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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (11038)	8/25/2004 4:53:15 PM
From: Elroy Jetson	Respond to of 116555

I think there's a significant difference between "contrarian" and "dishonest". Only propagandists like Gary Shilling or Arthur Laffer could come to the conclusion that the ever revised CPI, of recent years, over-states inflation.

To: mishedlo who wrote (11038)	8/25/2004 5:39:23 PM
From: S. maltophilia	Read Replies (1) \| Respond to of 116555

They obviously don't pay their own health insurance premiums.

To: mishedlo who wrote (11038)	8/26/2004 2:49:11 AM
From: Walkingshadow	Respond to of 116555

Thanks very much. I only got half way through that article when I ruined my keyboard by snorting a mouthful of Starbucks out my nose all over my PC. << A congressional study found that the CPI is biased upward in four areas. First, since the index has fixed weights, it doesn't account for the tendency to buy more of what's cheap and less of what's expensive. >> What a classic example of circular reasoning. Besides, this ignores the realities that, regardless of what happens to be cheap at the moment, people tend to need the same things month after month. And new and used cars, as well as the tech items mentioned (DVDs, cell phones, PCs, etc.) certainly aren't among the things that people NEED on a regular basis. So if gasoline happens to be expensive and cell phones happen to be cheap, does that mean consumers just decide to buy cell phones, skip buying gasoline and stay home from work for a month or two talking on their cell phones until gasoline gets cheaper? Somebody should have sent this profound example of vodoo logic to Joseph Heller when he was still alive.... maybe it would have inspired him to include it in a novel set in the fantasyland of modern economics: =========================================== Yossarian looked at him soberly and tried another approach. "Is gasoline expensive?" "It sure is," Doc Daneeka said. "Can you call that inflationary?" "I sure can. But first DVD players and lots of other techie toys that nobody really needs to buy regularly have to get expensive. That's part of the rule." "And then you can call it inflationary?" Yossarian asked. "No. Then I can't can't call it inflationary." "You mean there's a catch?" "Sure there's a catch," Doc Daneeka replied. "Catch-22. Anytime somebody objects to the price of something they really need, and calls it inflationary, it isn't really inflationary. They are just buying the wrong things. They need to buy more DVD players. Or whatever else happens to be relatively cheap at the time. If they didn't insist on buying expensive things, they wouldn't have a problem with inflation." "And what happens if nothing is cheap?" asked Yossarian. "Oh, that's easy. We just find some new gadget that's cheap because nobody really needs it and nobody is buying it to the list. That's what people should buy, if they are concerned about inflation." "But what if they don't need the things that are cheap, but they need the things that are expensive?" asked Yossarian. "Well, that's their business if they want to make their own situation worse. What's more, it's unpatriotic. We are thinking about making that a federal crime," said Daneeka. "Why, even as we speak, there are folks on the Hill working on the Catch-22 Anti-Inflation Act." Yossarian let out a respectful whistle. "That's some catch, that Catch-22," he observed. "It's the best there is," Doc Daneeka agreed. "That's how we keep inflation under control. We figure only people who are un-American traitors would not want to keep inflation under control. And those types belong in prison." =================================== As for gasoline accounting for 2.7% of outlays... the car I drive gets about 35 mpg, and I estimate I spend roughly twice that figure on gasoline each month. I wonder how much the average gas-guzzling land barges that have become so popular spend. The only thing that article shows (once again) is that Mark Twain was right: there are 3 kinds of lies---lies, damned lies, and statistics. JMVHO.... Walkingshadow