have moved reported inflation ever further from broad, common experience, with resulting reporting biases in the CPI that usually are to the downside. Consumers have a pretty good sense of where basic inflation stands, and whether or not they are able to make ends meet, let alone maintain a constant standard of living. Here are the issues raised in the BLS article that I feel need to be touched upon: Hamburger versus Steak. From page 5 of the article: "Some critics have incorrectly claimed, for example, that the BLS assumes that consumers are no worse off when they substitute hamburgers for steak." A later clarification: "To begin, it must be stated unequivocally that the BLS does not assume that consumers substitute hamburgers for steak." I have never claimed that the BLS "assumes that consumers are no worse off when they substitute hamburgers for steak." Quite to the contrary, I have always argued that those giving such a rationale as to why the CPI purportedly overstated inflation knew very well that consumers were worse off with hamburger, and that the pitchmen were looking to change the concept of the CPI so that it no longer measured the cost of maintaining a constant standard of living. Such clearly was the case in the early-to-mid 1990s and was reflected in official arguments and press of the time. Much of what happened here was forced upon the BLS by the political system, but such is the BLS’s primary client. I did not invent the example used by the early CPI detractors, who argued that the Index was overstated because it did not reflect people substituting hamburger for steak, when steak got too expensive, or their arguments that reducing a so-overstated CPI would help to cut cost of living adjustments on Social Security and relieve federal budget pressures. I am still searching through boxes of papers to find the earliest reference to same, though I believe I first heard that pitch from then Federal Reserve Chairman Alan Greenspan. Consider from the New York Times, "Panel Sees a Corrected Price Index as Deficit-Cutter," September 15, 1995, by Robert D. Hershey, Jr.: "Speaker Newt Gingrich, Republican of Georgia, suggested this week that fixing the [CPI] index, with its implications for lower spending [Social Security, etc.] and higher revenue [tax bracket adjustments], would provide maneuvering room for budget negotiators …" "Alan Greenspan, chairman of the Federal Reserve, is among the other Government officials who have spoken optimistically about financial benefits of a more accurate [CPI] index …" "[E]conomists believe one of the most important [CPI upside biases] is when consumers shift their buying patterns in response to changing prices, substituting one product for another. The [CPI] index is based on a fixed market basket of goods and services. But for, for example, if the price on an item like steak gets too expensive, consumers may switch to hamburger." The Boskin Commission Report, December 4, 1996, actually used steak and chicken for its substitution example. The examples being used to argue for changing the CPI clearly were tied to prices rising and resulting consumer demand shifting to a lower-quality product. Simply put, that is a cost-of-maintaining-a- constant-standard-of-living issue and was a primary consideration of those seeking to change the CPI, although other issues would come into play. From the San Francisco Chronicle, "Government’s economic data misleading, he says," May 25, 2008, by Sam Zuckerman: "In the 1990s, for example, Republicans wanted to make changes in calculating inflation along the lines recommended by a special commission, including more use of quality adjustments. By lowering the official inflation rate, such changes promised to reduce the annual cost-of-living adjustments for Social Security and other federal programs. "[Katherine] Abraham, the Clinton bureau [of Labor Statistics] commissioner, remembers sitting in Republican House Speaker Newt Gingrich’s office: "’He said to me, If you could see your way clear to doing these things, we might have more money for BLS programs.’" Related changes to methodologies were made beginning in the mid-1990s. As noted in the 1999 Economic Report of the President, page 93: "A final reason for the slowing of reported price indexes has been methodological changes to both the CPI and the indexes used in the national income accounts …" What happened was that geometric weighting (replacing arithmetic weighting) was introduced for narrow product categories in the CPI. The categories were narrow enough to allow weight shifts between different types of steak, but the "mimicking" of the steak versus hamburger or steak versus chicken substitution was not possible based on geometric weightings, since steak, hamburger and chicken all were in different categories. Nonetheless, if steak prices were to rise, strapped consumers indeed likely would shift to cheaper meats, and such would be reflected in the broader weighting categories. The problem from the BLS standpoint, though, was that those weightings traditionally were recast only every ten years. So, the broad- category reweighting process was accelerated, with a reweighting in 1998, and, thereafter, reweightings were structured formally for every two years starting in 2002. This process moved the CPI closer to a fully substitution-based index. These approaches, in conjunction with other methodological changes ranging from increased use of discount-store surveying to shifting quality and hedonic adjustments, resulted in meaningful downside adjustments to reported annual CPI inflation of roughly 300 basis points (3%), of which 28 basis points currently is estimated by the BLS as the effect of geometric weighting. The period involved here, from the early-1990s to date, was dominated by efforts to address the Greenspan/Boskin contention that the CPI "overstated" inflation. Nonetheless, the resulting, current CPI was and still is not a fully- substitution-based inflation index. An experimental substitution-based index, the Chain Weighted CPI-U (C-CPI-U), is published monthly by the BLS along with the CPI-U and CPI-W. At present, the C-CPI-U is showing the annual inflation rate running about 80 basis points (0.8%) below the official CPI-U. It is plotted as one of the three CPI measures in the inflation graph on the www.shadowstats.com home page. Geometric Weighting is a Mathematical