Reagan/Bush changes to inflation -- really 300 percent higher

This is an update. I went in and estimated what inflation would be, had not Reagan, Bush I, and Bush II admins changed the numbers.

[9215]

1. That is interesting stuff

I haven't had time to look at it in detail, but I would love to know the history of the CPI (an earlier topic) and how its elements have been changed over the years. I remember hearing, I think it was an article by Gore Vidal many years ago, about how Raygun reduced the "visible" military budget by shifting much of the nuke research over to the Dept. of Energy.

It would be real interesting to see how many more areas of government spending and economic indicators have been changed to make them more politically palatable.

I have been reading Susskind's book on Treasury Sect O'Neill. In it O'Neill cites Cheney as saying "deficits don't matter, Reagan proved that" when O'Neill confronted him with the numbers if tax cuts were combined with increased military spending. Then we have Der Fuhrer not even mentioning deficits last night in the SOTUS.

IMO what Cheney meant is that,for some reason, deficits don't matter poltically, because they definitely matter to the public who has to pay them off.

3. What is SOOOOOO interesting

Wooooooooooooow

The seed of the cooked inflation number was PLANTED by Reagan, according to my research, in 1983!

This is getting more fascinating the more I look at it.

I just updated with yet another discovery about the SUV trend and weightings.

(You said)
In it O'Neill cites Cheney as saying "deficits don't matter, Reagan proved that"

[9215]

7. You are really onto some serious stuff here

These comments by Cheney really stood out as I read this book. Very puzzling. What I think Cheney means is that these deficits don't matter politically. Reagan sure did get away with them, so in that regard Cheney is correct.

I highly recommend Suskind's book. O'Neill realizes he is playing the game according to a different set of rules than the Bushistas. Suskind: brackets mine

.....After the midterms <2002>, though, O'Neill could sense a change inside the White House, from Rove, Lindsey, and others. A smugness, a sureness. No one mentioned to O'Neill that the proposals (tax cuts) were back on the launchpad. They knew better.

Now Cheney mentioned them again, how altering the double taxation of dividends would provide some positive stimulus.........

O'Neill jumped in, arguing sharply that the governmnet "is moving toward a fiscal crisis" and then pointing out "what rising deficits will mean to our economic and fiscal soundness".

Dick cut him off.
"Reagan proved deficits don't matter," he said.

O'Neil shook his head, hardly believing that Cheney--whom he and Greenspan had known since Dick was a kid--would say such a thing.

He was speechless. Cheney moved to fill in the void. "We won the mid-terms. This is our due" (Price of Loyalty pp. 291)



Note: The double taxation of dividends is referring to stocks that are taxed as corporate profits and then again as capital gains by individuals.

[gristy]

6. Dan, is Clinton really innocent of these shenanigans?

I mean, he might be. But if he isn't you would do well to point out the extent to which each President played or didn't play this game.

on edit: oops, meant to reply to original post...

17. I haven't checked out the Clinton years in extreme detail

In a sense it doesn't matter after what Reagan/BushI did in 83.

It looks to me like the variations are less extreme under Clinton. But still, the major trend was set by Reagan/BushI in 1983 with the housing change, and that sleeper cycle is just rearing its ugly head recently as the house/car cycle builds up the "black hole which eats oil."

The real kicker is they claim to have done this because "houses aren't a consumption", but an investment. Welll....they were...until people started to take out 25k pieces of their houses and consuming them enmasse about 2 years ago. That's consumption, in small pieces.

And as far as I can tell, 2003 is the first time winter energy costs got moved into summer in the PPI. And in the CPI, December 2003 fuel oil costs just went away--unless you actually had to pay them, which everybody did(?)

Now, the BLS policy to be able to hack CPI figures in this way was set in 1990 me thinks--a Bush I year! Hmmmmmmmmmmmmmmmmmmmmm!!! I need to check that again! I think they call it some kind of "intervention", which is outrageous. Hacking data is hacking data, and you don't want to be giving low-interest loans to people who are getting reamed with energy costs...or do you????

BUT, so far, the Bush winter in summer PPI thing is unprecedented, first time in 2003.

