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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: KyrosL who wrote (16527)3/8/2002 9:52:43 AM
From: Mike M2  Read Replies (1) of 74559
 
Kyros, corporate America reports their results in nominal dollars. The trouble with applying hedonics to areas of the economy is it creates misleading statistics. When the hedonic deflator is applied to spending on computers it can multiply the real nominal dollars spent by a factor of 5 to 10 fold. The trouble is these hedonicly deflator dollars spent do not represent revenue nor income for ANYONE. It only exists in the minds of gov't bureaucrats. Think about this if the income derived from the hedonic multiplier is real why doesn't the IRS tax it? True spending on computers is a small % of GDP but once the hedonic hoax is applied it creates the illusion rapid economic growth and productivity- the new economy AG likes to refer to as the money supply grows at the fastest rate in the history of the Federal reserve ( with the possible exception of WWII) . I see a pattern of deception in the gov't numbers as well as corporate accounting. GAAP numbers have taken a back seat to operating earnings ( EBITDA) or worse yet pro forma - Accounting speak for anything goes. Its all about deceiving the public into thinking we are in the midst of an economic miracle but its a mirage in order to reap the benefits of a speculative bubble at the expense of the future. Mike
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