Customer Feedback, Week 2: “Where Are the Republicans?”

73 Comments

1. Patterico sez:

   the Democrat-controlled Senate

   In other words, “I’m a mindless partisan who needs to inject stupid insults into a conversation I’m pretending is serious”. Not that we didn’t know that about him already.

   • At one point in drafting, I tried to refer to the same idea. “Democratic-controlled Senate,” I wrote, and gagged. A Democratic-controlled Senate is, in other words, a Senate controlled by Democratics. I thought “Democrat-controlled,” being proper grammar, should sail through ok, but to be safe, I went with a different locution altogether. That was the right move, I think.

     • I’ve been coming around on all this, myself, thanks to Will T. I think it’s absurd (and flameworthy!) for the GOP to introduce legislation changing the locution from “Democratic” to “Democrat”. I mean, that’s just childish and all-to-representative of the GOP’s approach to politics.

       But in general, I think Democrats need to soften up on the issue and not be such grammar-Nazi’s. I mean, people talk that way. I’ve even heard democrats talk that way. So I think the Dems ought to let the GOP have it and it’ll be normalized soon enough. And so will conservative’s infantilism about the issue.

     • “Labour-dominated Parliament” sounds right to me, and it doesn’t mean dominated by Labours, but by members of the Labour Party.

       • The “be-Laboured Parliament” sounds sufficient.

2. Boehner thinks Jack Lew is a lefty extremist. Bernie Sanders thinks he’s a corporate squish. They can’t both be right…

   As for Hagel, that minor skepticism on his part of the current size of military spending is raising the ire of supposed deficit hawks speaks volumes, none of it good. If spending is the problem then there is no reason for “defense” to not be on the table.

   • IIRC, we’ve matched out peak spending (in inflation adjusted dollars) under the Cold War — and that does NOT count the costs associated with actual deployment to Iraq and Afghanistan.

     I can’t take anyone seriously about the budget unless they’re looking to trim back Defense by 20% at least. (Which will only leave us spending, you know, 80% as much as the rest the world combined on the military. Which if that isn’t enough to protect us, we should probably surrender to…whomever, I guess).

     Medicare’s a different story simply because Medicare is actually a slower-growing government example of a massive, massive problem — the overall cost of health care. Medicare covers the most expensive demographics (elderly and sick) and they’ve kept their cost curve lower than private industry. We’re not so much having to “fix Medicare” as “fix healthcare entirely”.

     There was a lot in the ACA designed to bend the cost curve, IIRC. Most of the bits that applied to Medicare got scaremongered by the GOP for votes. So the Democrats at least seem to realize healthcare (including Medicare) have some serious long-term cost issues.

     At this point, I’m gonna have to say the GOP is more the problem on Medicare than the Democrats, simply because of that — I don’t even think the GOP wants to end it, because the Democrats trying to fix it are simply too useful a cudgel electorally.

     No one can tinker with Medicare without the next election cycle featuring screaming Republican attacks on it. Meanwhile the Republican solution is, well, politically infeasible. (I do not think, even with a super-majority in both houses and the Presidency that they would actually repeal or replace Medicare with vouchers or whatever their plan is, simply because they are so dependent on the votes of Medicare users — who will know they’re about to get the shaft).

     Which is probably why the GOP line on entitlements appears to be telling Democrats “offer us some cuts” and not making any suggestions on their own. Better cudgel.

   • Sure they can. Corporatism and lefties are bestest friends. Just look at Hillary.

3. Really, Tim, I think this is one of the better developments on the site post-election.
   (Will T’s Linky Friday posts being another. Weekends used to be dull around this place.)

   As far as incarceration initiatives go, I was reading about this at the federal level in Utah:

   The first program, called RISE (Reentry Independence through Sustainable Efforts), was the only program in the United States, when it started, to have a specialized mental health court docket for people coming out of federal prison with severe mental illness. The mental health defendants have an obligation to attend counseling, take prescribed medications, and report to the court on a weekly basis as a part of their plea in abeyance that keeps them out of prison. Wells said, “It’s a positive approach rather than a punitive approach…we’re a problem-solving group.”[14] For more information about this specialized mental health court, please see this article: http://www.vawatchdog.org/09/nf09/nfapr09/nf041309-7.htm

   The second program is a specialized drug court docket for re-entry for people with severe drug abuse problems. She also chairs a state federal advisory board to attempt to identify and eliminate barriers to employment, where re-entering offenders can meet their obligations instead of returning to prison.

   (from Wikipedia)

   The odd thing is, even though these programs are something that I’ve been advocating for years, I can’t tell once I see them whether they’re “Leftist” or “Conservative.”
   And I still think that a chemical dependency is a legitimate medical issue, and to violate a person’s probation or parole over a dirty UA is a violation of the Americans with Disabilities Act.

   At any rate, the feds seem like they’ve always been a lot more in the way of cheapskates than the states. The states can always get more money from the feds.

   • Will- We have programs just like this at the state court level in AK. At the state level drug treatments always are looking for money and often get it from the feds since the can’t, or wont’, fund them.

4. That Patterico dude is very smart. He’s exactly right. Problem is, Boehner & Co. have no idea what they actually want, and even more so really don’t want to figure it out.

   • I’m suer they know what they want. The problem is they can’t sell it to either the public or half their party.

     Play to the public? Face a primary candidate from crazy-land who has a good chance of winning. Play to the base? Lose the public utterly.