Adjustment, Not a Model of Consumer Behavior. The BLS touts the use of geometric weighting in the narrow CPI categories as a way of measuring shifting consumer preferences based on changes in prices in related items. The weights that shift based upon price changes (relatively higher price changes end up with relatively lower weightings) do so by straight mathematical adjustment that the BLS once described as "mimicking" substitution effects. The shifts are not calculated based on any consumer surveying done, for example, as to how candy bar consumption would vary given relative price changes. The BLS claims support for using geometric weightings in the CPI, because everyone else does it. One also could argue that other sovereign statistical agencies, by their nature, have a tendency to want to reduce reported inflation as much as possible, as did Messrs. Greenspan and Boskin. On page 6 of the article, the authors argue that the shifting of weights within geometrically weighted categories does not affect a consumer’s standard of living, since the earlier arithmetic weighting always overstated cost of living, based on common academic thinking. "There is also no dispute among economists [except for John Williams as at least one] that the price index formula used in all of the basic CPIs prior to 1999 (called the Laspeyres formula) tends to overstate changes in the cost of living; specifically, the change in a Laspeyres is an ‘upper bound’ on the change in the cost of maintaining a [note: no "constant"] standard of living. …" "The Laspeyres answer is correct, however, only if the consumer is completely unconcerned with changes in price …" I would argue, to the contrary, that it is the so-called "overstatement" in the cost of living that enables the maintenance of a constant standard of living, where the consumer does not have to be concerned with changes in price. The BLS claims that with the geometric weighting, weighting shifts are measuring a "constant level of satisfaction," that there is no "declining standard of living" in the numbers, because geometric weighting is not applied to broad enough categories to allow hamburger substitution for steak. Nonetheless, the geometric weighting shifts have impact on a constant standard of living basis, as discussed above. Further, as mentioned earlier, the increased frequency of the reweighting of the broader categories impacts the standard of living on the steak to hamburger issue. Hedonic and Quality Adjustments. Quality adjustments that are directly quantifiable and adjustable in terms of price impact are a necessary part of the CPI process. For example, a package that contained 12 ounces of crackers that now has been reduced to 10 ounces needs to be adjusted proportionately in pricing, in order for period-to-period price comparisons to have proper meaning. When the quality change is not easily quantifiable (which usually includes hedonic adjustments), price adjustments for quality change are not so obvious, particularly from the standpoint of how individuals would assess them against perceived common experience, a constant standard of living and variance with official CPI reporting. Here are two examples of somewhat varying nature. Consider the following from the February 15, 1995 CPI release: "A quality adjustment has been made to gasoline prices in the January CPI to account for the effects of the mandated introduction of reformulated gasoline in selected areas of the United States. The gasoline index rose 0.4 percent in January, following seasonal adjustment. Without the quality adjustment, it is estimated that this index would have increased 1.1 percent." As I recall, that additive later was found to be harmful to the environment and eventually was removed from gasoline. Where consumers generally will look at the cost of filling a gas tank in terms of dollars laid out, irrespective of any theoretical improvement to the environment, counting the cost of the additive as a price increase, as opposed to ignoring it as a quality improvement, would seem reasonable. Quality adjustments of the hedonic, more-theoretical kind, however, have tended to reduce reported inflation meaningfully. In the article the BLS indicated that hedonic adjustments had increased prices in certain products. Those "increases," though, often were based on comparisons against prices that already had been previously adjusted and reduced based on simpler quality assessments. Getting more into the hedonics area, I’ll get personal. I use two personal computer systems purchased about 10 years apart for roughly the same price in nominal terms, about $800. While the most recent computer has greater memory and is faster than my old system, both systems generally perform the same tasks for me. Based on the BLS’s adjustments to computer prices, in terms of quality/hedonics, my old system should have been replaceable for about $85.00 in current dollars, which was not doable. I do have a nicer picture screen, with the new system, but I also unexpectedly had to buy a new printer, because the new system was not able to function with my antique work-horse printer. The new computer also was not able to use certain key programs that had not been rewritten to the standards of the new system. How does one compare and value such systems in the CPI? While some quality adjustment in the case of computers seems appropriate, I argue it has been heavily overdone from the practical standpoint of the average consumer. SGS-Alternate Consumer Price Inflation vs. CPI-U. The BLS argued that our alternate CPI measure showed a 155% increase in the ten-year period of April 1998 to April 2008, and that such was much too high given average prices the BLS reported in underlying CPI categories. I publish two estimates of alternate CPI growth, based on methodologies in place as of 1980 and as of 1990. The alternate estimates are based on adjusting the published CPI-U for cumulative annual differences in CPI as estimated by the BLS for the impact of its various methodological changes since the early 1980s (or 1990s). Some of the 1990s and later estimated changes have not been published by the BLS. I do not recalculate the CPI, only adjust for the reported, aggregate biases, generally using the BLS numbers. Since 1980, the aggregate change in annual CPI inflation reporting due to methodological shifts has been a reduction of roughly 700 basis