Wednesday, May 16, 2007

Hedonic Adjustment, or (just make the damn numbers up)

Why does everyone think the Dow is going up, when it is actually going down in value?
According to the Minneapolis Federal Reserve, total inflation from 2000 to 2007, using the Consumer Price Index, is just about 20%. This means the Dow would have to be at 14,100 just to break even. And that's if the CPI wasn't a made-up, hocus-pocus, voodoo fabrication (which it is). Here's why.
In calculating inflation, the Bureau of Labor Statistics (BLS) takes a basket of goods and services and tracks their prices throughout the years. This worked just fine when they would track the actual price of the same items year after year. The problem is they no longer use the actual price, and they no longer track the same items year to year. If the price of an item has gone up so much that it might make whichever administration that is in power look bad, they simply drop that item from the basket of goods (deletion), switch to another item (substitution), or make up their own price (hedonic adjustment). Yes, the BLS has become just another division of the governments "Ministry of Propaganda". Its job is to manipulate the numbers, so as to paint smiley faces all over the economy.
…[This kind of] “invisible crash” is a product of a fiat currency system and/or rampant credit creation. It requires a rapidly expanding money supply to obscure the fact that an overvalued asset class is correcting and reverting back to fair value or less. It cannot happen on a gold standard with conservative fractional reserve banking practices. Therefore, it didn't happen in the United States until the 1970s and today. But it has happened numerous times throughout history once a country leaves an asset backed currency standard. The stock of the Mississippi Company of John Law's France, and the German stock market during the Weimar hyperinflation come to mind.
It's no great secret, we are being bamboozled by government reporting agencies. I can't say I blame them, the numbers don't look good. Answer? - Make'em up. Most people won't check, after all it's a government reporting agency right? Good as gold...

It's time we pulled our heads from our butts and did our own checking. Things are coming apart fast and we don't have the luxury of closing our eyes and hoping it will go away. All good things must end eventually and so it is with the great housing market of the early 2000s. It’s over, deal with it.


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Friday, May 25, 2007  

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