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Japan To Unleash Inflation... By Fabricating Data
The great thing about statistics is that you can make them say pretty much whatever you want them to say.
Although good statisticians generally try to build in all kinds of safeguards to ensure that when they’re trying to draw conclusions based on data analysis, those conclusions are free of biases, that’s no good if you’re a government agency hell bent on conveying a very specific message to the general public (or to the market).
You see, goalseeked data is a key tool in the fight to “prove” that seven years of unconventional monetary policy hasn’t been for naught. After all, both Europe and Japan recently slipped back into deflation despite printing trillions in fiat money…
...and earlier this week, Tokyo was forced to admit that despite all of the “Abenomics is working” rhetoric, the country has just entered its fifth recession in five years.
Clearly, some statistical "massaging" is in order.
China has long been the undisputed king of manipulated economic data and earlier this year, the BEA decided it was time to take a page out of the NBS playbook. With the help of Janet Yellen's old friends at the San Francisco Fed and after an on air assist from Steve Liesman, the US government introduced the market to "residual seasonality" or, double adjusted GDP data.
In simpler terms, after seeing it work so well for years in China, the US Department of Commerce's Bureau of Economic Statistics simply replaced all of its Excel models with just one function. The following:
And visually:
The moral of the story is that sometimes, when it's a choice between everyone realizing that the emperor has no clothes and just making up the numbers, you should just make up the numbers because if you don't, well, people may start to wonder what the point of printing trillions in fiat currency was other than to inflate the assets of the rich and exacerbate the gap between the haves and the have nots.
Sure enough, it now looks like Japan is set to follow in the footsteps of the BEA because as Reuters reports, when you're stuck in deflation, sometimes the best thing to do is simply omit all the things for which prices are falling from your calculations. Here's more:
The Bank of Japan will release a new set of price indicators this month that reconfigures the way price trends are measured as the central bank seeks to show the country's below-target inflation rate is due to volatile items such as energy.
Importantly, a new consumer price index (CPI) will exclude energy costs, which have been falling, but include the costs of items such as processed and imported foods, which have been rising.
See there? Eliminating Japan's dreaded "deflationary mindset" is as simple as only including those items in the CPI that are getting more expensive. Back to Reuters:
The BOJ currently uses the government's core CPI, which excludes fresh food but includes energy costs, as its key price measurement in guiding monetary policy.
With core CPI now slipping due largely to slumping oil prices, the central bank began internally calculating a new index that conveniently shows inflation exceeding 1 percent in the past few months. That index strips away volatile fresh food and energy costs, but includes processed and imported food prices, which are rising.
The BOJ said on Friday it will start publishing this month the new CPI, as well as other indicators such as one showing the ratio of goods seeing prices rise versus those that are falling, on a regular basis each month.
Obviously, this is completely ridiculous and speaks to just how desperate Japan truly is now that the time clock on failed state status is about to tick under two years.
Of course you can manipulate the numbers all you like, but you can't manipulate the underlying reality and eventually, papering over the problem with artifically inflated data will cease to be a viable option once things get bad enough and Excel simply crashes under the sheer ridiculousness of what it's being asked to do.
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Awww…
The land of the rising… imaginary inflation.
(o)Bamzai!!! :-)
Looney
And I suppose we can assume that when energy costs start to rise again, we will see another revision to the spreadsheet formula to add energy back in again, because, only then "Energy is an important component of the economy and must be included"? At least we have Shadowstats in the US.
Land of Godzilla and Fukushima.
So, why surprise at fake inflation ?
Japan is 10 years ahaed of us so what this tell me is the USA have 10 years of BS before the SHTF. Japan is the canary in the coal mine and the coal mine still has not imploded.
Did you know that Japan as a country never has been invaded by an outside force/army in the history of the world?
So government trust, subservience & lack of questioning must have been baked into their DNA over the last million years.
I guess that the Japanese believe everything a government official says. A good example is Fukushima: only when the population starts to light up in the evening and one has to skate over the puke to get home, someone might carefully ask a question.
As evidenced by the fact that the Japanese SHOULD have been the largest buyers of Gold in recent years but apparently have not.. Unless that data has been manipulated also ...
