Listening In (the numbers behind the lies...how the US is fudging numbers)

[Roland99]

http://www.weedenco.com/welling/Downloads/2006/0804welling022106.pdf

A very dismal prospect. No question, this is the dismal end of the science— even for a dismal scientist! But the longer I’ve looked at the numbers and the statistical series as they’ve evolved over the decades, the more that I’ve started finding things in the numbers that most people do not see. One thing that you find when you look into all this is that the federal government is very honest in terms of disclosing what it does. It always footnotes the changes and provides all the fine details. Nonetheless, some of the changes are nothing short of remarkable and the pattern over time is what I call Pollyanna Creep—

...

What has happened over time is that the methodologies employed to create the widely followed series, such as what used to be called the GNP but is now widely followed as the GDP, the CPI, the employment numbers, all have had biases built into them that result in overstating economic growth and understating inflation— both of which are admirable political goals

...

Real unemployment right now—figured the way that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression—is running about 12%. Real CPI right now is running at about 8%. And the real GDP probably is in contraction. I venture that if you talked about those numbers now with the average person, they would say that they seem reasonable. If you tell them that people are playing with the official numbers, they say, “Yep, I figured that. There are no great surprises there.” I guess what I am saying is that my work shows that the economic perceptions of non-professionals actually have some real validity; there are in fact reasons for the disconnect between official statistics and what the populous is feeling.

...

One of the prime examples of how the system has really degenerated over time is the CPI. There was a very deliberate effort in the early 1990s under the auspices of Michael Boskin, who at the time was the head of the Council of Economic Advisors, in conjunction with Alan Greenspan, who, of course, was Fed Chairman, to “fix” the CPI. The story, very simply, was that CPI was supposedly overstating inflation. The pitch was that if people go out to shop and find that buying a steak is getting expensive, they buy hamburger instead. Therefore, their cost of living is really less than it would be if they always had to buy a fixed basket of goods, which is what the CPI was originally designed to measure. That was the whole purpose of the CPI, to measure the change in the cost of a fixed basket of goods over time. You’d have a steak, a loaf of bread, a gallon of milk, whatever. You’d price them out one year and then you’d price out exactly the same goods the next year. You’d look at the difference in the cost and that was your annual rate of inflation. It was a measure of how much the cost of a consistent and constant standard of living was going up. What Boskin and Greenspan argued was, “We should allow for substitution here because people can buy hamburger instead of steak, when steak goes up.” The problem is that if you allow substitutions, you aren’t measuring a constant standard of living. You’re measuring the cost of survival. You can keep substituting down and have people buy dog food instead of hamburger. It happens. But that’s not the original concept behind the CPI. The reason substitution of the items in the CPI basket became a hot topic in Washington at the time—and it was talked about very openly—was because the CPI was (and is) being used to adjust Social Security payments to compensate for increases in the cost of living, and tamping it down would hold down Uncle Sam’s outlays.

Williams later goes on to rail against Clinton for fudging unemployment numbers and later states he is a Republican by birth, a conservative, but that he's disgusted with both parties for creating and now ignoring this situation.

Very good read and there is MUCH more at the link. Get it while you can!



forgot I could still edit this OP :)

A Primer On Government Economic Reports (related article
http://www.gillespieresearch.com/cgi-bin/bgn

Notice the links in the top-right:

Series Master Introduction Read.
1. Employment and Unemployment Reporting Read.
2. Federal Deficit Reality Read.
3. Consumer Price Index Read.
4. Gross Domestic Product Read.

[SheilaT]

1. the fudging of the numbers

is very subtle and hard for most people, even those who've taken some calculus and statistics as I have, to figure out what's really going on.

For example, several weeks ago the Kansas City Star, my local newspaper, ran a long story about how average hard-working people are falling farther and farther behind. They're not living extravagantly, not charging up luxury items on their credit cards, simply paying there bills and trying to get along. But as is so often typical, a health-care crisis (in one case it was the birth of a premature baby) will knock everything over.

Meanwhile, on the business pages of the same paper all we read (in-between stories of the Enron trial and local businesses that are in bankruptcy) is how much better everything is.

Using averages can be extremely misleading. A good example is the old one of Bill Gates walks into a room of 30 people, and now, on average, everyone is a billionaire. In reality, it's sill just Bill Gates and thirty ordinary people, and no one has gotten any richer.