I am taking a step back now and saying "Why are the energy costs for the SUVs outside of 'core' CPI, when you can't run the damn things without the energy!!!!"

So it looks like a set-up to me! Reagan-BushI-BushII

The GOPs top donors last year were the luxury homebuilders and of course the auto and oil cos. I am wondering if the auto companies have cut some kinda behind the scenes deal with BushCo on the prices which "go down" on cars.

This definitely helps feed the black hole cycle--amidst our people dying in Iraq over energy, and with global warming and all.

SHAME!!!!!!!!!!!!!!!!!!!!!!!

Lied to from Corporate America.
Lied to on Wall Street
Lied to about Iraq -- to the UN and last years state of the union
Lied to about inflation...why not?

[Beetwasher]

9. I Agree, the Cheney Statement Was Meant to Refer to Political Repercussion

from deficits.

As to the shift of funds from the Pentagon to DOJ, this was actually quaint if you think about it. They actually at least TRIED to hide it. I think there's even more hanky panky than that going on and in broad daylight now! For instance, the trillions missing from the Pentagon budget. Yes, that's TRILLIONS missing in the last few years. Ooops! No one knows where it is, and apparently not many people care.

Also, remember during Reagan the big scandal of the inflated prices for various low cost things like nails and hammers? I can almost guarantee that money was being funneled elsewhere. The thing is now they don't even bother doing that. Trillions just show up missing and no one does anything about it. Sad really.

[9215]

11. Weird

A minor correction: it was shifting funds from Pentagon to DOE.....but maybe DOJ too.....who knows.


But that statement by Cheney really has me wondering. I wish some reporter would ask him what he meant. You have the head of the Fed and the Treasury Secretary beating their brains out trying to figure out how to control deficits and after a few years of submitting reports and advisement they are told that their input doesn't matter on this issue!

Then they let O'Neil go.

With Halliburton and other Bushista related obligations coming on board as deficits skyrocket Cheney doesn't want that to crimp the spending binge for the BFEE's interests, expanding the war into other areas costs be damned--there is enough pork to go around for anybody.

This SOB is gonna crash and crash big.

Then there is Ruppert talking about the stock market being artificially inflated with CIA drug money being pumped into it in years past and we now have the dope trade in Afghanistan back up to pre-Taliban levels......zzzzzzzzzzzzzzzzzzzz....combined with a rise in the stock market?

[Beetwasher]

21. Sorry, typo, meant DOE

n/t

[Beetwasher]

2. Thank You Dan!

Your stuff is terrific and well sourced! For some reason I can't help but think this cooking the books regarding the CPI is not an isolated event. I gotta wonder which other numbers are cooked in this manner?

4. Keep in mind

In order to not pay the correct amount of Social Security, they have to cook the number. A lot of PAYOUTS from the government are indexed against this.

But let's ignore that for a moment.

The big problem I see is banks just take the number as reported, and lend out cash at low interest rates, not realizing all the problems.

[TahitiNut]

8. Remember also that the upper limit on FICA/OASDI payroll taxes

... is also indexed to the CPI. This makes little difference to those earning less than that limit (the vast majority of wageearners) but it sure makes a difference to right-wing fat-cats.

[Beetwasher]

10. Damn

You're right. This index is key to so much and it's so fucking cooked. Wow...

And you know what, this makes sense to me and should to everyone even on a subjective level, even if you don't bother checking all the source material (I did and the conclusion is fairly impeccable anyway, IMO). I fucking KNOW prices have been going up on shit. EVERYONE KNOWS THEY ARE! Although rents are dropping...hmmmm....

12. Rents are not dropping

They just record house prices in terms of rents, which are not going up fast like houses. And they give this a huge weight in the index.

HOWEVER, notice that CARS are listed as going down in price. I do not think they actually are, this is not only an artifact of low interest rates, like in the CNN article--but I fond some information that they also use a new formula where a new car with a new feature makes the index go down. Then this gets subtracted from the CPI.

Then they increased the weighting of this magic shrinking car in the index. This then allows the Fed to say there is no inflation--and more cars ae sold, which makes the index go down more, which makes the Fed say blah blah, which sells more cars...