     • +1. What the Red State/HotAir crowd wants is simply not popular. Even 70% of Tea Partiers don’t want cuts to Medicare or Social Security. The only reason Ryan and Romney weren’t killed on Medicare is they made the politically smart pivot of basically saying, “Obama stole your Medicare money to give to poor brown people in Obamacare.”

       So, there’s there reason why Obama has continually said, “put up some cuts publicly” during this whole run around. Because he’s already been f’d over once for trying to make cuts, only to see the GOP run against those cuts. Also, because just like the Chuck Hagel nomination, the tax deal in general, and most of the things we’ll see over the next few years, it’ll further cleave the crazy conservatives from the corrupt conservatives.

       Also, any Republican politician, commentator, or strategist who supported George W. Bush in 2004, but is worried about raising the debt limit now is a hypocrite at best or a demagogue at worst (I know, Obama did the same thing. The difference, the Democrat’s made a lot of speeches on the Senate floor and that was the extent of their attempt to cause issues. Harry Reid was never on Meet the Press talking about tax increases or we try to destroy the credit of the United States).

       • Ya know, I’ve heard that line about raising the debt limit under Bush II, and it’s really not the same thing now.
         The debt exploded under Obama, and much of it from the stimulus in the first two years.
         We’re talking about the difference between walking a flight of stairs and climbing Everest.

         • Even though Obamas spending is greater quantitatively, I think it’s important to make the qualitative distinction that bushes spending was mostly military, where Obama’s spending is mostly domestic. So if we’re going to have a conversation about it, we have to talk about the merits of military spending and policy (see Robert Kagan’s book, which I reviewed last year) on the one hand, and the merits of Keynesian domestic economic policy, on the other hand.

         • Point being, one shouldn’t look at spending under Obama as justified or not based on the amount Bush spent on military adventures. Whether bushes Bush’s expenditures were justified is a completely different question than whether Obama’s are.

         • 1. Actually, Obama’s spending growth has been the lowest since Eisenhower (http://www.forbes.com/sites/rickungar/2012/05/24/who-is-the-smallest-government-spender-since-eisenhower-would-you-believe-its-barack-obama/). The reason why deficits have exploded is basically, tax revenue fell off a cliff for obvious reasons after ’08. If we were still getting 18-19% of GDP in taxes as in during the Clinton and Bush years, we’d still have a deficit, but it wouldn’t be as massive.

           2. Second, the biggest expenditure that drove the deficit up were the Bush tax cuts, that were enacted without any spending cuts. The defense budget bloating up to $700B from $450B was part of it, but that’s relatively small change compared to the tax cuts (and before anybody jumps in, I think we’ve should’ve let ’em all expire and gone through a progressive simplification of the tax code.)

           3. I realize these are big numbers, but if 16 Trillion dollars of debt is a moral hazard that we must fix or we’ll become Greece/Spain/Zimbabwe, is 10 Trillion Dollars of horrible horrible debt really that different?

           4. Again, yes, Obama and other Senator’s made silly speeches against the debt ceiling. But again, Harry Reid or Chuck Schumer never went on Meet the Press and said, “either the President rescinds the tax cuts for the top one percent or we’re going to destroy the credit of the United States.”

         • The spending growth analysis tells you more about the immediately preceding Congress, in this case, the 110th, comprised of a Democratic Senate and House.

         • Yes, if only there was some sort of way the President could stop bills from passing he wanted. I’m sorry, but large amounts of spending has been a bipartisan deal since 1981 at the very least. The whole, “oh, it wasn’t Bush’s fault, that evil Nancy Pelosi made him sign bills” is silly. But, OK, as a liberal, I’ll take the blame for the .8% difference in spending between Bush’s first term and his second term. 🙂

           Dubya, who I mention again had 70% approval ratings from Republican’s on the day he left office, needed to spend money due to outside forces (a recession picking up steam) just like in the 90’s, Bill Clinton had to cut spending due to outside forces (bond vigilantes!).

           Regardless, the rest of my point stands. If 16 trillion dollars of debt is a sign we’re doomed as a nation unless we cut spending, the 10 or 11 trillion we were in debt in 2003 shoud’ve been a sign as well, but it seems conservatives didn’t care at the time. The debt only seems to matter to the center-right consensus when a Democrat is in office.

     • Morat & Jesse –

       Some on the right certainly think they know what they want; others know what they think they want. But I made a point of saying “Boehner & Co.” As you say, they’re stuck. The last thing they actually want to do is sit down and start to think about what they actually want (meaning, “want to go with” – I really don’t think they actually care that much what happens, so long as they can sell it as cutting “spending” while not hurting constituencies they don’t want to hurt. Maybe they do care, but I get the sense that on earnest policy preferences, they likewise don’t have that much of a sense of what they’d do with unified power right now.) In some senses it’s amazing they’re seeking to max leverage. They could easily just say, ‘Look, we don’t want to threaten U.S. credit and we don’t even think government shutdowns are a good thing to use to leverage budget discussions. But we sure as hell are going to talk a lot about what a big spender this president is.’ That would be a completely legitimate approach for (effectively) an opposition party to take. I don’t think they actually want the fish they’re casting for with these high-stakes standoffs (again, the leaders – there certainly are true believers who know what they’d do with it). I think what you’re going to see over the next few months will essentially be them slowly reeling in their lure, hoping for no bites they cant shake off the line.

