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Proof Positive That the Inputs For 99% of Economic Modeling are Garbage

Phoenix Capital Research's picture




 

 

The big news that has somehow shocked the media is that the BLS was caught fudging the jobs numbers going into the 2012 election.

 

How on earth is this news? Anyone with a working frontal cortex is aware that CPI, the unemployment numbers, GDP and virtually everything else reported by the Federal Government is massaged to the point of being fraudulent.

 

Indeed, as far back as JULY 2013, the former head of the BLS stated point blank that real unemployment was around 10%

 

Keith Hall believes the US economy is a lot sicker than the 7.6 percent unemployment rate would lead you to believe.

 

And he should know.

 

Hall was, from 2008 until last year, the guy in charge of Washington’s Bureau of Labor Statistics, the agency that compiles that rate.

 

“Right now [it’s] misleadingly low,” says Hall, who believes a truer reading of those now wanting a job but without one to be more than 10 percent.

 

Source: NY Post

 

Then of course there is inflation. Anyone who actually shops for just about anything knows that prices are moving higher. Even if it’s not explicit (an actual price hike) we are paying higher prices through a slew of gimmicks corporations use to maintain margins in the face of rising costs.

 

Among these are:

 

1)   Substituting lower quality ingredients (coffee makers)

2)   Selling less product for the same price (across the board in food retail)

3)   Simply not filling a box all the way (how many times have you opened something to find it’s just 75% full?)

 

This is how you hide inflation. Corporations don’t simply raise prices because of price elasticity.

 

And it’s not as though the BLS is even good at measuring inflation. The former head of the organization reveals that to measure CPI it performs hundreds of thousands of surveys to see what consumers are buying and how much they paid. Then the BLS sends people into stores to determine how much these items cost.

 

So the Feds are relying on people:

 

1)   Remembering what they bought last month for groceries

2)   Remembering the price they paid

 

Do you remember how much the cheese you bought last week was? Well your answer helps determine inflation… which helps determine Fed policy.

 

An economic model is only as good as the inputs. Suffice to say the inputs for most of the Fed’s economic model are of QUESTIONABLE value and that’s putting it mildly.

 

And the stock market is trading based on all of this?

 

For a FREE Special Report on how to beat the market both during bull market and bear market runs, visit us at:

http://phoenixcapitalmarketing.com/special-reports.html

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

 

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Wed, 11/20/2013 - 19:23 | 4175446 steveo77
steveo77's picture

Seriously IMF proposes world wide bail in, where not just banks but financial institutions of "all sorts" can independtly, without any court review, just take your money, even retroactively...money that you used to have in their instiution.    Seriously.

 

http://oahutrading.blogspot.com/2013/11/imf-frank-discussion-of-bail-in-...

Wed, 11/20/2013 - 09:33 | 4173046 tedstr
tedstr's picture

Food and Travel seem to be the  only items inflating.......Food is due to commodity price manipluation which is rampant.  You can get around this by simply buying smart.  the cheap stuff is still out there but you  have to find it.  I now buy box wine (which my wife hates)  but it is so cheap and REALLY good.  Shop on the bottom shelf only!

Travel is tougher.  The cost of higher end hotels is now through the roof. 

Wed, 11/20/2013 - 04:47 | 4172703 Jimbobo
Jimbobo's picture

Didn't Bastiat all the way to Mises already showed models are mostly useless when I comes to trying to model economic decisions by billions of players?

Wed, 11/20/2013 - 02:51 | 4172613 ItsDanger
ItsDanger's picture

Why hasnt anyone produced their own independent inflation number that accounts for quality and repair/replacement?  Or does someone do this already?  We all know the govt #'s are bogus but surely somebody out there has down their own research.

Tue, 11/19/2013 - 22:24 | 4172235 logicalman
logicalman's picture

All government numbers are arrived at based on what they think will further government policies without alerting the majority to the fact that something is very wrong.

Simple, reallly.

Tue, 11/19/2013 - 21:51 | 4172162 Spankrupt
Spankrupt's picture

Drink mightiliy under the glow of stars and know thats where you will be at some point in the future. You can't bring it with you so use it up, use it all up while giving the finger to religion, government and all who know you are right but are afraid to tell you.