points (7%). Again this is based primarily on published BLS estimates. The 1980-base SGS index calculates out to a 147% increase for the period (the BLS had access to the SGS data), not 155%, although the variance there does not affect the overstatement claim significantly. In contrast, the official CPI-U was reported up by 32% over the same period. While 1980-base SGS inflation overstates the inflation suggested by most of the proffered data, the government’s CPI-U understates inflation in most of the same data. For the same period, the 1990-base SGS inflation would have been up about 77%. These issues will be fully explored and discussed in the upcoming academic study, including a careful analysis of inflation reflected in raw price data for various periods, versus the various CPI measures. "Gross Domestic Product" (Part Five in a Series of Five) October 6, 2004 _____ Overstated GDP growth has meant that the 1990 and 2001 recessions were much more severe than recognized, and that lesser downturns in 1986 and 1995 were more or less missed entirely. Introduction The Gross Domestic Product (GDP) is one of the broader measures of economic activity and is the most widely followed business indicator reported by the U.S. government. Upward growth biases built into GDP modeling since the early 1980s, however, have rendered this important series nearly worthless as an indicator of economic activity. The analysis in this Installment will indicate that the recessions of 1990/1991 and 2001 were much longer and deeper than currently reported, and that lesser downturns in 1986 and 1995 were missed completely in the formal GDP reporting process. Furthermore, the current economic circumstance is suggestive of an early-1980s-style double-dip recession. The distortions from bad GDP reporting have major impact within the financial system. For example, Alan Greenspan's heavy reliance on productivity gains to justify some of his policies is equally flawed, since the methods applied to GDP estimation influence the numerator in the productivity ratio. As with the CPI distortions discussed in Installment III, the Federal Reserve Chairman knows better. With reported growth moving up and away from economic reality, the primary significance of GDP reporting now is as a political propaganda tool and as a cheerleading prop for Pollyannaish analysts on Wall Street. Reporting Basics The GDP is compiled and reported by the Bureau of Economic Analysis (BEA) of the Department of Commerce. Quarterly estimates are updated monthly, with the "advance" estimate published at the end of the first month following the close of a quarter. The first and second revisions are called the "preliminary" and "final" estimates. In turn the "final" estimate is revised in annual revisions (usually in July), and every five years or so a benchmark revision is published that revises all data back to 1929, the first year of formally estimated economic activity.[1] The popularly followed number in each release is the seasonally adjusted, annualized quarterly growth rate of real (inflation-adjusted) GDP, where the current-dollar number is deflated by the BEA's estimates of appropriate price changes. It is important to keep in mind that the lower the inflation rate used in the deflation process, the higher will be the resulting inflation-adjusted GDP growth. Due to a lack of good-quality hard data, the "advance" GDP report is little more than a guesstimate. The BEA comes up with three estimates of growth, a high, low, and most likely. The numbers then get re-massaged so that the reported growth rate is moved closer to whatever the economic consensus is expecting. There actually is a belief at the BEA that there is some value to economic consensus estimates.[2] The estimation process does not improve much with the "preliminary" and "final" estimates. The BEA reports that 90% of ultimate revisions to the "final" estimate fall within a range of +3.1% to -2.6%. Where average growth has been about 3.5% over the years, that means that most reporting is not statistically significant. The upward bias shown in the revisions is due to what I call "Pollyanna Creep," where methodological changes regularly upgrade near- term economic growth patterns. These patterns will be explored shortly. The GDP is a large component of the National Income and Product Accounts (NIPA), representing "the output of goods and services produced by labor and property in the United States."[3] The NIPA was the concept and development of the National Bureau of Economic Research, a private organization founded in 1920. The NBER work evolved into the BEA and the current NIPA accounting. The NBER remains a consultant to the process and retains the position as official arbiter of U.S. recessions. At one time, the NBER did define a recession as two consecutive quarters of negative GNP/GDP growth that were not distorted by an event such as a truckers' strike.[4] The NBER used trends in indicators such as industrial production and payroll employment to time a recession's beginning and end, to the month. More recently, though, the NBER has abandoned the GDP as a recession indicator and has relied instead on those other economic series. My presumption is this change resulted from an unofficial recognition of the declining value of the GDP reports. In theory, the NBER is apolitical, although the timing of some of its recent calls on the ends of recession are suspect. Specifically, there is no such thing as a jobless recovery. If jobs are being lost, the economy still is in recession. There Is a Problem in the Basic Structure As part of the NIPA, the construct of the GDP is heavily reliant on economic theory for composition, unlike other data series such as retail sales or the trade deficit, which are relatively simple surveys that end up contributing to the GDP estimations. The related Gross National Product (GNP) is the broadest U.S. economic measure and includes the GDP plus the balance of international flows of interest and dividend payments. For net debtor nations such as Guinea-Bissau and the United States, GDP usually will show the stronger growth than GNP, since the outflow of interest payments does not get charged against economic activity. For this reason, the United States switched its primary reporting from the GNP to the GDP in 1991. Put in perspective as of the "final" estimate of second-quarter 2004, annualized real GDP growth was 3.3%, down from 4.5% in the first quarter, while GNP growth for the same period was 1.9%, down from 3.9%. I respect the intellect and creativity of those who have anchored their careers in academia. Frankly, though, most economic theories have little practical use in the real world. Concepts such as free trade being a boon to the world's economy [5], a weak currency helping turn a nation's trade deficit[6], or personal income including what the average homeowner would receive from himself in rental income if he charged himself to live in his own house, fall in to the "not in the real world" category.