5. I really liked the Schiff video.
   I wish he would go more toward explaining the discrepancy in the numbers.

   • The people who dump on the CPI act as though the CPI is the only one of the many measures of inflation that disagree with them. That’s nonsense. The various inflation metrics make sense with respect to one another and they pretty much make people like Schiff look wrong. So those guys choose their own preferred model. But why do they produce such unique results? If people like Schiff want to blame monetary policy for the run up in their own private inflation index, they’re also going to have to explain why monetary policy drives the price of say, chicken, and not a bunch of other goods.

     Perhaps most importantly why, if inflation has really been running at 7-9% for years (as people like ShadowStats would have us believe), have we not noticed that we are all massively less wealthy than we were just a generation ago?

     • He compares those numbers in the video actually.

       • I’m not sure what you mean by this. I watched the video, but it’s not exactly a detailed comparison of methodologies–what was his weighting for the sets of goods? More than likely the statement, “Inflation is high” boils down to, “The price of health care is increasing very rapidly.” Grabbing a couple of the examples from these sample bundles and spot checking against the BLS data don’t really show alarming inflation rates. Back to the question of monetary policy, though: Is the argument really that a spike in health care costs is a monetary policy issue?

         • We’re seeing giant gobs of inflation in energy costs (tripling over teh past 13 years.)
           Food prices are inflated right now (transitory, probably) because of large midwest drought.
           Health care costs are an issue, as is debt service (but that’s going down, see calculated risk).

           Not saying that we have monetary policy issues. Actually “you can’t push a string” and ZIRP strongly indicates that the FED is useless right now.

         • That is NOT INFLATION.

           Inflation relates to the value of currency overall, not to the price of a single good or commodity!

           I realize it is common to use the term ‘inflated’ as in “The price of gold is inflated’ but that does not mean inflation is happening. That means demand for gold has risen more than supply (and the implication of ‘inflated’ is that the demand is temporary, driven by speculators or hoarders, rather than something longer lasting).

           There is no “energy inflation” — the price of energy has risen because demand has outstripped supply, not because the buying power of the US dollar has fallen.

         • Morat,
           Calm down, I’m just using the term as the BLS does, when it calculates the inflation of cereal, or anything else for that matter.

         • No, you’re not. That’s not what the BLS does either!

           You’re conflating two or possibly three seperate meanings of “inflation” and deciding they all mean monetary inflation (of the type the BLS measures), and then listening to conspiracy theorists on it.

           Do yourself a favor — go read the basics on what inflation is and isn’t, what is meant by the term, and how economists use it. (I suggest wikipedia as an excellent start).

           You’re confusing entirely different things, and until you get them straight you’re not in any position to grasp the points anyone is trying to make — me or shadowstats or whatever that website is called.

           I’m not trying to be cruel or insulting — but inflation, as used by the BLS and as relates to something very specific about the US dollar and it’s purchasing power overall.

           It is a difficult and tricky subject (as you’ve stumbled into yourself, it can be quite difficult to determine whether the dollar’s purchasing power is changing or if underlying economic issues are causing it — energy prices, in specific, can cause quite far reaching changes in prices) and until you get the basic definitions and concepts straight, you can’t discuss it.

           “Inflation” as the BLS calculates it is entirely about the purchasing power of the dollar — how much is a dollar really worth. (It calculates this against a standard basket of goods). If there is inflation, then the dollar purchases less — if there is deflation, it purchases more.

           However, if oil prices rise because oil demand rises and supply does not keep up — oil gets more expensive, but the dollar has not inflated. The purchasing price for the dollar has remained unchanged, the price of a commodity has risen. That is not inflation.

           View it as a logic problem: Inflation causes prices to increase, but price increases aren’t necessarily inflation. You are claiming prices have increased (but only for specific goods), so therefore inflation — which is not logically sufficient.

           And in fact, as pointed out, those prices would have risen a great deal more if there WAS inflation, as their price increase is fully explained for other reasons.

         • morat20,
           Forgive me, but my understanding of this is a little bit dated. Didn’t we throw out the fixed basket of goods a while ago?
           (Yes, I do get that inflation ought to be calculated against a basket of goods. My inflation is different from your inflation, because I spend my money on different things than you do.)

         • How does one measure inflation without measuring M3?

         • Your inflation is the same as mine, Kim, because we both use dollars.
           The statement “My inflation is different from your inflation, because I spend my money on different things than you do” is…

           It’s…like every possible word and implication of that sentence is so wrong it transcends the word “wrong” and enters into a new word, some word meaning “Not only wrong, but so wrong it’s obviously corrupted other nearby concepts until they’re wrong”. It’s like a tumor of wrongness.

           Inflation, no matter how you slice it, is about the purchasing price — the power, the value — of a currency. Not to “an individual”. It has nothing to do with your net worth, your salary, or anything to you personally.

           It means, in the US, “what can I get for a dollar?”. You can also view it as the “value” of a dollar — (hence the basics of increasing the supply of dollars — printing more — is generally going to inflate the currency. Except, well, not always. It’s complicated, but this is the Econ 101 version wherein if you double the number of dollars, you’ll halve the value assuming demand stays constant.)

