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America's Latest Proposal To Deal With Its Insolvency And Pursue Stealth Dollar Devaluation: Change The CPI
A few months ago we reported on Goldman's proposal to change the definition of GDP to make the US economy appear to be growing faster than it really is. So far, it has not caught on, as even the revised definition will soon confirm a contraction. But that proposal appears to have given Joe Biden some ideas, who now has taken the Fukushima approach to (sur)reality, whereby one merely changes the terms of data measurement when the data does not cooperate. Enter the revised CPI: "Lawmakers are considering changing how the Consumer Price Index is calculated, a move that could save perhaps $220 billion and represent significant progress in the ongoing federal debt ceiling and deficit reduction talks." And because nobody has an issue with the current artificial hedonic and otherwise adjustments to the CPI which always reflect a far lower increase in prices than what is actually happening, here comes the government with another idea to make inflation appear to be rising even slower: "According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example, consumers tend to drive less when gas prices increase dramatically. Such a move is widely seen by economists as resulting in a slower rise in inflation. That would impact an array of federal programs that are linked to CPI including the Social Security program and income tax brackets set by the federal government. The proposal could lower federal spending by around $220 billion over the next decade, based on calculations by last year's White House deficit commission, which recommended the change as part of its final report." What does this mean practically? SImply said, the worst of all worlds for the US middle class: "[the proposal] would likely lead to both lower benefits paid to seniors and higher taxes paid by most people who pay federal income tax." We expect this last-ditch accounting gimmick will be implemented shortly, and the broader American population will not care one bit that it's purchasing power will see a step function drop yet again in the ongoing crusade to destroy the dollar.
More on this surreal idea which is actually being very seriously discussed in DC:
According to two congressional aides familiar with the budget negotiations, the shift is being "seriously discussed" as part of the ongoing talks to strike a budget deal, that would be used to ease the passage of a required increase in the country's debt limit.
Those talks involve Democratic and Republican lawmakers from both chambers and are led by Vice President Joe Biden. The group held its latest meeting Tuesday as they strive to reach the broad outlines of a compromise on federal spending by the end of the month.
In a press conference that took place before the meeting, House Majority Leader Eric Cantor (R., Va.) declined to comment on the specific proposal, other than to say that "a lot of things are on the table." But asked whether the proposal would be interpreted as a tax increase and therefore a non-starter for Republicans, Cantor said it could be seen as both impacting tax rates and benefits paid out by the federal government.
When asked about the idea after the meeting, Rep. Jim Clyburn (D., S.C.) said everything is being discussed.
It could be easier for both parties to agree on than a significant overhaul to the Medicare proposal or an increase of taxes on wealthier Americans.
"It's certainly something that is going to be considered," said James Horney, director of federal fiscal policy at the Center for Budget and Policy Priorities, a liberal think tank. "There are questions whether it would be politically easy."
Several senators that are not party to the Biden-led talks voiced support for the proposal including Budget Committee Chairman Kent Conrad (D., N.D.), while Sen. John Thune (R., S.D.), a member of the Republican leadership team, said it should be looked at as part of the negotiations.
Washington just took extend and pretend to a whole new level.
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This is just part of the gameplan that governments have always followed to get out of their debt obligations. They will turn their problem into yours. It is actually a war against savers and it is called financial repression.
http://politicalmetals.com/financial-repression-what-is-it-and-how-does-...
Again? Already happened in early 80s.
http://www.shadowstats.com/alternate_data/inflation-charts
Thanks JB, I'll apply your logic and choose to pay less taxes when those go up.
This is nothing more than another move by the political class to reduce the standard of living of the citizens of this country........it will change much...have your passports ready.
Unfortunately those who get to experience the reduction in the standard of living (i.e. EVERYONE) will be comprised of a majority who will beg the government to help them. Ohhhhh the humanity of democracy.
Have you seen my baseball...I mean Republic?
US policy makers are basically saying "we're going to keep things as they are for now - but in another couple years, we'll raise taxes and interest rates to bring the financial system into balance."
They may as well release a bulletin: WARNING: any investment a business makes in plant, equipment, or work force is guaranteed to result in financial losses. Sane and reasonable people and businesses will hoard cash and prepare for a long term depression.
Also add the following. They also warned people they have a couple of years to get their plants and capital out of this country.
I have never seen a more economically clueless class than bureaucrats and politicians.
It is the Boskin Comission II
This insane monetary policy, with it's fractional reserve banking and currency created with payable interest to who knows who, gets even more insane each and every day.