[7] Varied academic theories, often with strong political biases, have been used to alter the GDP model over the years, resulting in Pollyanna Creep, where changes made to the series invariably have had the effect of upping near-term economic growth. Whether the change was to deflate GDP using "chain-weighted" instead of "fixed-weighted" inflation measures, to capitalize rather than expense computer software purchases, or to smooth away the economic impact of the September 11th terrorist attacks, upside growth biases have been built into reported GDP with increasing regularity since the mid-1980s. The accompanying table shows the net impact of these changes over time. The GNP level for various years from 1929 through 1980 and GDP for 1980 and 1990 are shown in billions of current dollars. Once set, these GNP/GDP levels should not change. With redefinitions and methodological shifts, however, earlier periods have been restated so as to be on a consistent basis with the latest reporting. Accordingly, the GNP/GDP levels are shown as they were reported variously in 1950, 1984 and at present.[8] What becomes evident when looking at these data is that the biggest reporting changes have taken place since 1984 and have accelerated coming forward in time. For example the 1980 GDP that had been reported as $2.708 trillion in 1992 had crept up by 2.9% to $2.786 trillion based on 2004 reporting. The 1990 GDP, however, had Pollyanna Creep of 5.3% over the same period. ---------------------------------------- POLLYANNA CREEP ---------------------------------------- Change in Reporting Year 1950 1984 2004 2004/1992 ---------------------------------------- GNP (Billions of Current Dollars) ---------------------------------------- 1929 103.8 103.4 104.4 +0.97% 1933 55.8 55.8 56.7 +1.61% 1940 101.4 100.0 101.7 +1.70% 1950 284.2 286.5 295.2 +3.04% 1960 -- 506.5 529.5 +4.54% 1970 -- 992.7 1044.9 +5.26% 1980 -- 2631.7 2823.7 +7.30% ---------------------------------------- GDP (Billions of Current Dollars) ---------------------------------------- Change in As Reported Reporting in 1992 2004 2004/1992 ---------------------------------------- 1980 2708.0 2785.5 +2.86% 1990 5513.8 5803.1 +5.25% ---------------------------------------- Double-Entry Bookkeeping The NIPA effectively is a double-entry bookkeeping system, where an item on the consumption side of the ledger, in the GNP/GDP accounts, is offset on the income side of the ledger, in Gross Domestic Income (GDI) accounts. In theory, the GNP and the GDI should be identical. In practice they rarely are, with the latest "statistical discrepancy" showing GNP to be $67 billion, or 0.6% higher than the GDI. This is due to the BEA's inability to reconcile the two series. Part of the problem is that source data often are estimated without regard to actual numbers otherwise available. As an example of how far from reality the GNP/GDP/GDI reporting has gone, consider data from a high quality and unbiased resource: the Internal Revenue Service (IRS). Based on its analysis of income tax returns, the IRS reports that, "For the second consecutive year, Adjusted Gross Income (AGI) fell, decreasing by 2.3% to $6.0 trillion for 2002. This represents the first time since prior to 1950 that total AGI reported on individual tax returns has fallen for two successive years."[9] While one might expect to see some parallel income reporting in the GDI, it only happens by coincidence. Although the BEA considers the IRS data, it never has been able to reconcile the differences between GDI assumptions and IRS reality. Of course, the BEA sticks with the GDI assumptions, which have income rising in 2001 and 2002. The following table shows some of the specifics of comparable income components. Where wages and salaries are the single largest component in the GDI, they grew by 6.8% in 2002, according to the BEA, but the IRS reports a 0.4% contraction. ----------------------------------- INCOME GROWTH 2002/2001 -- IRS VERSUS BEA (Not Adjusted for Inflation) ----------------------------------- Income Category IRS GDI ----------------------------------- Wages & Salaries -0.4% +6.8% Interest Income -20.9% -6.4% Dividend Income -14.9% +5.1% ----------------------------------- Part of the difference is in imputations, which gets back into the theoretical structure of the NIPA. Any benefit one receives, either living in one's own house, or receiving free checking from a bank has an imputed income component. Free checking, for example, is calculated as imputed interest income. Not only did imputed interest income account for 21% of all personal interest income in 2002, but also it grew at an annual rate of 8.3%! As an aside, renting the house you own from yourself gets imputed as 62% of total rental income. Another issue is distortion in underlying series. The bias factors (now reported as net business birth/death modeling) inflate reported payroll employment, as discussed in this series' first installment. GDI estimates of wages and salaries are calculated off the payroll numbers and are inflated on a parallel basis. Deflation Wonders As emphasized earlier, the lower the inflation rate that is used to deflate the GDP, the higher will be the resulting inflation-adjusted growth. One of the deflation stars is the computer. While computer prices have come down over time, the quadrupling and re-quadrupling of memories provided with a standard computer have, through hedonics and quality adjustments (see Installment III on the CPI), enhanced the decline in prices used in deflating computer consumption in the GDP. According BEA deflators, $1,000 computers bought in 1990, 1995 and 2000 would cost $48.63, $95.84 and $526.58, respectively, today. I bought computers in each of those time frames and could not replicate