Tue, 11/19/2013 - 19:01 | 4171720 Randoom Thought
Randoom Thought's picture

In my experience it is always the assumptions that fuck you over. It is not that believing incorrect assumptions always screws you because fraud tends to favor those who buy "the program" per se. It is that one may benefit from believing the bullshit of the powers when believing the truth will hurt you.

The powers love the fat, dumb and happy who have handed over their free will. It despises those who do not need or want them.

Tue, 11/19/2013 - 18:57 | 4171708 Umh
Umh's picture

When metrics are established the people involved will come up with a way to distort the inputs to the metrics. This results in those that trust the metrics being decieved. This seems to be a universal truth. Just look at contract performance metrics:(

Tue, 11/19/2013 - 16:14 | 4171023 jonjon831983
jonjon831983's picture

"1)   Remembering what they bought last month for groceries

2)   Remembering the price they paid"

 

This is actually a good idea. I only started keeping grocery receipts over the last couple years. However, it would be more useful to enter line by line onto spreadsheet.

Tue, 11/19/2013 - 21:48 | 4172150 Winston Smith 2009
Winston Smith 2009's picture

"This is actually a good idea. I only started keeping grocery receipts over the last couple years. However, it would be more useful to enter line by line onto spreadsheet."

Useless for most items, except for ones that can't be reduced in size without being obvious like a dozen eggs or a gallon of milk. You need to record the cost PER UNIT (oz., lb, etc.) of the food you buy since, as you may have noticed, quantities in packages have been steadily shrinking.  

That along with their BS games of hedonics and substitution make consumer price inflation look far lower than it actually is.  You can blame the Boskin Commission, one of the members admitting years afterwards that the primary intent of that commission was not to reach a more accurate CPI figure but instead to find a way to reduce cost of living adjustments to recipients of federal programs.

The hilarious result according to the excellent book "Greenspan's Bubbles" is the fedgov using their own manipulated, crap figures for unemployment and inflation as inputs to other things like Fed actions.  Garbage data into their pure garbage neo-classical economic models = the crap situation without end we have now.

Tue, 11/19/2013 - 22:26 | 4172240 logicalman
logicalman's picture

If I kept grocery receipts, I think I'd be even more pissed off than I am, just relying on memory.

 

Tue, 11/19/2013 - 19:05 | 4171731 Umh
Umh's picture

People are really bad about knowing the price of items unless they buy the things on a regular basis. I know the prices of my favorite beverages very well. I'm not real very well versed on what is a good price of boats since I haven't bought many of them. I understand that them seems obvious, but it is an important factor.

Tue, 11/19/2013 - 15:37 | 4170818 GreatUncle
GreatUncle's picture

Look where the number is being manipulated too / being held at. They are held at the position they are to then be able to modify their tools such as QE or interest rates etc.

 

e.g. Inflation is recorded as low to allow taxes to be increased if they wish whereas inflation being high not a chance.

Far higher levels of unemployment would prevent them from raising interest rates sharply if at all.

 

That is how they operate, pretending to have control of the economy when really the economy would be controlling them.

Tue, 11/19/2013 - 15:09 | 4170656 screw face
Tue, 11/19/2013 - 15:01 | 4170610 Its_the_economy...
Its_the_economy_stupid's picture

OK, news flash.

 One of my friends works for a National company. His job is to go into grocery stores in my area and LITERALLY price scan everysingle item on every shelf. Yes, you read it right.

Now you might wonder why the store managers don't throw him out. The answer is because the store executive office subscribes to the price checking service in order to bench mark their competition and in order to get the data, they sign a contraqct pernitting the scanning of their own stores (so other stores can subscribe). Yeah, crazy, I know, but that is how retail grocery chains know what to charge,

So, why the diatribe?

Just how hard would it be for the BLS to get this data piped into their computers from the retail world across the land? Painfully easy, AND painfully cheap.

When I say painful, I mean, the news would be painful, therefore, avoid it at all cost!