Creating additional money out of thin air to buy bonds in the hopes of stimulating the economy, but can productive enterprises be created out of thin air too ?
Smoke and Mirrors!!! Baby!! Smoke and Mirrors!!
I thought about buying TIPS once for about 30 seconds until I looked into how the yield is calculated.
Of course, then I bought GLD.
Then I stumbled across ZH and I've been getting smarter ever since.
Besides Social Security recipients, this idea would save $$$ billions on federal civilian and military retirement payouts -- whose payments should be tied to real GDP growth (or decline) - not CPI.
So....anyone anticipate a flood of TIPS hitting the market soon?
Glad I flipped mine to the Fed in Jan.
This will make TIPS much less lucrative, won't it? Since TIPS are tied to the CPI ...
Glad I never bought any TIPS. I love how they change the rules halfway through the game.
A mistake on my part to buy them, honestly; the CPI tends to be a "huh? what? oh, umm...yeah" type of indicator that doesn't track real inflation for dick.
So using it as a hedge is really a recipe for losing slightly less money than holding the equivalent debased cash in this so-called market.
This is not something new. The CPI statisticians have already been doing this price shifting to reflect so-called changing consumer patterns.
So long as a cheaper item is substituted, the now more expensive item can be discounted.
Thus when the price of steak rises, it becomes less "relevant" and is statistically discounted as consumers switch to hamburg, then to tripe.
Eventually, when we are reduced to eating mud and grass ( as are many Haitians already), it won't be because of rising prices, but because our food "preferences" have changed.
Being more high tech, they might move to a soylent green type solution to reduce the hungry population! Those pointing it out will be "domestic terrorists" and disappeared into the food factories to make a "contribution to solving world hunger"!
/sarc off
Actually, lots of folk are raising chickens and rabbits on their back porches, even in cities where it is mostly illegal.
post hung-refresh posted two
I'm old enough to remember when chicken wings and spare ribs were considered to be offal, they were ground up and used as animal feed. Now they are almost a luxury item, put enough sauce on anything and it becomes edible. Market it right and people will eat anything. Case in point, that mystery pink slime that passes for a "Big Mac".
TIPS will do an even lousier job of offering protection against inflation after the CPI calculation is wrecked even further.
Hahahahahaha. Stranger than fiction. Simply amazing. I predict this will indeed pass, and nothing will be mentioned about it in the media.
We the people need to become economists and trained military to survive the shitstorm headed this way.
Just another way to screw the common man.
We could save 100s of billions of dollars by simply removing all the perks, long term benefits, death benefits, etc. etc. etc. that Congress has created for themselves.
These farging iceholes need to have their entire job description, salary, bennie package, etc. completely restructured back to a level of reality and logic.
Reality? Logic?
Surely you jest.
"According to congressional aides familiar with the discussions, the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase. For example..."
If they were even interested in appearing capable of rational thought processes, then wording would reflect "when prices change".
Since the current inflation formula is skewed to under-report inflation (particularly in a housing depression), and any correction which does not increase reported inflation is indefensible- they need to first and perhaps just change the definition of "inflation" not the formula to calculate it and the problem magically solves itself.
It's now theft and pretend.
changing the definitions=true signs of failure.
These people are a bunch of criminals! The whole lot of them are acting against the American people in favor of themselves, their cronies, and their own glory! They're a bunch of racketeers!
What a bunch of dickless morons running (ruining) this country, and by inference, the world. My solution, since I discovered how bad most of the "food" they foist upon the masses is: Eat only meats, vegetables and rice. No processed foods. Refrain from voting. Pay no income tax (file, but use their own system against them - there are plenty of methods).
Slap a corn dog from the mouth of some fat, stupid SNAP user every day. Ride a bike whenever possible. Cheat and steal from corporations as a sign of no faith in crony capitalism. Cash for transactions, well hidden. Silver and gold. And, grow you own...
Allow me to retort... Weiner has a dick...
Awesome commentary!
What makes my day is riding my bike across the GWB (George Washington Bridge) in the morning and laughing at all the "weiners" in their cars who paid $8 for the privilege of sitting in traffic, while I'm free and wheeling along at 20 mph.
As long as you always file your taxes correctly you dont have to pay.
Tax fraud is a crime.
Failure to pay legally owed amounts is a civil issue.
I know a guy who has a carpet cleaning business. He faithfully fules every year and correctly calculates the amount owed, but he never sends them any money. He has no known assets in his name. The IRS visited him only one time in the last ten years.