[KAT119]

14. K&R! Thank you! Met person from WH @California Health Spa

who whispered:" Never believe ANY numbers coming from THIS WH!" Also,somewhere read b/4 last "election" that whatever the "polls" said, in-house RNC saw the truth at 1/2 the poll #'s published...so * is in the teens now looking for a way to declare Martial Law to stay in power indefinitely-avoiding ANY future elections.

[unblock]

2. what would those stats have been in the 30s if they used today's standards

i wonder if you used today's definitions and applied them to the 30s what the numbers would have been....

[Roland99]

4. Not sure but we'd have likely seen BS articles like this one >>>>>>

http://www.investors.com/editorial/IBDArticles.asp?artsec=20&issue=20060310



The adjectives in that 1st paragraph alone are a dead giveaway to the smell of the rotten BS contained in that article.

And no wonder, they cite Brent Bozell's Media Research Center. :puke:

[Greyhound]

3. K&R, Should be on the front page.

:kick:

[Roland99]

5. A Primer On Government Economic Reports (related article) >>>>>>

http://www.gillespieresearch.com/cgi-bin/bgn/

Notice the links in the top-right:

Series Master Introduction Read.
1. Employment and Unemployment Reporting Read.
2. Federal Deficit Reality Read.
3. Consumer Price Index Read.
4. Gross Domestic Product Read.

[Darkhawk32]

6. Kicked and nom'd! n/t

[porkrind]

7. Important issue and good post. Thanks. K&R.

[RUMMYisFROSTED]

8. k

[Joanne98]

9. republicans always always lie about numbers K&R

It's their first commandment....

[leftofthedial]

10. there is a fine line between "fudging" and "lying"

the current criminal regime lies every time they say anything.

[Roland99]

11. That's why I went with fudging. It's been going on for a while.

[leftofthedial]

12. the first alarming "fudging" I remember was when Reagan

redefined "unemployed" to no longer include most of the unemployed people I knew.

the bush crime gang, though, has moved economic reporting squarely into the propaganda department. I don't believe a word they say or a number they report. It is transparently politically self-serving.

[Roland99]

13. And it only stands to get worse after M3 becomes a secret.

[many a good man]

15. Guess who is getting ripped off the most

Interesting note about Social Security:

All in all, if you
were to peel back changes that were made in the CPI going back to the
Carter years, you’d see that the CPI would now be 3.5%-4% higher. The
difference that it makes is significant: if the same CPI were used today
as was used when Jimmy Carter was President, Social Security checks
would be 70% higher.

Seven-zero?
70%. You have to keep in mind that all these changes were cumulative.

You haven’t even mentioned hedonic adjustments.

It should be noted that he fingered every president since Kennedy for manipulating the methodology or data. He says it was Clinton that stopped counting discouraged workers (after one year).

[Ksec]

16. exactly

[Roland99]

17. The Fed Officially Kicks Off the Next Recession

From AGENDA21's thread:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x638529


http://www.safehaven.com/article-4759.htm

It is official. A recession is coming. How do I know? Because this week new Fed Chairman Ben Bernanke gave an official warning to bankers about commercial real estate loans. That is always the kickoff to a recession. It is the starter's gun, the national anthem before a ballgame, the opening hymn at a church service. Here is how it works. The Fed has three official tools to control the money supply: Setting reserve requirements (telling banks how much of their deposits they cannot lend. The higher the reserve requirements, the less loans, the less money creation by the economy). The second tool is open market operations. Here they set the amount of money in the system by buying or selling securities. Third is setting the discount rate, the rate of interest banks must pay to borrow money at the Fed. Theoretically, the higher the rate, the less money banks will borrow, the less they have to lend, and the less money that is created by the banking system.

However, there is a fourth tool, a stealth tool, which has more power and impact than the other three. It is called the Federal Reserve Bank examiner. He/she is the person who goes into a bank about once a year and decides which loans are good and which are bad. Based upon their holy edict, a loan is classified in one of several categories which determines how much money the banks must set aside from earnings to reserve for possible losses. It is completely an estimation game. So the rules can and do change, based upon the whims of the examiner, taking his marching orders from the Fed Chairman. If the Fed wants the money supply to expand, then Fed examiners come in with reasonable standards for review of loans, and classify those loans with a general leaning that they will be repaid according to terms. Thus banks do not have to reserve as much for possible estimated losses and are in effect not discouraged from making more loans. When the Fed wants money supply to grow, aggressive lending standards often get passing grades. That's when you business people will see your friendly bank commercial lender more often, jawing you into that expansion project you've been thinking about, inviting you to golf outings and ball games. They want more loans. They need your expansion project.

