The Beauty of Government Statistics
Wednesday, May 14, 2008
Nothing to see here, move along people:
- WASHINGTON (AP) --Inflation pressures eased a bit in April despite the biggest jump in food prices in 18 years.
- The Labor Department reported Wednesday that consumer prices edged up 0.2 percent last month, compared to a 0.3 percent rise in March.
- The lower inflation reflected a flat reading for energy, which helped offset a 0.9 percent jump in food costs as prices climbed for many basic items, from bread and milk to coffee and fresh fruits...
- Core inflation, which excludes food and energy, showed prices well behaved in April, rising by just 0.1 percent, compared to a 0.2 percent gain in March.
It's like magic: if you exclude the prices of things that are increasing at double-digit annual rates*, prices are "well-behaved." Hell, they probably even bring an apple and put it on your desk before cleaning all the erasers.
But wait! What's a joke without a punchline?
- That reading should ease concerns at the Federal Reserve that the sharp increase in food and energy prices this year would lead to broader inflation problems.
The one thing in the economy that everyone needs**, food, is already shattering budgets here and causing protectionist laws, the forcible shut-down of futures markets, and foot riots elsewhere. But at least we can all rest assured that's not going to lead to broader inflation problems.
*.9%/month x 12 months = 10.8% annually. And that's just what they admit to. It's probably closer to double that in the real world.
**it's a lack of this item that has from time immemorial driven the migrations of howling tribes of barbarians, caused entire societies to die off like bacteria in a petri dish, and forced parents to eat their own children. But hey, the price of RAM is going down. No worries.
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Posted by smerdyakov (anonymous) on May 15, 2008 at 11 a.m. (Suggest removal)
Waiting for the End?
Posted by El_Borak (Bill Hoyt) on May 15, 2008 at 12:40 p.m. (Suggest removal)
Just the end of the Fed. It will eventually be obvious to everyone that
a national bank does more harm than good, and maybe, like we have twice in 250 years, some farsighted President and Congress will abolish it and take back their constitutional responsibility in regards to currency.
In the meantime, nothing to do but sharpen a few sticks and open a bag of marshmallows.
Posted by smerdyakov (anonymous) on May 16, 2008 at 10:11 a.m. (Suggest removal)
Until I heard this
http://thisamericanlife.org/Radio_Episod...
I'm not sure I would have agreed. After all, Greenspan was like God or something and it kinda feels like Bernanke's done as good a job as we could hope for these past few months.
That podcast (episode 355, "The Giant Pool of Money" ... BTW it will only be free for the new few days—it's a MUST LISTEN) identifies Greenspan's withdrawal of treasury bonds as a worthwhile investment as the impetus for what became the housing/credit crisis we're in now.
Still, I think I like the idea of the Fed having the reigns instead of a politically vulnerable (or worse, inept) person(s) making currency decisions based on their short-term political best interests.
Posted by clayhill70 (anonymous) on May 17, 2008 at 7:50 p.m. (Suggest removal)
I read The Creature from Jekyll Island about a year ago and I pretty much came away with.......the Fed is bad and our government is insanely addicted to it. Currently the price of oil is tied to the dollar, many oil producing countries in the middle east want to tie it to the Euro. Saddam Hussein was pushing for it the most, as are the Iranians. The Saudis hold "alot" of dollars.
Posted by El_Borak (Bill Hoyt) on May 17, 2008 at 11:13 p.m. (Suggest removal)
"the Fed is bad and our government is insanely addicted to it."
I think that's mostly correct, but a tad misleading, as if the Fed was somehow not government. The Fed is ultimately a creature of government; it has some independence but not as much as is popularly portrayed. And I'm not certain that even the independence it has is a good thing.
Smerdyakov's comment about the Fed rather than politicians "making currency decisions based on their short-term political best interests" represents the thinking person's understanding of the Fed. And there are real and concrete advantages of not having our Clown Congress making those decisions.
But the problem is that the people making those decisions still make them for reasons, and those reasons are not necessarily in the best interest of the citizenry.
The Fed is a bank, chartered by politicians but operated by bankers who - like everyone else - act in their own self-interest. Bankers make their money by lending, therefore it is in their best interest to lend as much as possible, therefore it is in their best interest that we borrow as much as possible.
Which means, all conspiracies aside, our monetary policy is set by those who have a vested interest in making sure that Americans are in as much debt as possible. How can it be a surprise that we find ourselves exactly in that position? We are the most prolific borrowers in the history of the world.
The Fed was created as the finance arm of government, ultimately to create money from nothing so that the government could spend money that it does not tax*. It was created to allow the government to run perpetual deficits, to remove it from the reality that each of us face as individuals: we can only spend what we can afford based on our income. But there is no free lunch. All bills come due eventually, and you cannot avoid your breakfast bill at Denny's by stretching the meal into lunch and then dinner. You have to pay it or walk away.
That bill, if not paid via taxes, is ultimately paid by the destruction of the currency. We are seeing that today, in the price of gas, in the price of food.
There is a very simple act that illustrates its effects. 4 Decades ago, one could take the current American money, a silver dime, and buy a gallon of gas with three of them. Today, that 1964 silver dime is worth more than a dollar, which means gas is still 30c a gallon, so long as one has the proper 30c. The other $2.60 represents how much the Fed has destroyed our money, not just for gas but for housing and for food as well.
But it has done so at the behest of government, which has done so at the behest of us. Ultimately, we are the Creature, or rather, we are Dr. Frankenstein, the creator of a creature we no longer control, but which wreaks havoc on everything around us.
* because the people who vote for politicians love spending but hate taxes.
Posted by El_Borak (Bill Hoyt) on May 28, 2008 at 9:06 a.m. (Suggest removal)
"Choose your own candidiate for President instead of the come to be expected RIGGED Elections!"
Heh. Am I the only one who sees the irony in that?
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