The old system told you how much you had to increase your income in order to keep buying steak. The Boskin / Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak… Cost of living was being replaced by the cost of survival. The CPI is consequently adjusted downward.”Īn even more risible example: “One of Williams’ favourite hedonic fudges is the decision to lower the adjusted price that is used in inflation calculations for college textbooks with colour illustrations, based on the supposed higher quality.”Ī broader and more sinister example, taken from Williams’ website : “The CPI was measured using the costs of a fixed basket of goods, a fairly simple and straightforward concept…. How is this achieved? Inflation is lowered by the use of “hedonics.” For instance, “Today’s $1,000 computer has far more capabilities than the $1,000 model of yesteryear, so even though consumers are shelling out the same dollar amount, they’re getting a better product and therefore conceptually are paying less. This advertisement has not loaded yet, but your article continues below.

Now we are all slaves to the great god Numericus, and other measures of prosperity as dismissed as “anecdotal,” with the result that governments live and die by GDP expansion. So debt has increased by $8 trillion, while GDP has only increased $4 trillion.” Younger readers of this space might be surprised to learn there was a time when the term Gross Domestic Product was confined largely to the financial pages. Since Bernancus Magnus “became chairman of the Fed in 2006…the debt has gone from $8 trillion to $16 trillion, while GDP has gone from $12 trillion to $16 trillion. If you look at the gold price, in combination with world liquidity, you see that gold is going up hand-in-hand with increased liquidity.”Īs he points out, there is no end in sight to quantitative easing, notwithstanding the ever-diminishing returns.

So there is clearly short-term manipulation, but it makes no difference whatsoever. At King World News, Egon von Greyerz, managing partner of Matterhorn Asset Management, declares, “Every time COMEX opens, it’s the same thing-you see selling.

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