There are hundreds of thousands of people who do this. When the IRS has no way to collect or compel they apparently leave those people alone.
First rule of politics: Lying to the public is always the best strategy.
The best part about all of this is that these assholes making the decisions don't even contribute to or participate in SS....go figure...DOUCHEBAGS!
Only central planning kleptocrats could tout deflation as caused by inflation.
Please post the names of the negotiators, Tyler, so we know who to call and write abou this. This is an outrage!
Clinton and Greenspan also rewrote the CPI calc rules.
Don't forget Gingrich, it was his idea to begin with.
+1 agreed thanks for the reminder. Gingrich.... what a slimball piece of shit that guy is.
any deficit reduction on the back of the poor or rich would leave the politician that much more money to spend.
they will never stop until we are into another 1929
and I belive we are very near to that situation now
if this is not a depression what is it?
all depression do not have to be of the magnitude of 1929
to be considered a depression.
from 1929 to 1939 there were a lot of up and down in the economy. but it never stopped until WW2.
I am in my 80 and was a school kid then and we moved constantly as my father looked for work.
you haven't seen anything yet, if present fiscal polices continues we will again see something similar to the 1930s
4 years in and this thing's just gettin' started. It will totally eclipse your 1929 by the time thid train really gets a rollin' down the track. All Aboard !!!
It is worse than 1929 lads, for the US has been following the playbook of collapsing empires, trying to buy a little more time while continuing attempts to sustain the unsustainable. Study your history, this is classic Rome circa late 3rd century.
we are getting to be argentina where it is illegal to queestion inflation numbers. guess they don't like the flak of what is going on with the BOE and inflation and QE. gotta clear the way to lie to allow more QE. somebody should post this on krugman's blog because he still believes the inflation numbers are valid and the "smartest" person in the room won't even admit the number is rigged. Once more this should be front page news in all the major papers
Yup, was going to say that dcb. I really never thought that I'd see the same behavior in the "first world".
by the way the market is going up to at least 6/27 or the 24th on the friday. it's all the speed lines baby
Buying more time to plunder more wealth.
The federal government will suck every last bit of wealth out of America keeping itself going long as possible.
I hope some day every federal employee becomes a target. They'll be easy to spot with their good living standard, nice home, nice car(s), nice everything, while everyone around them is in poverty.
Biden...Ideas??
A Biden "idea" will be about as bright as Weiner's idea of emailing dick pictures...
These guys are not dim bulbs, they are burned out bulbs...
But like light bulbs... their heads are simply a vacuum...
"I'm mad as hell and I'm not going to take it any longer" .... a classic line from a classic movie and it's what I feel every day after reading most of the articles Tyler puts up for us. Having my Eyes Wide Open is hard when you realize just how far America has run off the tracks. Politicians think their constituents are absolutely stupid and are morons to keep putting this type of crap in front of us. The problem is....most of us are still asleep and so inextricably tied to the matrix that we will take what ever sh*t is fed to us through our feeding tubes. Anything Biden touches you know is going to do nothing but screw up things even worse. I'm just sick of all this crap. My rant for today.... or at least for this moment.... frack.
Eyes wide open........
http://www.youtube.com/watch?v=YThN6iqr4SM
This video has brought tears to my eyes on many occasion,
Not hyperbole!
Some interesting coimments in this thread. I went to skool on the GI Bill. I worked and supported myself. I went to a CC and then Cal State Univ. The econ prof at the CSU also taught at UCLA. I worked a number of jobs including unloadining UPS trucks in DT Los Angeles from 10pm until whenever...
I know this sounds like internet bravado, but suck it up and work harder and smarter and you will get through skool. Whining that GI Bill is changing or whatever is not the plan. People will recognize you and give you a hand-up, but no one wants to hear that "its hard."
Fuck it, why work? Just sign up for SNAP card and unemployment and get a sign 'Veteran will work for food' hell youll make hundreds a day.
Hardwork, self discipline, and a good attitude will almost always pay off in the end, even if there are exogenous events that knock you off course on occasion. The key is not to become a whiner or a quitter.
Yea in which parallel universe?
Obstacles to your goals should only make you work harder.
Isn't that what Boxer use to say...right up until the time he was shipped of to the knackers?
+1
People who fail to succeed always seem to have an excuse other than lack of effort on their part.
This is easy to say, and true to an extent. There are many who expect things handed to them, and some do manage entirely on family connections. OTOH for those who must put forth effort, the amount required, on average, to produce a given return has multiplied over time.