         • I think what Kim is saying is that, if inflation is based on a basket of goods, then the approximation (it’s always just an approximation) will be more accurate if you buy a lot of those items in the basket, but it may be less accurate if you’re buying items from a different “basket.” The reason for a basket rather than a single item is that the price of a single item is affected by more than just the number of dollars floating around. A balanced “basket” helps control for those other things. But they don’t control perfectly. One “basket” may control better than another. I took that as one of the general points Schiff was making.

         • There’s a variety of baskets used, but one thing they tend to do is exclude very volatile goods — like oil and energy, because shortages (hurricanes, gas shortages, etc) will drive up the basket of goods because of a demand/supply problem (which isn’t inflation).

           In fact, the conspiracy theorists on inflation often use baskets — or just outright single commodities, kinda destroying the point — that are volatile or have seen large shifts and say “There! Inflation!”.

           But it’s stupid to look at the price of gold and say “It’s rise, therefor the US dolar has weakened”. No, the demand for gold has lept (and quite inanely so, but gold is magic to same people).

           You can make arguments for different baskets, and the various price indexes use different goods — but they all show agreement on US inflation rates (practically non-existant), which also agrees with the T-bill market and the bankers — who have alot of skin in the game.

           In the end, though, you’re trying to measure the purchasing power of a currency — and while baskets are clumsy, it’s a hard thing to do in general. However, baskets are good enough (no one needs several points of precision). And they’re all showing solid agreement on low us inflation.

           Which comes back to Kim, who wants to use inflation as the technical economic term (“Real inflation is much higher”) and defends it using information that only applies under an informal use of the term and is utterly wrong if you look at it with the correct (ie: what inflation really means and what the BLS and others measure).

         • I’ll take this to the bottom of the page.
           There’s too much going on here already.

         • “You can make arguments for different baskets, and the various price indexes use different goods — but they all show agreement on US inflation rates (practically non-existant), which also agrees with the T-bill market and the bankers — who have alot of skin in the game.”

           Not according to shadowstats. Why not just run the numbers yourself? I’m pretty sure someone’s got Carter’s basket of goods lying around…

           I REPEAT, the BLS is only distorting the headlines. Shadowstats is using the details from BLS.
           And they’re coming up with radically different conclusions than the papers talk about.

     • Perhaps most importantly why, if inflation has really been running at 7-9% for years (as people like ShadowStats would have us believe), have we not noticed that we are all massively less wealthy than we were just a generation ago?

       Imports, my friend. We have a domestic CPI, that is a CPI for domestically produced (some) goods and (mostly) services, that is exemplified by the rate of inflation for things like medical services, legal services, financial services, and education. But a large proportion of the things that consumers actually spend money on day in and day out are cheaper overseas imports. The two chunks of consumer spending average out to something like 4.3% inflation.

       And we actually are less wealthy that a generation ago. Unless you’re in the upper 5% or so at least. Our standard of living has held relatively steady but the level of personal debt to pay for that has exploded in the last 30 years.

       • Our standard of living hasn’t held steady. Houses are larger*, cars are larger, more reliable and more advanced and medical care is far superior. Labor heavy services (like medical care, education, etc) have gone up in price because people have more money to spend on things that haven’t had massive increases in efficiency and productivity. Some of this is due to Baumol’s cost disease

         If anything, CPI overstates inflation, rather than understates it.

         * In 2011 average size was 2,480 sqft compared to 1,600 sqft in 1980. This doesn’t even take into account shrinking household size.

         • Since when does a larger house make a better standard of living? The analysis i’ve read shows that people don’t use most of the house they own. And they pay more to heat/cool it too.
           Medical care is far superior? Really? Point me three MAJOR medical advances within the past ten years. MRIs don’t count.

         • Well, ceteris paribus, people pay for a bigger house than a smaller one. So people obviously value a bigger house more. If people continued to buy houses that were the the same size as they were 3 decades ago, housing prices would have gone down less.

           As for medical treatments, breast cancer survival rates are one indication of how much better things are now. Also, the improved survival rate post-heart attacks.

           In no particular order (not sure why I can’t include fMRIs)
           1. Minimally invasive surgery techniques (Cleveland Clinic removed a kidney through a belly button)
           2. Tykerb and other improved breast cancer treatments (herceptin is a little over a decade ago)
           3. Improved clot busting drugs

           On the more pure science front with potential for more in the future
           1. Stem cells (adult and embryonic)
           2. Cheap and fast personal genome mapping
           3. fMRIs

         • Mo,
           Well, see, past TEN years. fMRIs are from the 1990’s (your shifting goalposts are not appreciated, by the way). So are a lot of minimally invasive surgical techniques.
           Courtesy of the Komen foundation, we haven’t done jack to decrease breast cancer. *eyeroll* I know a PI on a study that managed to get early-stage breast cancer to disappear via manual stimulation.

           I’ll give you the clot busting drugs, and the “cheap and fast” personal genome mapping (still thousands of dollars, ain’t it, and government funded to boot!).

         • Genome sequencing today is about $4,000 (from a private company). It ain’t nothing, but it’s cheaper than some drugs. And for the value, it’s peanuts. Especially since it allows better tailored medicine. And the are two entrants in the $1,000 full genome sequencer X-Prize waiting to be judging.

           Laparoscopic surgery is from the 90s, but natural orifice surgery is even less invasive and less than a decade old.

           So throw in that, stem cells and improved more personalized cancer treatments and things are definitely getting better.

