Jul 27 2005
Government Statistics Are Fixed
Source: John Williams at Shodow Government Statistics
Lies. Damned lies… And statistics. Or so the saying goes. And its as right as could be!
Yet today most of the US operates as if the statistics pushed out by the Fed and the US Government are infallibly reliable. They presume that when the methods for calculating these were subjected to new and improved formulas (as under Nixon, Reagan, Bush I and Clinton), it must be legitimate given that the change was given some “new and improved” label… and nobody blinked twice. And, the tweaking of how such numbers are calculated has been dramatic, changing the very essence of the meaning of each number. Plus, given that one number feeds other numbers (for example, CPI is part of the GDP calculation), if each stat has a bit of a deliberate bias to make things look more rosy than it actually “is”, then the affect compounds.
And it is clear that the stats today are biased dramatically to make the economy look comparatively good when weighed against how they were previously calculated. CPI of 2005 is not our grandfather’s CPI: Substitution. Hedonics. Bias adjustments. etc. have all played a role in turning formerly reliable numbers into something totally different. Yet the world operates as if there is no meaningful difference, or for that matter, an agenda behind why such changes were promoted.
For example, whereas CPI was once a fixed basket of goods meaningful to the common man, it is now a rigged number that helps GDP seem rosier than reality, while keeping social security increases smaller than they otherwise would be.
Politicized? You bet.
And don’t take our word for it. Listen to John Williams, an economist who tracks the changes, including the how’s and why’s.
Oh. And if you think this is a meaningless subject, think again. If inflation is truly running at closer to 7% or higher as some suspect the real number to be, that difference will eventually catch up with the markets. Its just a matter of time before the markets catch on.
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