any one of them for the suggested proportionate price in deflated dollars, regardless of free memory enhancement. One of the more significant changes to GDP inflation was made in 1996, when the deflator was shifted from fixed-weighted to a chain-weighted basis. The chain- weighted basis weights inflation for a two-year grouping of a related GDP component, rather than using the weighting of the benchmark year. One happy side effect of this change is that the components of inflation-adjusted GDP do not add up to the total, with the difference being allocated to the residual category. As of the "final" second-quarter 2004 real GDP, the residual was a negative $35.6 billion, or 0.33% of total GDP. The residual usually gets worse the more removed it is from the benchmark year, which is 2000 at present. As of the fourth-quarter 1990, for example, the residual is 13.4% of GDP. Before 1990, the BEA does not publish the detailed breakout of accounts, because of the large residual. For some reason, this bothers a number of well-reputed economists. A Tempting Target for Manipulation In the introduction to this series on government reporting, I mentioned political manipulation of the GNP/GDP in the Johnson and first Bush administrations that went beyond overly positive methodological changes. In both instances, my sources were consulting clients who had been involved directly in the process. In the latter instance, an individual at the BEA also confirmed the situation. Few people argue with the GNP/GDP reports, so when Lyndon Johnson kept sending the initial GNP estimates back to the Commerce Department for correction, he eventually got what he wanted, and the media dutifully reported stronger than actual economic growth. Near the end of the first Bush administration, an outside-the-system manipulation was worked. A senior member of the Executive Branch approached a senior officer of a large computer company and requested that reporting of computer sales to the BEA be inflated. This was done specifically to help with the reelection effort. The request was granted, and thanks to the heavy leverage of computer deflation, reported GDP growth enjoyed an artificial spike. There are suggestions of other direct manipulations over time, specifically involving the Clinton administration and the current Bush administration. Most recently, a bizarre annual revision to the GDP data eliminated the 2001 recession, at least as traditionally defined with two consecutive quarters of real GDP contractions. Where little public attention is paid to the GDI, however, it is interesting to note that the revisions did not follow the same pattern on the inflation- adjusted income side of GDP. Pre-revision numbers showed quarterly real GDP contractions in third-quarter 2000 and the first- through third-quarter 2001. In the 2004 annual revisions, second-quarter 2001 GDP growth turned positive (from -0.6% to +1.2%), breaking up any consecutive quarterly GDP declines. The patterns were repeated in revisions of the GNP. Following the latest annual revisions, however, the GDI-same as GNP in theory-showed contractions in fourth- quarter 2000, second- through fourth-quarter 2001 and third-quarter 2002. Estimating Economic Reality Based on my analysis of the GDP/GNP revisions and redefinitions over time, over- deflation and economic reporting as published before later political corrections, reporting of real GDP growth at present is overstated by roughly three percent per year against a more realistic, pre-Pollyanna Creep period. Where the period of bloated GDP reporting began after the severe double-dip recession of 1980 and 1981/1982, it includes the last two recessions that were severe enough to generate reported GDP contractions. Both the 1990/1991 and 2001 recessions were deeper and longer than currently estimated. The recession from July 1990 to March 1991 (timing per the NBER) really began in late-1989 and persisted into 1992, perhaps even 1993. Such was evident in the underlying data of the time. Due to the NBER's early call of the recession's end, however, the first "jobless recovery" was seen. Similarly, the recession that was timed from March to November 2001, began in late-2000 and persisted into 2003. Again, because of an early call to the recession's end, a "jobless recovery" was seen. There also were economic downturns in 1986 and 1995 that were evident to most companies dealing in real world economic activity at he time. Although the contractions showed up in a number of measures, they were not severe enough to turn bloated GDP growth negative. As the economy once again appears to be faltering, or losing traction, risk is high of renewed or a double-dip recession, of which the 2001 downturn eventually will be counted as the first leg. I have only touched upon some of the highlights in problems with GDP reporting. Unfortunately, though widely followed, the series is probably the least meaningful of the major economic statistics followed by investors and the financial media. ______ Footnotes to Installment Four [1]Full definitions and methodologies are available at the BEA's wbsite BEA. [2]The information on the guesstimation process is based on my conversations with individuals at the BEA during the last 25 years. The economic consensus misses turning points in the economy about 100% of the time. [3]BEA [4]Though the NBER now denies such a definition was ever used, the NBER supplied me with this definition in a conversation back in the 1980s. [5]Free trade theory assumes all involved nations are at full employment. When that is not the case the wealthiest and highest salaried countries end up with a declining standard of living and redistributing their wealth to the other free-trade participants, as is the current circumstance for the United States. [6]While currency values can have relatively quick impact on trade in pure commodities, products with quality differentiation combined with the financial and marketing creativeness of importers and exporters often bypass standard theory. [7]This is an actual component of the income side of the GDP. [8]BEA, various historical editions of the Statistical Abstract of the United States, Department of Commerce. [9]Individual Income Tax Returns, Preliminary Data, 2002, IRS website IRS. List of those unable to think: Bumper sticker on DwarF's car: Oh, BTW DwarF.... That means the ball is in YOUR court.