However, once the Fed Chair sounds the alarm about commercial real estate loans, it starts an entire chain of events that ultimately and unequivocally leads to economic recession. Here's what happens. Out of the blue (that seems to be a favorite modus operandi for all Fed operations) those friendly back-slapping Federal Reserve examiners (not really, they are never overly nice -- okay I've met two or three out of a pool of three hundred -- Mike, Eddie, Eric, you know who you are and I know you read my stuff) show up with a scowl that droops like the golden arch. They ask for the files, a table, an outlet, a coffee pot, and the key to the little boys and girls room. About two days after they arrive, the banker knows something has changed, something serious, and he gets this knot in the pit of his stomach that will last for about three years. Examiner Margo asks for a meeting with banker Joe. She brings her supervisor to raise the fear level of the meeting. The Bank's President, Joe, brings his top commercial lender for protection of his fanny, and that lender brings his junior lender who will ultimately be the sacrificial lamb and get the ax should things blow up.

...

There are two ways for the money supply to grow. First is through the bank lending function. The more lending, the more spending, the more bank deposits, which is at the core of the money supply definition. The Fed has apparently decided to slow the velocity of money creation by slowing or shutting down lending. However, the Fed knows it needs money to buy financial markets and monetize our debt. The lending function is too much out of the direct control of the Fed. In other words, money is created that way, however the Fed doesn't get to decide where that money goes. It is going to businesses for expansion and jobs, etc... No, the Fed wants to decide where money goes. So it will replace money created through the lending function with money created from thin air by the Fed itself. The way for that electronic money to enter the economy will be from the Fed directly buying something, or lending money to someone. In effect, the Master Planners will decide where fresh money goes. They will control more of the spending. But they cannot let us know this. Because it would be too easy to prove they are doing this if M-3 remains transparent. You would simply compare commercial and consumer loan data to the M-3 figures. If we saw debt declining but M-3 rising, voila, we would clearly see the Fed is directly pumping and funneling that money someplace, which would beg the tough question, where? You can bet most honest, patriotic, free-market Americans would not appreciate the answer.

More in the article (scenario re: banks and Fed examiners as well as more info on M3

[ms liberty]

18. K&R, bookmarking for later reading...

I'm like one of those people in the article - I couldn't tell you how, but I know we're in deep doo-doo.

We have to fess up to the fact of our dems being in this one up to their necks; it's gone on too long to be otherwise. But we need to be the ones to fix it; we know damn well they won't.

Thanks for posting this.

[Roland99]

19. There's also a great article at the WaPo from a while back >>>>>>>>

Almost Unnoticed, Bipartisan Budget Anxiety
Wednesday, May 18, 2005
http://www.washingtonpost.com/wp-dyn/content/article/2005/05/17/AR2005051701238.html

While Washington plunged into a procedural fight over a pair of judicial nominees, Stuart Butler, head of domestic policy at the conservative Heritage Foundation, and Isabel Sawhill, director of the left-leaning Brookings Institution's economic studies program, sat down with Comptroller General David M. Walker to bemoan what they jointly called the budget "nightmare."

...

With startling unanimity, they agreed that without some combination of big tax increases and major cuts in Medicare, Social Security and most other spending, the country will fall victim to the huge debt and soaring interest rates that collapsed Argentina's economy and caused riots in its streets a few years ago.

"The only thing the United States is able to do a little after 2040 is pay interest on massive and growing federal debt," Walker said. "The model blows up in the mid-2040s. What does that mean? Argentina."

...

Walker put U.S. debt and obligations at $45 trillion in current dollars -- almost as much as the total net worth of all Americans, or $150,000 per person. Balancing the budget in 2040, he said, could require cutting total federal spending as much as 60 percent or raising taxes to 2 1/2 times today's levels.

[mom cat]

20. Excellent post K&R

[Roland99]

21. Kick for the business day crowd

:)