Sentences (#100)

Cathedral money:

the reason why inflation measurement and reporting has become so controversial is that it is “less a measure of purchasing power (and therefore a financial tool), and increasingly a process of affecting macro-economic policies (and therefore a policy lever).”

(The whole post is crucial, still more so the report.)

May 10, 2017admin 17 Comments »
FILED UNDER :Political economy


17 Responses to this entry

  • E. Antony Gray (@RiverC) Says:

    One of the crucial failures of scientific public policy is that the attachment of ‘scientific’ government measures to policy decisions guarantees a perverse feedback loop – people have seen this happening in China, it definitely happens in Japan (how big is Japan’s economy, actually?) do they suppose it isn’t happening in the USA?

    The power – which does actually have the power to set the null hypothesis, to lie and have it be accepted as truth – is clearly not bound by law. “But..” you say, but? There is no but. Instead of changing the rule that said they must base salary changes for government people on CPI changes, they changed the CPI.

    This isn’t a problem in and of itself, after all, the government is free to adjust its slaves’ wages as it sees fit. When, however, the government feels compelled to always comport with public scientific righteousness, inert algorithms (including those governing artificial intelligence) will change to ensure actions are good and right and true.

    Weakness it is, not strength.


    Posted on May 10th, 2017 at 3:05 pm Reply | Quote
  • Brett Stevens Says:

    Going Full Soviet in the West has brought about many such little glitches.


    Posted on May 10th, 2017 at 3:23 pm Reply | Quote
  • Thales Says:

    Coincidental caveats.


    Alrenous Reply:

    Idle question: do they deal with consumption?

    What we want to measure is not nails and shingles hanging out in a warehouse, but roofs. However, the nails and shingles are consumed when making the roof. Do they count the roofer buying the shingles and the owner buying the shingles off the roofer in the form of a roof as separate ‘productions’?

    Now imagine ore, smelted into ingots, refined into boules, cut into wafers, processed to circuits, put into a board, sold to a clockmaker, who sells to a distributor, who supplies a retailer, which then sells a clock. Is the silicon for this clock counted ten times?


    Contaminated NEET Reply:

    Supposedly, GDP is the value of all “final goods” produced, so it should not count your shingles and your silicon multiple times. I imagine there’s some wiggle room on what counts as a “final good.”


    Orthodox Reply:

    The better measure of the economy is gross output. The BEA puts out the data, but it is delayed so mostly ignored. Last year GDP was $18.5 trillion. Gross output, the measure of all activity in the economy (when the nail factory sells the nails to Home Depot, it’s counted) was $32 trillion.

    From 2008 to 2009, GDP contract from $14.7 trillion to $14.4 trillion, or 2%.
    GO contracted from $26.8 trillion to $24.7 trillion, or 7.8%. GO also shows private industry contracted from $23.7 trillion to $21.4 trillion, or 9.7%.

    Alrenous Reply:

    I see.
    So it’s just auditing error then. Someone has to tally up all saies by all retailers. The IRS probably has the data, but we have to trust it was compiled correctly and reported honestly.

    Posted on May 10th, 2017 at 3:48 pm Reply | Quote
  • Orthodox Says:

    Everyone is living a mass delusion of low prices and persistent deflation because the government lies about CPI? Demographics and debt levels argue for deflation/disinflation. Central banks are moving to negative interest rates because inflation is low, not high. Credit growth and bank balance sheets, derivative books point to deflation or at least very little inflation. The growth in total debt outstanding is on a slower growth trajectory post-2008. If the credit growth was there, demand in the economy would be there.

    Healthcare and education costs are controlled by the government and they behave as we’d expect in a centrally planned market. The number of administrators grows exponentially in those industries, while the number of doctors and teachers grows with population. A huge chunk of wage gains are soaked up by healthcare costs and now student debt/tuition costs. This is a structural defect in the US economy, but it is not inflation.

    Japan has quadrillions in debt and the CPI doesn’t budge. A can of Coke costs the same as it did in the early 1980s. I can’t remember the exact years, but in back around 2012, Japanese nominal GDP was the same as it was in maybe 1994. It’s not secret inflation making prices go nowhere, it’s demographics and debt.


    Michael Rothblatt Reply:

    >A can of Coke costs the same as it did in the early 1980s.

    And that’s exactly the problem. It should become cheaper with the rise in productivity. The fact that it remained the same despite leaps and bounds in automation is due to inflation. Of course, you might not call it inflation, but that depends on the definition of inflation one is using…


    Posted on May 10th, 2017 at 11:37 pm Reply | Quote
  • SanguineEmpiricist Says:

    “A fascinating, recent report by the Devonshire Research Group, whose recent work on Tesla was featured here one year ago, has moved beyond the micro and tackled on of the most controversial macroeconomic topic possible: what is the true rate of inflation. What it finds is that, like others before it most notably Shadowstats and Chapwood, the accepted definition of inflation, or CPI, is dramatically understated for various reasons, both political and economic.” – Cathedral Banned Website

    Operational Subjective views of Probability Theory say via Frank Lad says that there is no such thing as a ‘true’ rate. Excellent topic for discussion, I do not commit to any side other than preference for subjective views while maintaining the broad correctness of Deborah Mayo’s but also David Miller’s Critical Rationalism as ALL NON-NEGATED VIEWS and any other mathematico-philosophico-conceptual apparatus that encapsulates the relevant affairs(empirical predicates or not) to execute decisions over ‘to achieve the result’.


    G. Eiríksson Reply:

    mathematico-philosophico-conceptual apparatus that encapsulates the relevant affairs(empirical predicates or not) to execute decisions over ‘to achieve the result’.

    That sounds like something out of Evola’s «The Hermetic Tradition».


    Posted on May 10th, 2017 at 11:55 pm Reply | Quote
  • SilverSpeed Says:

    Goodhart’s Law.


    Posted on May 11th, 2017 at 8:05 am Reply | Quote
  • vxxc2014 Says:

    Then again all the fraud provides future justification for nullification of all debts and hard reset to hard money.

    I will now entertain other theories: Fuck You. Hope you’re entertained.


    G. Eiríksson Reply:

    We shall carry gold in our purses. *Moldbug’s voice when he plays a DnD character from Baldur’s Gate*


    Posted on May 12th, 2017 at 11:09 am Reply | Quote
  • Rohme Giuliano Says:

    I prefer graphic eqs to price indexes. I can feel 60hrz.

    Private debt keeps the show running. Today, fall in incomes supplemented by credit is antirecession policy.

    How can debt loom so large over an economy when the credit doled out was supposed to grow the economy?

    Does any one know the accelerationist party-line on financialization?


    G. Eiríksson Reply:

    Does any one know the accelerationist party-line on financialization?

    I’ve been wondering about circa para this.

    There’s a thing such as over-finalization which means anti-acceleration. An author I posted recently says it converts into lower GDP.

    I’ll grant a concept for disambiguation : ‘disfinalization’.


    Rohme Giuliano Reply:

    Hi Erik,

    Who is the author? James Gleick or someone else?


    Posted on May 13th, 2017 at 12:23 pm Reply | Quote

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