Washington’s Biggest Lie (and Why it Continues to be Told]
12/04/2012
By Dr. Paul Price of Market Shadows

"Normal people have no trouble defining how they measure inflation in their own lives. They compare what the same exact purchases of goods and services cost them today versus one-year earlier. It would include everything they spend money on.
. . .
Those of us old enough to have lived through the 1970s remember the bad old days when prices were escalating at a sickening pace.
. . .
The officially reported 1980 CPI increase of 13.91% was the ‘straw that broke the camel’s back’ in terms of what our leaders were willing to admit to. They decided to change the way CPI was calculated to avoid making people even more upset.


(Chart above is looking at the compounding inflation starting on Jan. 1 , 1969 - so baseline starting point is on Jan. 1, 1969.)
. . .
Intentionally understating CPI also served to diminish COLA (cost of living adjustments) in government salaries, pensions and social security obligations. It also kept the rates paid on government borrowing somewhat below what would otherwise have been demanded
. . .
Today’s headline core CPI excludes food and energy completely. That’s impossible for us to do that in our real lives. Remember the old sub-$2 per gallon gasoline prices? How about the health insurance premiums, grocery expenses and electric bills you’re paying today versus four or five years ago?
. . .
Under the old rules US inflation has been in the double-digits for much of the preceding five years. The ‘new’ BLS numbers want you to believe price increases since 2008 have been quite mild.


. . .
All these changes in the way CPI is calculated have been duly disclosed to the public. That doesn’t make them any less dishonest when viewed the way most people gauge changes in their real cost of living. [My Note: where and how these changes were disclosed to the public is also an exercise in duplicity.]
. . .
If truth in advertising were being strictly enforced the BLS might be renamed just the BS."


More and some interesting charts at:
http://www.zerohedge.com/contributed/201...ntinues-be-told

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Out of curiosity I went out to the BLS web site and requested inflation from 1969 to 1974, 1979, 1982, and present. in constant dollars.
The information generated uses 1982-1984 as the base period i.e. 100.
The percentage increase were: +28%, +91%, +1.64%, and +5.35%
In other words that which cost $100.00 in January, 1982-1984, cost:

$ 35.70 in 1969
$ 45.80 in 1974
$ 68.50 in 1979
$ 94.40 in 1982
$226.67in 2012

http://data.bls.gov/pdq/SurveyOutputServlet or
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt

I've compared notes with others who run small businesses. In all our experience, we noticed inflation creeping in and the job market softening in the late 90's. We were all doing well and under the illusion it was one of those temporary things. However, the damage hasn't stopped since.

IMHO we are paying the price of aggressively gutting our economy in the name of globalism, so-called 'Free Trade', and political correctness under the three prior administrations. {In reality the enemy within in has been very slow and patient. The damage has been going on for decades.} Obama is just the icing on the cake.

OOPS . . . forgot to add, the damage over the three prior administrations had been hidden by 'enhancing' our economic statistics (unemployment, inflation, GDP), cheap credit, and cheap electronic ( & other) goods made by neo-slaves in third world countries.

Quote: algernonpj wrote in post #3

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IMHO we are paying the price of aggressively gutting our economy in the name of globalism, so-called 'Free Trade', and political correctness under the three prior administrations. {In reality the enemy within in has been very slow and patient. The damage has been going on for decades.} Obama is just the icing on the cake.

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Quote: Weird Tolkienish Figure wrote in post #5

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Quote: algernonpj wrote in post #3

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IMHO we are paying the price of aggressively gutting our economy in the name of globalism, so-called 'Free Trade', and political correctness under the three prior administrations. {In reality the enemy within in has been very slow and patient. The damage has been going on for decades.} Obama is just the icing on the cake.

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I've given trade a lot of thought over the past few years because it's a subject that troubles me. In general I used to be 100% committed to the idea of free trade and still I am close. However, some things are giving me pause... for example, trading with China, a country that we might be at war with one day, strikes me more as suicide than sound policy.

Plus when a country doesn't "play fair", subsidizes industry, put tariffs on our products, we need to use trade policy to iron out the problems.

I'm for free trade and think competition is good. Competition built this country. Competition is how capitalism works. Without international competition of automobiles we'd still be driving crappy 1970's cars.

But when you have other countries that aren't playing fair, then we don't really have free trade IMO.

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Quote: Weird Tolkienish Figure wrote in post #5

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[quote=algernonpj|p4710]I've given trade a lot of thought over the past few years because it's a subject that troubles me. In general I used to be 100% committed to the idea of free trade and still I am close. However, some things are giving me pause... for example, trading with China, a country that we might be at war with one day, strikes me more as suicide than sound policy.

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Quote: Thunderbird wrote in post #7

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Quote: Weird Tolkienish Figure wrote in post #5

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Quote: algernonpj wrote in post #3

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I've given trade a lot of thought over the past few years because it's a subject that troubles me. In general I used to be 100% committed to the idea of free trade and still I am close. However, some things are giving me pause... for example, trading with China, a country that we might be at war with one day, strikes me more as suicide than sound policy.

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It's not trading with China that is troublesome to me..its the amount owed to them by our government that is. That and the poorly made crap they produce.

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Zitat

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The fine print in China's WTO agreement was in an attached document euphemistically labeled an "accession agreement," which gave China status as a "nonmarket economy" and spelled out thousands of details about special preferences for China

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China Celebrates Outwitting Us