In the 1950's a person with an average IQ, without a high school diploma, but with a little drive, could get a factory job, and support a few kids and a stay at home wife. With some luck in choosing his factory, or in looking for advancement he could perhaps make it to supervisor or manager. Maybe evenretire with a good pension and SS. Today even college grads with advanced degrees require two incomes to raise less children, and for the most part, their incomes do not keep up with increased costs.
When major corps outsource entire departments overseas, even the best producers are laid off. Often corps play copycat (ie. most jobs in the affected category are offshored) and the laid off are unemployable without new skills and the ability to relocate. If they cannot relocate because their house is underwater, or their spouse cannot move the other job, then they just failed.
"It could be easier for both parties to agree on than a significant overhaul to the Medicare proposal or an increase of taxes on wealthier Americans."
More extend and pretend.
Medicare and SS are the elephants in the room no-one wants to talk about, except a few well rehearsed and utterly false promises ahead of an election. Those Grey Panthers understand economics well enough to show up at the polls.
"There are questions whether it would be politically easy."
Politically IMPOSSIBLE would be more realistic.
They always figure out newer ways to screw us, don't they?
http://www.bloomberg.com/news/2011-06-22/u-s-postal-service-will-suspend...
CBO Sees U.S. Federal Debt This Year Climbing to 70% of GDPhttp://www.bloomberg.com/news/2011-06-22/cbo-sees-u-s-federal-debt-this-...
Just zero it out and change the accounting rules, VOILLA! Everyones a billionaire.
As we all know, 'debt' is the accumulation of annual 'deficits' we've run up (put it on the tab, bartender).
The real, actual debt is between 56 trillion and 202 trillion, depending on whether one incorporates future entitlements, deemed to be guarantees.
U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff
Boston University's Laurence Kotlikoff: U.S. Debt Really $202 TrillionWho cares what debt means.... Just change the definition of debt.
We live in the times of idiocracy. This country will change when other countries dictate terms much like what's happening in Greece.
Time to create new weapons for the future.
he he he...Social security checks are about to get smaller...alot smaller since they are linked to the "official" CPI.
Let them eat less cake!
I can picture The Obot saying exactly that.
+1 - I didn't think I was going to laugh today.
Very soon, the U.S. is going to overtake China as top third world economy. The leadership is giving up everything good about the U.S.A. and standardize everything to the bottom of third world.
Well, of course! That was the plan after all. 8-(
Toilet paper scam, "Proof of inflation"
http://www.youtube.com/watch?v=2Tg-KkRgiGI&feature=related
Sounds like they figured out a way to impose austerity while continuing to give the banks what they need. The EU must be envious, they don't have peasantry that takes whatever their corrupt government gives them so easily like here in the US. Maybe their less relevant politicians should be involved in dick scandals too so that the populace can be distracted.
I'm sure this version of the CPI will simply be "transitory."
Fucking unbelievable.
Glass-Steagall switches extend and pretends, to meet this standard or wiped away as fraud.
I don't know if the CPI can get any less trustworthy. According to www.verifythecpi.com, the cost of living is up 12% so far in 2011, versus the "official" CPI increase of 2%.
Agree... The CPI is already a joke!
so the only inflation is hyper-inflation in their eyes?? o.O
Gas prices going up means inflation is going down... hey it's a no-brainer.
They can start by REMOVING government spending from GDP, which is money taken from productive society or borrowed from the Federal Reserve. This would reveal we've been in a goddamn depression for 4 years.
kinda funny watching our lying planners design the next lie, the next link in the chain, and even explain why: the proposal would shift how the Consumer Price Index is calculated to reflect how people tend to change spending patterns when prices increase.
why don't these fuking moronic asswipes just follow the PM prices, like everybody else?
Be careful what you ask for :-) If COLAS were indexed to PMs there would be even more funny money burnt to keep down PM prices.
Yeah, right. Bunch of criminals.
Artificially lowering the CPI has other consequences too, you liar, moron, predator scumbags!
For example, it gives cover to the gangsters at the federal reserve to keep spewing money into the pockets of their gangster bankster co-conspirators under the guise that "inflation is low, so this is prudent" (my butt).
This will only assure that inflation will get totally out of hand and beyond any ability to control long before they pretend to have justifications for doing anything about it.
predators DBA government
predators DBA corporations
predators DBA central banks
It is long past time people started treating predators like predators.