List of those unable to think: Bumper sticker on DwarF's car: Fuck off, Erica. That's not in any format remotely readable. If you have a point to raise, raise it.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." ROFLMAO... No Erica...that is not how it works. YOU have to be able to defend your bullshit when it gets called into question by facts and data as it was when I pointed out flaws and you threw your first snit fit a year ago.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." If you have a point to raise, raise it. Quit cursing. Thanks. Oh Erica spanked your ass in the post you are afraid to address.
Chuckles.....posts went from 69 to 85 with nobody posting back and forth that is not bozoed by me. That may be a record. I'm sure I missed alot of "valuable" back and forth...so much for the betterment of my eyesight......chuckles:):)
Death to everybody who does not get outta my way. (decided to retire the beatdowns on old worthless retread posters that are bozoed)
Wart claims that your post looks like Chinese, and curses you for confusing him with the facts. All he can comprehend is... 1) Less liberty. Obama's watch stopped on 24 May 2008, but he's been too busy smoking crack to notice.
Feel free to summarize that mess, Stone. It wasn't a post. It was spam.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Don't speak for me. The stank lasts for days.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." NBER has used the peak/trough method of calculating the beginning and end of a recession for decades. The reason that it uses GDP as an indicator is because IT DeVELOPED THE MODEL for the US government back in the 1920's. NBER still relies on GDP as a factor in determining peaks and troughs but it's not the only factor that they use. Given that the NBER developed and catalogued GDP first for the US government and then continued using it for its own purposes, it is 100% horseshit to claim that they did this change "recently". My presumption is this change resulted from an unofficial recognition of the declining value of the GDP reports. In theory, the NBER is apolitical, although the timing of some of its recent calls on the ends of recession are suspect. Specifically, there is no such thing as a jobless recovery. If jobs are being lost, the economy still is in recession. He can "presume" all that he wants to presume. He should try to make a case instead. "Presume" is a weasle word, which is why you probably admire him. Since NBER developed the GDP odel for the US and, by its own admission, relies upon it, his presumption if patently false. All he he had to do was go to NBER's website to know that his presumption was stupid. Specifically, there is no such thing as a jobless recovery. If jobs are being lost, the economy still is in recession. Again a provably false statement. Business cycle activity is not a chorus line in which each participant kicks in unison. Capital formation initiates investment which initiates purchases which result in sales which result in manufacturing which result in deliveries which result in construction. All of these occur at their own pace and at each place along the supply chain workers may or may not be needed. Your turn, Erica. Given the above, why would you believe such pap that is demonstrably - as I have done yet once again - false?
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Hey, Eric. In the interest of me learning what you think I need to know, could you please address war's post in your own words (that means without cutting and pasting a huge article someone else wrote). Keep it to a few sentences. It shouldn't be hard for someone with your vast knowledge. Specifically, if it is as war states, that the 'More recently' part isn't true and that in fact they never relied on GDP alone as your article says then how can anything else in the article have credibility?
------------------------------------- Now Biff...do you really believe Erica up to the task? I mean...cutting and pasting takes SO MUCH out of him...
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." All I'm asking is for him to demonstrate his marvelous thinking abilities. One time on one small point. Is that too much for him to do for a peon like me?
------------------------------------- Allow me to answer for him: America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Yes, i suspect so, lol
------------------------------------- This is what happened the last time and his reaction was to throw a little Boofer and then bozo me. So he claimed.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Any sign of Erica?
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." BUMP
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." 100...yer boy is a no show Stone...
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." BUMP
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Since the details are clearly too adult for your inferior mental acuity, I will be so generous as to provide a summary that even a mental-midget like you should grasp. (Obviously, DwarF refers to your lack of mental abilities): 1. The US govt. has been systematically cooking the books since 1980. You continually claim I don't present the underlying facts. I *have.* If you want to dive deep into the underlying data, feel free to visit shadowstats.com. You can thank me for the lesson now.