Now, they will probably tell you "but people are buying more cars!"...

All the while demand for oil goes up!!!!

Clever.

[creativelcro]

19. These days, any idiot could use a spreadsheet, decide what

inflation numbers they want and work backwards to fiddle with the data and weights plus rationalization of them to make it come out...

[Beetwasher]

20. Re: Rents Dropping

Sorry, that was just a bit of a personal observation I've had and maybe it only applies to NYC. I'm looking for an apt. in NYC and the rents ARE definitely dropping. I don't know about in general in the country though...

[Gulf Coast J]

23. They are dropping

Plenty of non BLS reports say that rents are going down. Plenty of apartments Northern Virginia are now offering deals that I couldn't find when I signed my lease five months ago.

I've read articles about rents dropping in other parts of the country too.

30. that's from the housing bubble

In some towns, rents are dropping in price due to overbuilding of houses.

[Beetwasher]

33. Yeah, no doubt

NY is definitely a unique example in many ways though. Not only the housing bubble, but lot's of people are moving out unfortunately AND the repercussions of 9/11 are still reverberating economically...I've never seen so many empty store fronts in my life for example...I know that's commercial real estate, but still, it's a reflection on the real estate market as a whole...

13. AHA!

Not surprised.

[leftchick]

5. Thank you Dan and keep the info coming...

Truly Enronomics going on here I am afraid. I showed your last thread about this to my husband (not a DUer) and he was shocked. He wants to know why our Democratic reps. don't seem to recognize what is going on. I do too....

14. It is complex

Bits and pieces come together. It is complicated like Enron transactions.

[RedEagle]

15. Keep going Dan

Maybe Moyers would pick up this story.

He doesn't seem interested in voting.

16. I'm worried

When you really look close, this problem is a pernicious cycle, with both the demand for loans,and the eating of energy.

Dan

[leftchick]

18. kick

:kick:

22. So what about the effects on global warming

of this cycle???

26. Kick

45. Whaaaaaaaaaaack

Kicky

[Gulf Coast J]

24. Could you link the original thread?

I wasn't able to find it. I'm interested in looking over what you did. Are you claiming the weights are wrong, or that prices of specific goods were underestimated? Although the CPI can't reflect the reality of every single person, I've found that what I've paid for things has been going up about in line with what the BLS is publishing. My health insurance has gone up faster than other things, but food, clothes, rent, entertainment and transportation have remained about the same.

25. Analyses

Your comment is very anecdotal and subjective. It is not prices specifically, but the weightings afforded overall, and during specific periods.

You can find an analysis at www.libertywhistle.us, which is largely referenced.

You can dig through some information at www.bls.gov, some of which is linked directly into my web page.

You can go into many tables at www.bls.gov, but there is no way you can analyze trends in things like demand, housing and vehicles from data there. You have to use my sources which are based on census or census analysis, or from the reported stories linked there.

28. My 300 percent calculation work

Its on a thread here somewhere on DU

Basically, I nixed the 1983 change, and then tried to account for the over-abundance of the auto factor which has a negative impact on the core rate due to financing incentives related to super-low interest rates. New autos are part of "core", but the gas to run them is not!

I was tempted them to add this fuel factor in to core calculations, but I did not.

Nice setup by BushCo. Cut a deal with the car cos and the oil cos so there is ALWAYS low inflation, no matter how many SUVs are bought.

[Gulf Coast J]

31. I read over your website

I know my example was just anecdotal, but I was just pointing out that your calculations didn't pass my smell test. Thank you for the link though. You've put a lot of work into this and should be applauded for your effort.

I'm not sold on your explanations though.

Reverting back to the pre 1983 owners' equivalent rent change seems capricious. The only justification for it seems to be that since it was done under the Reagan administration, it must have been politically motivated. This despite the lack of any evidence that methods were influenced by the White House. In a Bureau filled with nothing but civil servants (the Commissioner is the only political appointee) one would think that at least one whistle blower would come forward. Especially during the eight years of a Democratic President. Since the owners' equivalent rent attempts to separate the investment aspect of owning a house from the consumption aspect, the change seems to be based on good principles. After all, the CPI measures consumer prices. GDP calculations also include the equivalent rent of households, so the BLS change seems consistent and rational. Your assumptions appear to based on nothing but speculation.