       • How are you weighting your domestic purchases vs imports? More importantly, going back to Schiff’s claim, are you suggesting that overproduction of US dollars causes an offsetting increase in our purchasing power abroad? I’m not seeing it. I agree that the stuff we get from overseas is cheaper (and generally, getting cheaper), but how is this masking “real” inflation? It seems to me to be more of a function of cheap labor entering the market.

         Regarding percentiles, I won’t argue with your point there–I generally agree, although I think that the hidden cost of health care is a major part of that. But that’s a distributional issue rather than a price indexing one. Unless there’s an argument that hidden higher inflation contributes to that distribution. I haven’t thought too deeply about this, understated inflation would certainly be a major benefit to net borrowers at the expense of lenders.

     • Jesus! Use the actual numbers, the BLS doesn’t lie in the details. They only lie on top. And have a gentleman’s agreement with the news orgs.

     • Because Wallmart. And switching to cheaper goods. Pull me a kitchen table. I can tell you the exact date of manufacture, based on material, thickness, and ability to withstand weight put on it.

       We’ve switched to far less durable goods, in general.

       Why haven’t you noticed the desperation of the Christmas Retailer? I dunno, cause you’re stupid? Oblivious? People are out of spending money. People take out loans for Christmas.

       ONLY 33% of Americans have $1000 in their banks. You really think we’re doing better, living paycheck to paycheck in a debt-based society (ya want me to pull the numbers on the amount of debt the Average American has??)

       • Actually, you could convincingly blame that on wage stagnation, not inflation.

         Given wages have stagnated — dropped even, this last year or two — relative to the official inflation rate (which you claim is too low), then they should have plummetted against your higher rate.

         I can see our switch to cheaper being convincingly explained by high inflation OR stagnant wages, but both? It’s not nearly bad enough. And we KNOW wages have stagnated.

         • Inflation without wage inflation is a contradiction in terms. However, that’s what’s been going on since the 1980’s. Shit sucks and then you die.

           People work more hours, and earn less.

           I know one of the guys who put shadowstats together. He’s a competent researcher, you’ve used his work. And they put it together because it was ABSOLUTELY necessary.

           The government has a reason to distort the toplevel numbers:
           1) people are idiots and scared of inflation. It’s dumb. Be scared of deflation, that’s super super bad.
           2) SS

           Morat20, look at wallmart’s numbers. At the end of months, they’re losing money because people can’t even afford walmarts prices (switching to dollar stores). Stuff’s bad out there, and it is nearly completely masked for the uppermiddle. The lowermiddle, the working class hasn’t gotten a real raise in 10+years.

         • You can have inflation without wage inflation. It’s very simple — a wage/price spiral does not have to engage, you know.

           I simply don’t see a case that inflation numbers are rigged to be too low, and that secretly inflation is much higher. I see a case for nasty wage stagnation, going on 30 years now, with massive growth in energy and health care prices eating into disposable income more and more each year, but not one for rigged inflation numbers.

           I think if we were actually experiencing 7% inflation on top of stagnant wages, we’d sorta…you know, notice and we wouldn’t need conspiracy minded people to prove it using arcane economics.

           (of course, I once had a conversation with a fellow who couldn’t understand the difference between “inflation” and, say, “rising energy costs”. Inflation can make your electric bill higher, but so can a gas shortage. They’re not the same thing. poor fellow got very confused.)

         • Morat20,
           Can you think of three types of businesses that need to know the actual rate of inflation, so they don’t go out of business?

           Shadowstats is payed for on the free market, by large businesses who need to know the real numbers so that they can continue to exist.

           It was necessary.

           There are fifteen million conspiracies around you. Most fizzle, are rather dull and boring. Like the Knights Templar or the Illuminati.

           That occasionally, a conspiracy actually turns out to be important shouldn’t surprise you. Surely you’ve heard of astroturf?

         • Morat, yes, you can have inflation without wage inflation. But to analyze the problem, we ought to understand that what we really had was debt inflation. M3 Skyrocketing. Capiche?

         • Yes. Bankers. People who purchase T-bills.

           Both of whom have trillions of dollars, on the record, stating inflation isn’t 6% but closer to 1%.

           Unlike conspiracy theorists on a website.

         • ROFL. Flight to quality mean anything to you?

         • morat, what is so wrong about using Jimmy’s numbers? Honestly, answer me that.

         • So I’ve pointed out trillions of dollars of ‘real world’ people saying you’re wrong, and your answer is “lol” followed by asking what’s wrong with Jimmy’s numbers?

           For one, I have no idea who the heck Jimmy is. Secondly, the only numbers cited were BLS — which those trillions of dollars agrees with, as does, well, everyone else plus real life — and the conspiracy theory numbers of a website that are trivially and easily seen as wrong.

           People notice 7% inflation. Trust me. It wouldn’t be whispered on dark corners of the web, no matter what the government claimed was the real number. 7% is pretty freaking obvious. It’d be screamed by people like Krugman or DeLong — the BLS’s work is open and easy to delve into.

         • Morat20,
           Jimmy Carter — wasn’t that obvious?
           http://www.shadowstats.com/alternate_data/inflation-charts
           Shadowstats is using the BLS to come up with the REAL numbers, not the ones that have been systematically tinkered with to decrease SS(social security) payouts.

           Those banks et alia pay for this, because it’s what they need to do their jobs.