List of those unable to think: Bumper sticker on DwarF's car: You did not disappoint in any way, shape, or form, Erica. I asked you to provide definitive proof that you are absolutely 100% full of shit and you delivered. Merci.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." PING.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." I asked you to provide definitive proof that you are absolutely 100% full of shit and you delivered. Merci. SURE, dummy... SURE...... You are either too stupid or too lazy to read, and asked for a summary. I provided that summary. You contend that I do not provide the basis for the data. I provided that basis. You contend I don't back up what I say. I ALWAYS back up what I say. And your response? Going back to the leftist playbook, re-hashing the same old tired games... Rule of Disinformation #4. Use a straw man. Find or create a seeming element of your opponent’s argument which you can easily knock down to make yourself look good and the opponent to look bad. Either make up an issue you may safely imply exists based on your interpretation of the opponent/opponent arguments/situation, or select the weakest aspect of the weakest charges. Amplify their significance and destroy them in a way which appears to debunk all the charges, real and fabricated alike, while actually avoiding discussion of the real issues. Rule of Disinformation #5. Sidetrack opponents with name calling and ridicule. This is also known as the primary attack the messenger ploy, though other methods qualify as variants of that approach. Associate opponents with unpopular titles such as “kooks”, “right-wing”, “liberal”, “left- wing”, “terrorists”, “conspiracy buffs”, “radicals”, “militia”, “racists”, “religious fanatics”, “sexual deviates”, and so forth. This makes others shrink from support out of fear of gaining the same label, and you avoid dealing with issues. Rule of Disinformation #12. Enigmas have no solution. Drawing upon the overall umbrella of events surrounding the crime and the multitude of players and events, paint the entire affair as too complex to solve. This causes those otherwise following the matter to begin to loose interest more quickly without having to address the actual issues. Rule of Disinformation #13. Alice in Wonderland Logic. Avoid discussion of the issues by reasoning backwards with an apparent deductive logic in a way that forbears any actual material fact. Rule of Disinformation #14. Demand complete solutions. Avoid the issues by requiring opponents to solve the crime at hand completely, a ploy which works best for items qualifying for rule 10. Rule of Disinformation #15. Fit the facts to alternate conclusions. This requires creative thinking unless the crime was planned with contingency conclusions in place. Rule of Disinformation #17. Change the subject. Usually in connection with one of the other ploys listed here, find a way to side-track the discussion with abrasive or controversial comments in hopes of turning attention to a new, more manageable topic. This works especially well with companions who can “argue” with you over the new topic and polarize the discussion arena in order to avoid discussing more key issues. Rule of Disinformation #18. Emotionalize, Antagonize, and Goad Opponents. If you can’t do anything else, chide and taunt your opponents and draw them into emotional responses which will tend to make them look foolish and overly motivated, and generally render their material somewhat less coherent. Not only will you avoid discussing the issues in the first instance, but even if their emotional response addresses the issue, you can further avoid the issues by then focusing on how “sensitive they are to criticism”. Rule of Disinformation #19. Ignore proof presented, demand impossible proofs. This is perhaps a variant of the “play dumb” rule. Regardless of what material may be presented by an opponent in public forums, claim the material irrelevant and demand proof that is impossible for the opponent to come by (it may exist, but not be at his disposal, or it may be something which is known to be safely destroyed or withheld, such as a murder weapon). In order to completely avoid discussing issues may require you to categorically deny and be critical of media or books as valid sources, deny that witnesses are acceptable, or even deny that statements made by government or other authorities have any meaning or relevance. (You're big on this one!) Rule of Disinformation #20. False evidence. Whenever possible, introduce new facts or clues designed and manufactured to conflict with opponent presentations as useful tools to neutralize sensitive issues or impede resolution. This works best when the crime was designed with contingencies for the purpose, and the facts cannot be easily separated from the fabrications. Rule of Disinformation #22. Manufacture a new truth. Create your own expert(s), group(s), author(s), leader(s) or influence existing ones willing to forge new ground via scientific, investigative, or social research or testimony which concludes favorably. In this way, if you must actually address issues, you can do so authoritatively. Rule of Disinformation #23. Create bigger distractions. If the above does not seem to be working to distract from sensitive issues, or to prevent unwanted media coverage of unstoppable events such as trials, create bigger news stories (or treat them as such) to distract the multitudes. You are so predictable. List of those unable to think: Bumper sticker on DwarF's car: Read 91, simpleton.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." You fucking kooks always pull that Rules of Disinformation bullshit out of your ass rather than admit you're wrong. Address #91 as I asked you fucking dupe.
------------------------------------- I did, dummy. Points #1 and #3, HERE. Now, ESAD. Your willful ignorance of reality simply demonstrates you're ignorant or mentally defective (i.e., stupid or insane). Probably both. Oh, and BTW, it's still check-mate. You were fun to torment with facts. But now you're just boring.
List of those unable to think: Bumper sticker on DwarF's car: Your rebuttal is...well...lacking, Erica. PROVE that the NBER numbers are crap. First prove you know where NBER gets its numbers.
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." Help Cecil Help
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." {{{{{{{{CRICKETS}}}}}}}}
America...My Kind Of Place... "I truly am not that concerned about [bin Laden]..." You fucking idiot. You won't discuss details, all you'll do is cut and paste. You have no original thoughts. You only regurgitate what you read on kook sites. Get off this site you dumb bastard.
------------------------------------- bump
--GW Bush
#75. To: war (#74)
Why don't you make like a tree and get out of here?
#76. To: Biff Tannen (#75)
--GW Bush
#77. To: war (#71)
Erica...I ripped those charts apart previously. I ASKED you to defend them and you gave me a link to shadowstats. After I ripped that site apart you flew into a little snit.