You say that higher energy prices and home sizes are inconsistent with reducing the relative weight of that category. Homes might be larger, but heating and cooling systems are also much more efficient. According to Energy Star, heating and cooling a home costs $600 a year. http://www.energystar.gov/index.cfm?c=heat_cool.pr_hvac That's not out of line with the importance BLS puts on home heating. I'd like to see average energy efficiency factored in with home size and price before I buy your argument here.

I didn't see health insurance in any of the tables, but the weight of medical has been increasing. In December 2003, medical care counts for 5.961 of consumer spending. In December of 1999 that weight was 5.768.

I'll look over the rest when I have more time to research.

34. 83 change, et. al

The 1983 change is now driving the black hole, along with low interest rates, and the auto bubble. That such a change occurred under Reagan/Bush I is a nice coincidence. That it eats energy is a nice coincidence.

I do not however, believe such things which have cycles which benefit particular interests are coincidences. You can if you want. Had I done like you, maybe there wouldn't be a "black box" voting movement.

Regardless of all other things, without that change, there would not be a black hole of the type described without that change.

And you missed my point about consumption, related to the 1983 change. People are consuming their houses, at odds with the designation in the BLS documentation which says people don't consume their houses. So something changed.

As for whistleblowers coming forward, and "that we would expect them to be coming forward" is ABSOLUTELY absurd. We know from multiple events recently that even if they did come forward, we would not hear about problems until AFTER disaster struck. In fact, I am one of the few who was heard about by the public at large.

As for "more efficient heating or cooling", its certainly worth considering, though with larger homes come more windows, and heat loss(gain) is more related to volume and surface area than efficiency of a unit--....and you also seem to have missed the SUV scenario which proves exactly the opposite point. And the 600 dollar figure you pointed at is without parameters, so it is as good as hear say. Which year? Where in the country? I also referenced some data before I wrote that, which showed an increase based on square footage, and showed a direct correlation with increased energy over time, even considering any efficiency changes.

Simple thermodynamics--efficiency changes can be had in systems which are complex, such as air conditioners. A gas or oil furnace relies on a simple process of combustion, which isn't something that can or has been improved much since pre-historic times. While I am sure there have been some changes, it wouldn't sem to account for the flat or lower weightings for home energy--certainly between one year and the next.

Now, as to linking aberrations statistically to Reagan, Bush I, and Bush II, I could probably do that. Right now, I see some major changes at those junctures, which by themselves, explain the black hole.

You missed the medical insurance premium entry...its down in there.

The medical insurance premium is another category from medical services. Each represents about 5 percent of the budget of the average person. But premium is entered as less than one percent in the weightings.

Oh, yes, there is one other odd thing. The way weightings work, is items which drift less expensive, should drift to lower weightings in subsequent years. The increased weightings of owners equiv and new cars just don't jive looking at the recent past...they seem to have jumped Bushie II against what would be the math trend. On the other hand, maybe this is another side-effect of the low-interest bubble (a huge unsustainable demand spike), which should make us worry all the more--such is a sure sign of a bubble.

And interesting to know that the person who RUNS BLS IS a political appointee...! Are you sure?

[Gulf Coast J]

35. Thanks for the response

Your major point seems to be the black hole created from a change in the way the cost of housing changed in 1983. It's true that houses are being consumed. But houses are just as much an investment as it is something consumed on a monthly basis. I rent an apartment, so 100% of that is consumption. But if I spent the same amount each month on a house, it wouldn't be fair to put all of that money into consumption, since a house is also very much an investment. The way BLS measures housing seems very logical.

I looked for the medical insurance premium and couldn't find it. This is the release I've been looking at: ftp://ftp.bls.gov/pub/news.release/History/cpi.12162003.news. Perhaps I should be looking somewhere else.