           Yeah, we notice 7% inflation alright. Go look at Walmart’s numbers, they’re a decent proxy for a LOT of things.

           WHAT is so conspiracy theory about using an older metric? Honestly!

       • Yes, it could be a function of my stupidity or economic illiteracy, but humor me for a bit. How is the fact that median real wages are stagnating the same thing as inflation? More importantly, how is this a monetary policy problem, and what should the Fed do to fix it?

         • Real Wages Stagnating means that Prices are inflating relative to what people have. Fewer dollars per pocket, chasing goods that cost more.

           ROFL. Did I ever say this was a monetary policy problem?? The fed has a bazooka, but it still can’t push a string.

         • I suggest you stop using the word ‘inflation’ until you understand what it means.

           Inflation — it’s about how much a dollar buys, not how many or how few you have.

         • Actually, inflation is more of a surcharge on liquidity.

           I’ve done a bit of currency trading in the past; and I can tell you that the greenback is definitely lower against the loonie and the Aussie dollar.

           While whatever legitimate “demand” there is for gold might have some pricing affect, the devaluation of the currency relative to other currencies definitely has some effect.

           Of course, the vast majority of the legitimate demand for gold is as a hard asset.

         • Eh, you get into the weeds when you’re comparing floating currencies against each other.

           Because that’s not all (or even any) inflation, but relative economic strengths. X is gaining against Y, but they’re both gaining against Z, which means is Y is inflating and deflating at the same time, depending on who is measuring it.

           Gold tends to rise as people flee to it in uncertain times, which is like fleeing to hog bellies or lumber, except gold is magic to some people. Gold’s value is inflated in the sense that it’s higher than normal demand due to, well, panicky investors. I haven’t been watching it lately, no point. It’s a bad investment during recessions and uncertainty. Too much temporary money driving the price up.

           Good time to sell, though. 🙂

         • I need to get to the recycling center and deplete my reserves of cardboard, plastics, glass, and paper.
           I’ll get back with you.

         • lol. I have a bit of a bee in my bonnet about gold. Gold bugs annoy me the most (Alan Greenspan needs a sharp slap to the face about it), but really the human obsession with viewing gold as somehow special as a commodity irritates me to no end.

           It’s a commodity. Like platnium or iridium or iodine or sand or lumber or pig bellies. It’s worth lies solely in supply and demand, nowhere else. It does not have ‘inherent value’ beyond that any commodity has.

           I suppose I’m particularly annoyed by it because it doesn’t come up as people hedging gold under the common-sense theory of “People flock to gold when times are uncertain, because people are stupid about gold and think it’s a special super safe place for money, so I should buy gold low or bet on gold rising because, you know, psychology of masses and the like” — no, it comes up as people believing a lump of gold has some special, magical, wonderous property that every other element on earth (save perhaps silver, the weaker and less awesome magic metal) does not have.

           Especially people who can see how fiat money works — it’s value lies solely in supply and demand, it itself is just paper or cheap metal, and has value because it is a universal medium of exchange. We’ve all agreed on it. So it’s illusory, in a sense — and I can see how that trips people up. But gold is illusory in the same way — it has value solely because we value it! Just like fiat money.

           Backing currency with it does nothing but really screw with your monetary base, generally in the wrong way. It doesn’t somehow make money any less or more real — it’s the same as it ever was, an agreement over pieces of paper. Sure, you can redeem those papers for some fraction of it’s supposed value in gold if it’s gold backed — but you can also redeem it for a chicken whether it’s gold backed or not, and you can eat the chicken. 🙂

         • Will,
           You noticed that Breton Woods II is dead yet? I figure that’s why the Loonie and Aussie are headed up. Someone finally decided that we’re too loony (no pun intended) to pin everyone’s fucking reserve currency to us.

           Morat20,
           Do the words gold carry trade mean anything to you? The market in gold is mondo opaque, with tremendous “undocumented reserves” lying around in bank vaults. Yes, there is PANICK on top of that. Also, there is India, where carrying around money in the form of jewelry is traditional. Also driving up silver, fwiw.

           Goldbugs also irritate the hell out of me.

           Last time around, though, gold was actually a decent buy (I think. Bought silver myself, better potential for not losing your shirt, cause silver has growing markets). Buncha people needing to cover leveraged buys.

         • The loonie & the Aussie dollar are known as “commodity currencies,” and they typically follow the path of oil and gold respectively. Those commodities are more expensive. While part of that can be explained through S&D, much of it is a loss of purchasing power in the USD.
           Gold is up because and its “inherent value” in that it’s a hard asset.

6. That coin idea is a pretty fucking bad one. *eyeroll*
   After all, what would JFK have to say about it?

   Our spending is a long term issue. As in ten years. *shrugs*

   It’s all well and good to loosey goosey that the markets might panic. But they’re ALREADY panicking!@! Look at our bond rates, dammit! People are doing the classic flight towards quality, and that’s american bonds.

7. @TFrog: While he doesn’t go in depth as to the weighting of his basket, health care is not a component. Prescription drugs comes close.
   He does, however, go into the Kaiser survey where health insurance rose by 24.2% from 2008 – 2012, with the official numbers at 4.3%, which is lower than the official rate of inflation; as well as health insurance being 1% of the CPI while it is over 1/3 of the median household income.

   Inflation is about money supply, to my understanding. Rising health care costs have no causal effect there.