Tue, 11/19/2013 - 14:52 | 4170557 0b1knob
0b1knob's picture

Navigation paradox: Increased precision in navigation INCREASES the chance of a collision or catastrophic accident. Highly counter intuitive. The more control the government has the better the chance of disaster.

https://en.wikipedia.org/wiki/Navigation_paradox

Bertrand's paradox:  When two organizations (or countries or companies) compete for a fixed market, they will BOTH invariably lose. Once growth stops we are all screwed.

https://en.wikipedia.org/wiki/Bertrand_paradox_(economics)

Bonini's Paradox:   Complicated models of complex systems (like the economy) are fundamentally useless.   You can learn more about the economy from talking to a waitress at a truck stop than you can from studying government models. (This is NOT sarcasm).

https://en.wikipedia.org/wiki/Bonini%27s_paradox

 

 

 

 

 

Wed, 11/20/2013 - 15:18 | 4174458 TheReplacement
TheReplacement's picture

TheReplacement's Paradox:  The more they say things are getting better, the more they will say there are yet more poor who can't afford housing, food, heat, health, and phones and we all have to pitch in to provide those things.

TheReplacement's Pardox Part Deux:  The system isn't a failure because people are failing.  The system is a failure because most people don't have a chance to succeed while others are not allowed to fail.  Put another way, we have to let some fail so all have a chance.

 

 

Tue, 11/19/2013 - 15:10 | 4170659 Its_the_economy...
Its_the_economy_stupid's picture

Bertrand's paradox: Thus price fixing, and barrier's to market entry.

In my town there are 3 gas stations and have been for 35 years. They all retail at the same price. The owners all play cards once a week together. Thus, a solution to Bertrand's paradox.

PS: they all by gas on the secondary market. Wonder where that puts the wholesale jobbers?

Tue, 11/19/2013 - 15:16 | 4170696 0b1knob
0b1knob's picture

"price fixing, and barrier's to market entry" = Trans Pacific Partnership.   But in the end its consumers and workers who lose.

Tue, 11/19/2013 - 15:27 | 4170770 Its_the_economy...
Its_the_economy_stupid's picture

TPP: I wrote to my clowns (er, I mean, Congresspeople) and told them in no uncertain terms how I feel about it.

Tue, 11/19/2013 - 22:30 | 4172253 logicalman
logicalman's picture

I'm sure they'll read it carefully and consider your opinion when coming to a decision, assuming you also contribute suitably to their next attempt at election.

 

Tue, 11/19/2013 - 14:23 | 4170429 ebworthen
ebworthen's picture

Half-gallon ice cream (64 ounces) now 3/4 of a half-gallon (48 ounces) for the same price.

I'm waiting for the metric dozen of eggs, 10 eggs for the price of 12.

Also, the 96 ounce "gallon" of milk, "easier to pour" will be the ad.

Tue, 11/19/2013 - 14:15 | 4170392 Walt D.
Walt D.'s picture

How long before we are like Argentina, where the government threatens legal action against anyone who dares to criticize or correct falsified government inflation statistics.

All socialist/Marxist governments need to lie because socialism/Marxism is incapable of delivering what it promises.

Tue, 11/19/2013 - 18:38 | 4171640 MeelionDollerBogus
MeelionDollerBogus's picture

USA is Fascist, don't forget fascism. So far not a hint of Marxism is being used in the USA & certainly no socialism.
Socialism requires at minimum a collective ownership by the PEOPLE (not corporations) of the means of production. Which is not the case: the means of production for US markets generally is owned in China or multi-national corporations, not by American citizens (actual humans, aka, "the people").

Wed, 11/20/2013 - 04:58 | 4172710 The Wedge
The Wedge's picture

 

 

Fascism, at least from an economic perspective, is the mixture of privately held enterprise and government. The US does have partial ownership of privately held entities. Fannie and Freddy, GM come to mind. In the US, it's mostly in the hands of private entities though. Another aspect of Fascism, is uber nationalism whereas communism is more internationally oriented (workers of the world unite). By this definition, the US does not qualify as fascist. Does not pass the threshold. Although, you could make a strong argument that the Fed is an example of fascism in America.

And Marxism is being used in America. It's just not flowing in the direction you'd like. An illusion.