Rule of Disinformation #19. Ignore proof presented, demand impossible proofs. This is perhaps a variant of the “play dumb” rule. Regardless of what material may be presented by an opponent in public forums, claim the material irrelevant and demand proof that is impossible for the opponent to come by (it may exist, but not be at his disposal, or it may be something which is known to be safely destroyed or withheld, such as a murder weapon). In order to completely avoid discussing issues may require you to categorically deny and be critical of media or books as valid sources, deny that witnesses are acceptable, or even deny that statements made by government or other authorities have any meaning or relevance.
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#78. To: Capitalist Eric (#77)
(Edited)
I have provided a plethora of links and data.
--GW Bush
#79. To: Capitalist Eric (#77)
(Edited)
...your rotting corpses
--GW Bush
#80. To: war (#78)
REPEAT THIS UNTIL YOU GET IT:
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#81. To: Capitalist Eric (#80)
REPEAT THIS UNTIL YOU GET IT:
--GW Bush
#82. To: war, a k a stone, cz82, jwpegler, hondo68, Get Outta Dodge!, Coral Snake, socalv8, Wood_Chopper (#81)
"GOVERNMENT ECONOMIC REPORTS: THINGS YOU'VE SUSPECTED BUT WERE AFRAID TO ASK!"
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#83. To: war, a k a stone, cz82, jwpegler, hondo68, Get Outta Dodge!, Coral Snake, socalv8, Wood_Chopper (#82)
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#84. To: Capitalist Eric (#83)
--GW Bush
#85. To: Capitalist Eric (#82)
I present the data and links, YOU have to refute.
--GW Bush
#86. To: war (#84)
Fuck off, Erica. That's not in any format remotely readable.
#87. To: A K A Stone (#86)
(Edited)
#88. To: Capitalist Eric, war, A K A Stone (#82)
(Edited)
2) More taxes.
3) More government programs (to patch up their previous screw ups).
4) It's all the evil Republicans fault (even though the evil Democrats are equally to blame).
5) hObama's warmongering is great because it's humanitarian, but Republican warmongering is evil and immoral.
6) Human technology is evil and is destroying the planet, so we must kill as many babies and third worlders as possible, and return to the stone age.
7) If you deviate from this script, you're a RACIST!
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
#89. To: A K A Stone (#86)
Oh Erica spanked your ass in the post you are afraid to address.
--GW Bush
#90. To: hondo68 (#88)
--GW Bush
#91. To: Capitalist Eric (#82)
(Edited)
More recently, though, the NBER has abandoned the GDP as a recession indicator and has relied instead on those other economic series.
--GW Bush
#92. To: Capitalist Eric, war (#91)
Why don't you make like a tree and get out of here?
#93. To: Biff Tannen (#92)
--GW Bush
#94. To: war (#93)
Why don't you make like a tree and get out of here?
#95. To: Biff Tannen (#94)
--GW Bush
#96. To: war (#95)
Why don't you make like a tree and get out of here?
#97. To: Biff Tannen (#96)
--GW Bush
#98. To: Biff Tannen (#96)
--GW Bush
#99. To: Capitalist Eric (#98)
--GW Bush
#100. To: A K A Stone (#99)
--GW Bush
#101. To: Capitalist Eric (#82)
--GW Bush
#102. To: war, A K A Stone (#89)
Feel free to summarize that mess, Stone. It wasn't a post. It was spam.
2. The actual turning-point where we became hopelessly bankrupt was ~2003.
3. The NBER numbers are flat-out lies.
4. The Fed is printing us into oblivion.
5. Current inflation is ~3x the (cooked) "official" rate.
6. Actual unemployment is ~2x the (cooked) "official" rate.
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#103. To: Capitalist Eric (#102)
--GW Bush
#104. To: Biff Tannen (#103)
--GW Bush
#105. To: war (#103)
To: Capitalist Eric You did not disappoint in any way, shape, or form, Erica.
Check-mate.
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#106. To: Capitalist Eric (#105)
--GW Bush
#107. To: Capitalist Eric (#105)
Why don't you make like a tree and get out of here?
#108. To: war, a k a stone, cz82, jwpegler, hondo68, Get Outta Dodge!, Coral Snake, socalv8, Wood_Chopper (#106)
mcgowanjm, ferret mike, skippy, fartboy/yukko, white sands, bucky, lucys idiot mom, e_type_jackoff, go56, badlie, wreck, calCON, mininggold, war, Banjo Boris, Biff, Godwinson and meguro. If you're on the above list, you're too fucking stupid to hold a real conversation.
#109. To: Capitalist Eric, Biff Tannen (#108)
Points #1 and #3, HERE.
--GW Bush
#110. To: Capitalist Eric (#108)
#108. To: war, a k a stone, cz82, jwpegler, hondo68, Get Outta Dodge!, Coral Snake, socalv8, Wood_Chopper (#106)
--GW Bush
#111. To: Capitalist Eric (#108)
--GW Bush
#112. To: Capitalist Eric (#108)
Why don't you make like a tree and get out of here?
#113. To: CZ82 (#0)
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