   @Morat: I think you were being really unkind to Kim when she had a fairly true and salient point.
   Inflation is measured by aggregates, and it’s a fairly straightforward arithmetic problem.
   The value of all goods & services in an economy measured against the units of currency in circulation.
   Creating money at a faster rate than the economy can absorb it is the one and only cause of inflation under normal conditions.
   Most of consumer spending is food & energy related, which are often discarded by the official statistics as too volatile. This goes back to the concept of fundamental shifts and technical shifts, which relate to the type of analysis used in trading.

   And for all the talk of T-bills & bonds, you still haven’t addressed yield inversion.

   The issue of wage stagnation relates to the factors of production. The sticky wage effect has been known since the time of Kennedy.

   Back to the Schiff video:
   With 44% of a survey of over 1000 registered voters saying that “Rising Prices” is their “Primary Economic Concern,” you have to think that that maybe someone is seeing it.
   That the prices of the ten top-selling newspapers & magazines have risen by 131.5% while the gov’t is reporting it at 37.1% is problematic.

   Now, I’m not really invested in Everything Rightwing, and I care nothing for dragging Obama down.
   But the same thing that was wrong under Bush II is still wrong under Obama.
   And when you have Greenspan on Capitol Hill stating that the housing bubble took them by surprise, you have to ask, “Why?”
   And it’s no conspiracy to say that many people disagree.
   One of my big complaints with QE (pick a round) is that flooding the market with excess dollars is bound to generate inflation, at some point. The only question is one of when it will be realized.

   The odd thing here is that, although this seems to support many of the Lefty talking points (and particularly against chained CPI), that this is some Austrian economist seems to be sufficient cause to reject it.
   Think about what the man is saying. What is it that the data shows?

   • Under carter it was a straightforward problem. Once they started introducing the possibility of the things in the basket of goods changing, then it becomes less straightforward.

   • Will H:

     Ahh. I glitched. He included prescription drugs and dental services while the CPI has health insurance. In any case, the weighting here matters enormously, as does the basket of goods chosen. It should be noted, for example, that the MIT Billion Price Index tracks the CPI pretty well. So what’s actually driving the differences between Schiff and the mainstream? We could compare the BLS methodology to Schiff’s, but only the BLS puts out the complete report. If we knew what Schiff was doing, we could break it down using FRED or BLS data. If I had to guess, I would guess that it’s primarily prices for durables that are doing it.

     Back to my key point here: If what we were seeing was “inflation” in the sense that the dollar is losing purchasing power overall and the CPI was hiding it, we’d see the PPI going up (we don’t), the MIT index going up (nope), the GDP deflator reflecting it (diverging, but not in a direction that supports Schiff). Anybody can choose 20 reasonable sounding goods and arbitrarily weight them to produce practically any result. The question you have to ask is, why that number is special when compared to all of the others? Why is it different and does that difference make it more informative?

     And for all the talk of T-bills & bonds, you still haven’t addressed yield inversion.

     I think that Morat20 has addressed that indirectly by asking why we haven’t noticed. If the dollar was losing purchasing power at 7-9% per year, why is the yield curve not enormously positive? Who loans out money at a massive real loss rather than moving it into other currencies? Apparently, everybody who isn’t as clever as Schiff, which seems to be just about everybody.

     One of my big complaints with QE (pick a round) is that flooding the market with excess dollars is bound to generate inflation, at some point. The only question is one of when it will be realized.

     The Fed can cause inflation or deflation by choosing the wrong supply for dollars, pretty much by definition. That’s not a problem with a particular round of QE–it’s a problem with setting the wrong aggregate in general. But the function dollars:inflation is a test of peoples’ fundamental model of how the economy works. One camp says that in a demand-shock recession like this, we shouldn’t see significant inflation until the economy recovers. That side meshes with what I learned in econ 101 and they seem to be making much better predictions so far.

     The odd thing here is that, although this seems to support many of the Lefty talking points (and particularly against chained CPI), that this is some Austrian economist seems to be sufficient cause to reject it.
     Think about what the man is saying. What is it that the data shows?

     Are you really suggesting that we along with the majority of mainstream economists and investors reject Schiff’s analysis because he’s an Austrian economist? That’s really not a very charitable way of looking at it. I’m rejecting him because he doesn’t seem to have a workable model, his key prediction over the past 4 years has been wrong, and he’s producing his own private metrics to fit his model now that the his model and the generally accepted data are diverging.

     • Shadowstats methodology seems straightforward enough…

       • I’ll have to take ShadowStats word for it because I’m not going to pay for the data series. I don’t see any reason to think that the data are fudged–I just don’t agree with the conclusion.

         The assumption seems to be that inflation indexing was perfect in 1980 (or 1990, depending on which of the ShadowStats data sets you take as gospel) and deeply flawed. I don’t see any reason to believe that’s the case. I do see some reasons to find the ShadowStats conclusions suspect.

         1) The obvious “investors” question. Why again hasn’t the dollar collapsed as these savvy investors go running to other currencies with lower true inflation? Surely the long arm of the BLS doesn’t reach into Europe and Asia. Everybody seems to be jumping on investments with enormously negative real yields.
         2) Eyeballing the ShadowStats graph and saying that we have had 22 years of inflation averaging 7% yields a loss of purchasing power that doesn’t pass an intuitive sanity check. Compounding inflation like that doesn’t make things uncomfortable for the working class. It eviscerates everybody.
         3) Why do Google and MIT come up with numbers more in accordance with BLS than SS?
         4) Why are the other inflation indicators closer to BLS than SS?