I don't really know if your history is correct, but I do recall that the UNITED STAES OF AMERICA, that bastion of freedum and just ice and hope and change and kardashians on every streetcorner vaporized the cities of Hiroshima and Nagasaki some time in the mid-1940s, so there's that.
Otherwise, Japan is cool, I guess. I mean, where would all the hot money go without the Yen carry trade?
I know the CP is short for Child Porn but I'm not sure what the I is short for.
Intelligence?
kinda like that global warming climate change outright manipulation temp adjustments to the NOAA data
"The moral of the story is that sometimes, when it's a choice between everyone realizing that the emperor has no clothes and just making up the numbers, you should just make up the numbers because if you don't, well, people may start to wonder what the point of printing trillions in fiat currency was other than to inflate the assets of the rich and exacerbate the gap between the haves and the have nots.
Sure enough, it now looks like Japan is set to follow in the footsteps of the BEA..."
Yeah, the cognitive dissonance of government(s) and their lap-dog press they employ is quite amazing, "stretched thin consumers wary of spending"..."job market remains strong"..."razzzist bigots say no to refugees"..."Obama put em in your backyard, it's the American Way!"
There's three kinds of lies: lies, dammed lies, and statistics.
Our press chooses to recite the worst of the above three.
That isn't the point. It's a symptom. The point is to monetize the national debt and entitlement programs.
I'm thinking the BoJ has been told by other G-20 nations that they are getting out of control with their ¥ printing.
Japan> BoJ has run out of JGB's to purchase and if they issue more bonds the whole country will spiral down the shitter as the Japanese bond market goes thermo~nuclear, and those currently holding JGB's for the measly yield are taken as the greater fools.
Additionally, the BoJ has pushed the average maturity date so far out on the event horizon, in order to save face, that there's only one last way out for the BoJ. MAD [ Japan = debt/gdp ratio]
Japan 230.00 224.20 lowest 230.00highest 50.60 percent Dec/14 Yearly[+]
Hey, quit throwing numbers around. 4s might get confused for 9s.
I am completley assured that Abe-son-ke-wobi-jedi-mutha-fucka has this covered.
Unless Janet is her father.
Here's some good text for you.
While China's economic expansion in the second quarter, the country's debt levels increased at an even faster pace.
Outstanding loans for companies and households stood at a record [207 percent] of gross domestic product at the end of June, up from 125 percent in 2008, data compiled by Bloomberg show.
That's 207% before the Chinese markets bottomed a month later! here's the article
It's from July '15, so you can really see the "shit taco", the MSM serves...
As his skin is ever so slowly peeled away, Hideyoshi looks forward to his sake and anime knowing this is not the world to bring a child into
Does the Japanese central bank subscribe to the Gartman letter? Because dropping energy "because it has been falling" when its been bouncing around near a probably price bottom is almost a guarantee to make inflation look lower then it is when prices recover, its a sell after it has dropped strategy...
Unless they are intentionally doing it? When inflation finally bites they will wish they had not gone down the QE route, and the highest inflation seen will be in energy, since most of it is imported.
Either way they'll eventually get massive inflation with their current approach when the foreign debts start to choke the economy, personally I'm long on butterkist.
Hey, Eddie, I';m drinkig and alone, so I may or may not be very happy, but I don't give any credence to your postulation that energy is "near a probably price bottom" because that's like saying "I only put the tip in" at a paternity hearing.
From where I sit, not driving, BTW, energy prices are nowhere near a bottom. There are still some rational people in this world who remember oil at $20-30 a barrel, and, in a deflationary collapse, which is what's on the menu, I don't think you have gotten the correct memo.
If I were to wax poetic, I'd find a way to rhyme menu and memo, but I'm really not prepared properly. Get back to me after the next Garman Letter. I am impugning somebody's integrity. I'll leave it to you to figure out whose.
The ony fakeness I see is in the numbers of USA and China.
In all fairness, we did invent the doo-dad you're posting on. ;-)
fabricating again?... a quick short term history review...
let's see - after 'japan inc' revealed itself to be just another bubble, and their finance ministers cooked the economy's books for 20+ years just to save face...
WHY is this is supposed to be news or a big surprise?...
a little help please...