Have you looked over the BLS Handbook of Methods for how the CPI is measured? It can found here: http://www.bls.gov/opub/hom/homch17_a.htm. According to it, weights are determined by the consumer expenditure survey. The most recent survey for 2001 can be found here: http://www.bls.gov/cex/csxann01.pdf Perhaps you should read over those to get a better idea of how weights have changed.

As for political appointees, the current commissioner is Kathleen Utgoff, a Bush appointee. I'm sure there is a list out there somewhere of any other political appointees there (I'm pretty sure it's just the commissioner.)

37. Comments

The problem is the index has been hacked in so many ways so as to report a low number. It's up to you as to which you feel is the major point.

I conclude that you agree there is a problem if housing is consumed, since there isn't weighting whatsoever for home prices. So "logical"--but incorrect.

The weightings are not found in CPI releases nor surveys like you showed. I have read all that. You sent me a link to things I have looked at already. Those things can say whatever they want to, but it is the underlying table which is of interest, and is what I cite, and is what generates the number you and I see, and is worth considering over time and against trends.

Go to the BLS website and look at the weightings under "CPI" "Detailed statistics" for past years. I already put the entries in my story, they are large messy tables.

What I have learned is that there is a Bush appointee here. That is of interest.

38. The problem is a complex cycle

Perhaps you are trying to reduce an awful cycle to one cause. Fortunately, YOU are not assigned to figuring out what they did at Enron (joke)...

As I see it:

1) A number of changes all targeted toward making the reported CPI lower.

2) A change made in 1983 related to housing.

3) Low interest rates which were put in to try and get the corporate criminals off the hook for damage to the economy...as an "experimental cure" which didn't treat the disease.

4) A cycle which has arisen related to all of the above, and the related generation of a large amount of debt, and an associated, marked co-cycle generating increasing demand for energy--which isn't accounted for in the tracking of this inflated cycle, since energy is "non-core" (and actual energy numbers are hacked when reported, as I documented). A cycle which apparently also pushes jobs offshore, due to huge domestic appetite for energy.

In this respect, the problem is similar to the voting systems certification one, which is also an extraordinary, bad cycle.

[Gulf Coast J]

40. The CPI was revised downward in 1996

The current commissioner wasn't appointed until sometimes in the middle of 2002. Before that, the acting commissioner was Lois Orr, someone who had been at the Bureau for over twenty years. So you will have a hard time 'linking' any changes in 2001 or 2002 to Bush43.

The most troubling issue I have is you failure to discuss the merits of the 1983 change. Without a single bit of evidence you blame the Reagan administration for wanting to keep inflation low so they changed the way housing was measured. That's fine for speculation, but you are passing this off as serious research, and you need to address that actual issue of the proper way to measure how much is consumed when somebody is buying a house.

I remember posting something about the Boskin Commission's report from 1996 that the states that the CPI actually had been overstating inflation. Do any NBER or JSTOR search and you will find many papers stating that the CPI overestimates inflation.

A couple interesting papers: Symposium: Measuring the CPI
Consumer Prices, the Consumer Price Index, and the Cost of Living
Michael J. Boskin; Ellen R. Dulberger; Robert J. Gordon; Zvi Griliches; Dale W. Jorgenson
The Journal of Economic Perspectives, Vol. 12, No. 1. (Winter, 1998), pp. 3-26.
As essential overview of how Boskin measured the upward bias in the CPI.


Sources of Bias and Solutions to Bias in the CPI, Jerry Housman, NBER Working Paper No. w9298 Issued in October 2002
A discussion on how to correct various biases in the CPI


Bias in the Consumer Price Index: What is the Evidence?
Brent R. Moulton
The Journal of Economic Perspectives, Vol. 10, No. 4. (Autumn, 1996), pp. 159-177.
Does a good job explaining the commodity substitution bias (the Econ 101 reason the CPI is too high)

41. Comments

I also noticed those papers suggesting inflation was overstated--with regard to base calculation, but not in regard to weightings. In fact, I think there was a whole series of changes made to reduce the CPI based on these.

Such a paper might get extra special attention for political reasons, by the way.

I haven't examined those papers in detail, but the net change seems to be a lower CPI, indepdendent of the issues I am looking at, which result in an even lower, lower CPI.