         I’m not arguing that SS isn’t doing a straightforward above-board calculation from accurate raw data. I’m questioning the usefulness of the conclusions.

         • 1) not expecting you to pay for the dataseries.

           2) Flight to quality, combined with risk-evaluation (as scored by ratings agencies, and then implemented by dumb money), combined with honest to goodness flight of money to China and other third world countries, resulting in bubbles.

           3) If we’re talking real inflation, which also means wage inflation… *shrugs* no evisceration. Plus, inflation makes things better for borrowers. And when we’re running so much debt that is underserviced or in default… Inflation can be good for consumers. It might help to explain why we were seeing so much loans, wouldn’t it?

           4) Because google and MIT aren’t being paid by the same corps that pay shadowstats?

           5) Free market wins! Shadowstats gets paid by a lot of big corps (and smart people). Therefore their numbers are at least somewhat useful. nyaaah. [yes this is argument from authority.]

         • Kim:

           2) Let’s examine this. What does “flight to quality” mean when the “quality” is experiencing 7-9% inflation? Who considers a 3% nominal yield “quality” in 7% inflation, regardless of how likely it is to get paid? You’d be better off buying yen and stuffing them into your mattress or just handing your wallet to the Wallet Inspector. “Flight of money to China [or elsewhere]” would produce exactly what we’re not seeing–enormous drops in the dollar against other currencies. So I’m not sure how you’re using that as an explanation.

           3) Didn’t you just say earlier that wages were stagnating while prices go up? They can’t both be true. This should be easy to check. If prices are up 550%, wages should be way up too, yes? 550%? Nearly so? Not even close. Let’s go one further: Let’s find a set of common consumer prices that are up over 500% since 1990 or so. Bread? Eggs? Milk? Gasoline, even? We’d be wiped out.

           4) Huh? MIT and Google are trying to find the “real” rate of price increases. What are the corps that pay ShadowStats looking for? It seems to me that they have substantially the same goals but with massively different results. There is only one outlier here.

           5) Let’s think about the free market: There are trillions of dollars in investments out there that run precisely counter to what you’d expect in 7-9% USD inflation. How much money does it take to keep ShadowStats afloat? I mean, the free market keeps psychic hotlines in business too.

         • Troublesome Frog,
           So long as we aren’t talking deflation, or outright bankruptcy, it’s a good deal to buy bonds with positive yields. note: in europe people have been spotted buying negative yield bonds. That’s right, they’re paying Germany to hold their money for them.

           That’s “Flight to Quality” — the market afraid to take the risk of buying bonds with higher yields. The market being scared of the euro falling apart.

           (and apparently the rating agencies do).

           We are/were seeing a huge bubble in Chinese investment by Americans. I don’t think the Chinese exactly have a truly floating currency, so I won’t speak to that.

           3) No, no and no. Prices went kablowie because of the burgeoning REAL DEBT CRISIS — of consumer debt. Look at shadowstat’s M3 (where they get that data is substantially less clear than their Inflation numbers…), or the gov’ts M2 or M1.

           4)Is google really measuring online prices only? That seems odd. Poor datamining too. You should at least be able to get gas prices from twitter/facebook…

           5) Consider a different hypothesis: people are paying for both numbers because they’re both useful. Like U6 and U3?

         • So long as we aren’t talking deflation, or outright bankruptcy, it’s a good deal to buy bonds with positive yields.

           No, it’s not. Not if there are other currencies. Like yen. Let’s say for a moment that everybody is afraid of a Euro crash. How does that explain the dollar gaining against the yen? Sensible people would be maxing out their credit in dollars and Euros and buying safe Japanese assets.

           A few other points:

           1) If you’re expecting deflation, it’s great to buy bonds with positive yields in that same currency.
           2) Negative nominal yields are strong evidence that bond purchasers don’t expect inflation.
           3) Negative nominal yields on Euro-denominated debt are not evidence for the market expects the Euro to lose value. They’re certainly not evidence that people are being driven to dollars.

           What’s your mechanism that makes all of this make sense?

           Prices went kablowie because of the burgeoning REAL DEBT CRISIS — of consumer debt.

           What does “prices went kablowie” mean? I see no evidence of kablowie in either direction. My original statement was that if prices really went up as much as SS says, we’d all be gutted. You responded that “wage inflation” would offset it. That contradicts the claim that wages are stagnating and it can’t be made to agree with real median wages and how they compare to SS CPI. SS CPI would have real wages plummeting.

           Going back to consumer debt, yes inflation is a transfer from lenders to borrowers, but that’s really not the issue. Prices are prices regardless of the level of debt.

           Is google really measuring online prices only? That seems odd. Poor datamining too. You should at least be able to get gas prices from twitter/facebook?

           To hear people talk about inflation, you’d think that all they did was dance around big gasoline fires all day. Online price listings cover a huge variety of goods–far more than any of these other baskets. But they still happen to correlate well with the BLS numbers and not SS. Why?

           It’s quite possible that M3 and U6 numbers are useful. All accurate data has some value. But that doesn’t really support the argument that SS is right about inflation. People pay me a regular paycheck for stuff not relating to my opinion on inflation, but I don’t think that bolsters my argument here.

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