The worker or the "people" owning the means of production is by definition, communism. Which has never existed more than a handful of months anywhere. The illusion of the Soviet Union was that the people owned the means of production when in fact it was solely owned by the party leaders. Stalin was asked why he seized control of the MOP and claims it was to restore order, save the people. What Trotsky began was Bolshevism, which was essentially communism. Stalin eventually seized control and began 60+ years of pseudo communism. Castro, Mao, Pol Pot it all morphed into total control as well.

Socialism means different things to the masses. But at it's core is collectivism, d-emphasizing the individual. Obamacare is a glaring example of governing the "collective". But as usual an illusion, as it's really just about power. Gives the elite power and you a sub par, at best, healthcare system. This really is a fight for the sovereignty of your own body. Eventually, the Government (gang) or a strong man will control when, where, how and if you get health care. It's the nature of humans to subjugate even with good intentions. Another glaring example of this would be the total surveillance society. It's for your own protection...no it's just about concentrating power.

These distinctions disappear when you zoom out and realize it's just a scale with zero gov on one end (anarchy) and total gov on the other. But the distinctions, in some cases only slight, are very important. If you cannot recognize the very concepts used to govern you, the yoke is more easily placed around your neck.

Thu, 11/21/2013 - 16:34 | 4178755 MeelionDollerBogus
MeelionDollerBogus's picture

but I do recognize the concepts.
You do not.
This is not Marxism, nothing Marx described.
It's quite the opposite.

What matters MOST is WHO is the "government". It is the corporations.

What is Fascism - John T Flynn - Von Mises - youtube
http://youtu.be/4Ml7-aDXrgQ

Tue, 11/19/2013 - 14:09 | 4170370 Trampy
Trampy's picture

Why can't we be honest and admit that there is SHARED RESPONSIBILITY here?

It's INDIVIDUAL PEOPLE who concoct the lies and it's masses of other INDVIDUAL PEOPLE who believe them, hook, line, and sinker.

The "government" can only promote its lies by hiring dupes with no conscience.

These lies are then propagated by "journalists" who have no conscience.

And then the zombie masses dutifully register to vote, watch propaganda they believe to be news, pay their taxes, and think we live in the greatest country on earth where they benefit greatly from the Imperial Privilege ... so that's why they can't see anything wrong with it ... just like the nuclear industry whores who depend on lies for their high-pay jobs.

I've been harassed systematically in both retail establishments and "medical provider" offices by staff who took great offense at me wearing a shirt saying 9-11 WAS AN INSIDE JOB.  It took some time but eventually they all got their good riddance.

It's the stupid zombie public who is ignoring the clear Cognitive Dissonance  and labels Truth-Tellers with the "pejorative" Conspiracy Theorist label in order to satisfy themselves that they have the same thoughts and beliefs as all the other dupes who are controlled just as they always are by:

---

FINANCIAL SELF-INTEREST & FEAR OF LOSING IT

GUILT/DENIAL FOR BRINGING THEIR CHILDREN INTO THIS MESS

NORMALCY BIAS

OPTIMISM BIAS

STOCKHOLM SYNDROME

SHOOT THE MESSENGER

DENIAL AS FIRST STAGE OF GRIEF

---

But there's also OUTRIGHT FEAR of being tagged as a subversive dissident.

We need a new marching slogan:  THIS IS WHAT FASCISM LOOKS LIKE!

I really don't care if they kill me and that makes people very much afraid to even send me an email and they sure as hell aren't gonna risk using PGP to send me an email that traces back to their stupid Gmail account.

----

Winston Smith in 1984 had his unnamed girlfriend, as I recall.  Well, Russian mail-order-bride sites like Anastasia are looking more and more attractive to me.  At least in Russia and the Ukraine there are plenty of very intelligent, highly-educated and beautiful women who understand what it's like to live in a totalitarian society.   Tis a pity that I'd have to try and find someone in the FSU to have a "significant other" like Winton Smith had to help him try to keep his sanity.