I don't want more theory papers--often funded by govt political grants, directly or indirectly, by the way.

Show me the paper which describes the cycle I have outlined, and what its effects are on the economy when ultra low interest rates are in effect. Like, people are buying gas hog SUVs like crazy, even while our soldiers die in Iraq, and THAT perversely is the basis for reporting a low inflation rate, which feeds the cycle some more.

I do not believe I attempted to blame Reagan, I just pointed out that the core of the black hole was put in place then. And I cannot speak for why things were done under Reagan(in fact, he cannot speak for himself anymore), I just know now there is a cycle. It may have been an innocent change. But the result now is not a good one,, and clearly is benefitting BushCo. You know, like the war (at least for now).

Regardless of who is to blame, there IS a black hole.

[Gulf Coast J]

42. You would gain credibility if you just focused on the 'black hole'..

and dropped speculative reasons behind it. There is no evidence of some Reagan/Bush41/Bush43 conspiracy to lower the CPI. It hasn't even been established that the President has the ability to influence measures. Even if you didn't explicitly state a conspiracy (it sure sounded like it when you wrote that the 'seed was planted by Reagan', it is implied and many posters here are picking up on that. Such distrust over everything simply isn't healthy to keeping an objective view of things.

The fact you don't want to look at papers funded by government grants suggests that you are more concerned with only finding things that support your view, even if your view turns out to be wrong.

I still can't find any measure for health insurance.

43. I hear you

I originally didn't have a Bush or Reagan slant on the story. Go back and check and you will see that. There are earlier versions of my story on DU. BTW I voted for BushCo, but had no idea what was going on behind the scenes.

However, when I noticed the energy industry would benefit no matter what happened, and when I noticed the 1983 thingy under Reagan benefitted BushCo, I slanted the story a bit--but not much.

You know, the voting story didn't catch on, until they found out about Diebold comments about BushCo. Then it made the NY Times. And Bev and David are in the news every other day.

I will look at government-funded papers which explain the black hole. But I haven't found one yet.

The "health insurance" is BURIED, I am not surprised you didn't find it. But here, the most recent one, and apparently the same table as referenced in the CNN story (I conclude that because the super-inflated car and house weighting are very recent introductions, and the numbers in this table correspond to those in the CNN story)

http://www.bls.gov/cpi/relimp_2002.pdf

It is near the middle of one of the pages past the first. .315

[Gulf Coast J]

47. A little more about health insurance

I'm sure you've read this, but just in case anybody is following at home, they might be interesting in reading how BLS comes up with their medical care numbers: http://www.bls.gov/cpi/cpifact4.htm I honestly didn't understand most of what they wrote about health insurance.

I don't envy the person in charge of figuring out how to take into account quality of health insurance coverage.

48. That *absurd* mumbo jumbo

In all my years in computer science, economics, and science, I have never seen anything like THAT!

The mumbo jumbo in that explanation for how they arrive at the health insurance figure is utterly absurd. I love the last part, where they use the words "probably blah blah blah" (do they not understand their own absurd formulae)?

NO WONDER THE WEIGHTING FOR HEALTH INSURANCE IS WRONG AND OFF BY A FACTOR OF TWENTY!

To wit, nowhere in their formula do they mention how much anyone is actually *paying* out of their budget.

>>>Do banks which loan money out based on the "low" inflation know about this and related serious math problem in the CPI?<<<

I am going to update my article this weekend, to clarify some points, including how the core CPI was adjusted several years ago to fix the used car problem, and I will include some mention of the absurd mumbo jumbo (glad to see I am not the only one who thinks it is absurd).

(from the text)
The relative of change for each health insurance stratum is estimated, using the product of two relatives of change. The first relative is the change in the retained earnings ratio, item number 3 above. The second relative is the change in the cost of medical items from elsewhere in the CPI medical care major group. These two relatives are both required, because retained earnings levels change with both the change in benefits paid and the change in the unit cost of administering these benefits. This process yields a measure of price change for insurance of constant coverage and use. That is, changes in benefit coverage and use levels will generally be offset by compensating premium charges, and thus, not significantly affect retention rates. Also implicit in the process is the assumption that the level of service from individual carriers is strictly a function of benefits paid. Other changes in the amount of service provided for policy holders, such as more convenient claims handling, will affect the index; but these effects are probably small.

