Reply #1: Market WrapUp: Government Inflation Data at Odds With Reality [View All]

[ozymandius]

BY GARY DORSCH

In an age where governments of every political stripe distort economic data to promote their own self-interests, it’s hardly surprising that they present inflation statistics that are wildly at odds with the reality faced by consumers and businesses, and regarded with utter disbelief. In the latest US government report on inflation for instance, there was a glaring “seasonal adjustment,” for energy prices that cast great doubt as to the accuracy of the findings.

US Labor Dept apparatchiks said consumer prices rose a smaller than expected 0.2% in April, tamed by energy prices, which were unchanged last month. Utilizing an obscure “seasonal adjustment,” Labor figured that gasoline prices actually fell 2% in April, which doesn’t reflect the reality of what consumers were paying at the pump. Furthermore, the IMF’s global food price index rose 43% over the last 12-months, but the US consumer price index for food is only 5.1% higher.

Wall Street cheered the tame inflation rate, reckoning it gives the Federal Reserve more time to peg the fed funds rate at 2% to jig-up the stock market with massive money injections. But the folks who aren’t fooled by the government’s propaganda on inflation are the American people, whose dollars buy less with each passing month. The inflation tax is the great thief of the middle class.

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On May 14th, upon hearing Labor’s report of a scant 0.2% inflation rate during April, former Fed chief Paul Volcker had doubts about the way the government measures inflation. “It doesn’t feel quite right. I think the bias clearly is more towards higher inflation, offset by the weakness of the domestic economy,” he said. “Seasonal adjustments” are just one of the useful tools that Labor apparatchiks have developed to fudge inflation statistics. The Bernanke Fed has a simpler model; it simply strips out food and energy costs in its inflation calculus.

http://www.financialsense.com/Market/wrapup.htm

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I love this. Here's a person willing to call bullshit on the economic data and he packs the math to back it up.