Monday, August 6, 2007

Lies, Damn Lies and Statistics

"How fast is the cost of living rising? ... Measuring inflation is critically important. ... The inflation we experience in our daily lives is higher than what the government indexes report. ... [The CPI and PCE] understate the rate of inflation they presume to report. ... If both the B.L.S. and P.C.E. series publish adjustments excluding food and energy, why not an additional series that includes food and energy, but excludes durable goods"? Peter Bernstein in the NYT, 5 August.

Why not indeed? Because Uncle Sam's inflation statistics are just more propaganda, that's why. Consider: if reported inflation was higher, social security payments would be higher, tax collections would be lower and interest paid on TIPS would be higher. Of course Uncle Sam wants lower reported inflation.

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