Because I'm not a zombie like the masses it's practically impossible to meet people ... aside from vagabond drifters who go to Rainbow Gatherings, etc., but they're here today, gone tomorrow.  I'm banned from all contact with my family because my ideas are considered too dangerous to risk having my teenage nieces be "poisoned" by truth.  Better let them be brainwashed and living in a cocoon of delusion than face the ugly reality.

It required two entire "countries" of obedient zombie Germans and Austrians to allow what the Nazis could only have carried out whatever they did during the ""Holocaust" which I know for a fact killed all of my European ancestry.  I don't care a damn whether it was the almost-certainly bogus 6-million figure or the more likely ~2 million, but the important lesson is that the US is exactly like the Third Reich in late 1930s.  The zombies are US and we (allied with London and Tel Aviv) are now the Fourth Reich. 

So I'll be looking for a Russian or Ukrainian physical scientist with libertarian political views with, hopefully, post-doctorate education and a strong knowledge of economics and history.  Quite a shame that I'll probably have better odds finding that person in the FSU than here, eh?  But it sure seem to be so. 

Tue, 11/19/2013 - 18:39 | 4171646 MeelionDollerBogus
MeelionDollerBogus's picture

The answer is much more/less sinister (perspective applies to context) & much more simple.
The journalists are paid mouth-pieces. The audience are dumb cows & sheep, lesser humans.

Tue, 11/19/2013 - 17:17 | 4171317 steelhead23
steelhead23's picture

I like your comment Trampy.  However, I do not believe that the unwashed masses, or our masters, are zombies.  The majority are much more like cultish devotees, chanting their mantras: Money is God and Capitalism His church.  Anon.  Anon.  They then cling to Capitalism, not merely ignoring her hoary appearance (fraud, et al.) but live in abject fear that someone, anyone (folks like you and I) will stand up and point out all those festering sores.  September 2008 was the U.S.'s Kristalnacht and most good Americans had the good sense to look to der Fuhrer to tell them that yes, oops, some very smart people made some very stupid decisions, but our God and His church will survive.  Meanwhile, Winston is afraid he's losing his mind.

Tue, 11/19/2013 - 18:42 | 4171652 MeelionDollerBogus
MeelionDollerBogus's picture

that's crazy talk. None of these people are asking for capitalism or living in it.
Capitalism requires that NO ONE can force your labor or take your income OR that you are forced to be owned by others partially or completely or by corporations.
Yet that's all that's happening & what is being demanded. Very much anti-capitalist.
America hasn't used capitalism for at least 50 years, 100 years by some accounts (Federal Reserve).

Tue, 11/19/2013 - 23:08 | 4172339 msmith9962
msmith9962's picture

Our choices are socialism or facism.  We need capitalism, reward for innovation and creating value.  Offshoring jobs and financial engineering dont count.

Thu, 11/21/2013 - 16:36 | 4178764 MeelionDollerBogus
MeelionDollerBogus's picture

They count if you can off-shore yourself without penalty just like the corporations do.

Tue, 11/19/2013 - 14:56 | 4170577 0b1knob
0b1knob's picture

"Winston Smith in 1984 had his unnamed girlfriend, as I recall. "

Her name was Julia.   One interpretation of the novel is that she is an agent of the thought police who entraps poor Winston in a honey pot operation.   Sort of the way Monica Lewinsky entraped Bill Clinton for the Mossad.

Tue, 11/19/2013 - 14:14 | 4170388 doctor10
doctor10's picture

looks like we found another Federal Agency we can shutter-like next week.

Tue, 11/19/2013 - 12:28 | 4169862 Nothing but the...
Nothing but the truth.'s picture

The BIG LIES continue unashamedly. Governments around the world , wouldn't recognise the truth any more if it poked them in the eye.

Tue, 11/19/2013 - 13:40 | 4170236 shovelhead
shovelhead's picture

If that is true then why are they working so hard to hide the truth?

Tue, 11/19/2013 - 13:44 | 4170257 Nothing but the...
Nothing but the truth.'s picture

Cause the truth is ugly and it doesn't fit with the new normal and their hidden agendas.

Wed, 11/20/2013 - 02:46 | 4171757 Supernova Born
Supernova Born's picture

Inflation in prices and/or degradation in quality/quantity.

A .gov Ponzi is still a Ponzi.

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