44. If the past is any guide

A few years ago, they took used cars out of the core CPI index, because they were leading to a problem like new cars are now, although in the opposite direction.

YES--they took used cars out of the core index...

This suggests that their is room for the government to either raise interest rates to fix this problem, or to re-calculate the CPI with the new car stuff taken out of the core.

And perhaps possibly they would also fix the housing circular problem.

So there is a path to fix this problem:

1) Raise interest rates
2) Correct for the problem(s) and re-issue the CPI

Such is inevitable, because the current "black hole" cycle is unsustainable since it relies on infinite energy supply, which isn't accounted for. Something will "give." Let's hope it isn't too late...maybe it is too late for jobs in the US???? And then what?

Dan

50. Home energy back-of-napkin calculations 2000 vs. 1970

Let's just say that energy efficiency improvements can be 30 percent since 1970 (that is my best estimate based on what I read).

Let's say that there is a 25 percent penetration of such improvements since 1970.

Now, we know that average square footage is up by 50 percent since 1970.

Assuming energy demand is directly proportional to square footage, then the average house in 2000 vs. 1970 would use

1970 house
=1.0

2000 house
= 1.5 - (1.5 * .25 * .30) = 1.38 = 38 percent increase in demand.

BUT WAIT
According to census statistics, there are LESS PEOPLE in the bigger houses, and LESS PEOPLE in multi-family houses (which are more efficient because they have adjacent units which insulate). So the real number is higher.

Also, I think energy usage is proportional to square footage in a ratio that is greater than one, due to cubic factors related to heat radiation.

Hence, my claim that super-low interest rates which promote big houses and eat energy seems justified.

[corporatewhore]

27. Reagan and chimpy !!!!

29. kick that chimpy

[9215]

39. ROFLMAO!!

46. KICK! Is that baby Bushie with the Bottle?

IS IT OILLLLLLLLLLL in that bottle?

49. DROP-kick that chimpy

whack whack

[Skidmore]

32. Why don't you make this information available to

someone like Durbin, Kennedy, or Byrd and/or the Dem candidates?

[Jose Diablo]

36. Motivation to change the way CPI is computed in 83

To me I wonder why, or what was the motivation by the 83 administration to change the way the CPI was computed.

I remember the 70's as very high inflation with the devaluation of money as a real concern to people. Wages were going up, but it did little good because the higher wages were ate-up by inflation. I remember the justification for higher wages was dramatic improvements in worker productivity, thus higher wages. Yet the higher costs to live meant very few profited from those higher wages.

I think it was the late 70's that social security retirement benefits became tied to the CPI. Meaning as the money devalued, those on retirement benefits automatically received increased retirement to compensate for lower value of the money.

Throughout this thread, I keep wondering, why was the way CPI computed changed and when it was changed makes me wonder if it was changed to eliminate a benefit 'we the people' in congress provided to the politically powerful retirees.

Was the change in the CPI computation method made to get around indexing the retirement benefit to the CPI?

I also remember there was confusion as to what was causing the inflation. You would hear a lot of higher wages being the cause. Finally it was pointed out, the money supply, creating money without a underlaying tax base to pay for the spending by government triggered the start of the high inflation. Of course, the news shouted long and hard about the corrupt unions being the cause, but it was shown the true cause to be the fiscal policies of the Fed as the cause. Inflation was a hidden tax.

As for the CPI being an accurate representation of what exactly is the measurement of the rate of devaluation of the currency, I look at the changes I have seen in fuel, electricity, cost of shelter, cloths and food just to name a few and the official CPI stated by the labor department is way too low.

I suspected the books were being cooked, but never could figure out how. What you have shown is how the books were cooked.

Why they were cooked is the next question I would like to know. In addition to who planned and executed the fraud .

Good job.

[RedEagle]

51. Interesting Thread

Kick!

52. The red eagle swoops in

In't that a CLAW rather than a KICK?