Lying about inflation

Today I noticed that several things I bought regularly have recently increased significantly in price (movie tickets, gas, sandwiches at a local luncheonette, chocolate, ice cream (increase masked in last case by reducing package size instead of increasing price)).

We all know that the government says inflation is low and has been for a long time, but this is because of a lot of cooking-the-books accounting tricks. I understand the political motivation behind making inflation appear low, and the political and administrative mechanisms by which it is accomplished.

What I DON’T understand is how the Fed can act like they believe the lies and the real danger is deflation. Is Bernanke an idiot or a tool? A lot of economists and financiers are theory-worshiping nerds who place too much faith in mathematical models with garbage data — but even a nerd should be aware that the data is being calculated on a different basis now and doesn’t mean the same thing.


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25 Responses to Lying about inflation

  1. Gorbachev says:

    The economy is a faith-based confidence trick. If people lose faith, then the pyramid scheme collapses.

    All civilizations are pyramid schemes of this sort. All societies are. The moment confidence wanes, for whatever reason, people establish a new order. Or they don’t. But certainly, the old order fails.

    Therefore, the instinct of those in power, for this reason and many others, is always to maintain the illusion of security, or at least of the need to do X to maintain (or restore) security. Stakeholders can be a limited number of citizens, an oligarchy, voters en masse or a king – but the stakeholders must be kept within the faith.

    It’s the instinct of those in positions of management or power. Whether it’s a company or a country, it’s always the same.

    Those who want revolution (marxists, for example), have no stake, or have surrendered it, or are outsiders in some way. In any case, as a function of his position, Bernanke must say the things he says.

    He can’t say anything else.

  2. PA says:

    Is Bernanke an idiot or a tool?

    I see what you’re doing here. You’re summoning GBFM.

    I won’t comment one way or another about macroeconomics but commenter The Fifth Horseman (who isn’t entirely credible in my eyes at least on one level), who claims to work in high finance and swears to having insight into the inner working of the financial industry, insists that hyperinflation, despite Fed’s effort, won’t happen. Thee claims happened on a recent thread at In Mala Fide. Any thoughts?

  3. Bernanke is just doing the bidding of politicians. An independent monetary policy would have interest rates in the double digits now and they would have been there since the middle of the 1990s.

    Gorb, most people have no stake in the current way of handling things, yet they don’t realize it – yet.

    lol, this type of fruitcakes are more fun than Bernanke though. When the student loans bubble will burst and these idiots will end up on their self-absorbed asses, it will be funny.

  5. Gorbachev says:


    You’re right – most people aren’t stakeholders. Almost all of us, every one, have no voce in nor interest in the outcome.

    But the employees of a company have a stake in the system, though in a different manner than the shareholders. You need to maintain the employees’ faith, as well, because if that fails, … then the company stops working, and the confidence trick is up again.

    On a fundamental level, it’s a confidence trick in exchange – exchange of labor and its valuation, for security and continuity. People need to want that security and continuity. If that continuity is unwanted, at some point – part of the job of the trickster is to convince you you want the result – then the system fails, again.

    None of this is necessarily a bad thing, either the creation of the confidence trick or its failure. It’s a thing. It has consequences both ways.

    But the failures of these systems have serious consequences. History is littered with societies that self-imploded.

    In the middle ages, the Norse societies essentially failed – and before they consumed each other, they looked elsewhere. From relatively peaceful places, they became fantastically expansionist and violent; and then fell back into quiet production. This was a response to the agricultural failure of their subsistence economy and the reaction to the establishment of centralized authority by many sectors of the male population.

    So if the system fails now, … there will be consequences. The results can’t be accurately foreseen, I suspect.

    I doubt the US will end up on the bottom. The US has at its core an extremely aggressive, self-righteous ethos. It was founded by empire-builders, and democratic or not, socialist or not, the US will likely remain extremely aggressive. It’s a “you punch me, I kill you” attitude. It takes some time to rouse it, but one possible result of a financial collapse would be the creation of a Napoleonic semi-democracy that aggressively pursues its narrow interests and stifles internal opposition.

    China is another state on the brink. You should immerse yourself in Sinicism. It bears a close relationship to its homonym, “cynicism”. Not all is bright and shiny in China – even the things that are bright and shiny.

  6. Gorb, the US isn’t filled with the people that founded it. The ideals of a different people are of no consequence. lol. The English were empire builders. Blacks were slaves and Mexicans serfs though and they will be the majority of the US, like it or not. Also, there’s a difference in between wanting to do something and being able to do it.

    And just like 19th century America was filled with problems, so is China. But there will be the same transition to Asia that was from Europe to America.

    I also suppose that the non-Norse people were glad that the Norse societies failed. In the same fashion, I am glad the American empire will fail. It’s not even like America is a net benefit to the world anymore – economically, politically or culturally.

  7. Gorbachev says:

    Actually, RV, the non-norse societies were devastated by the failure of the Norse. That failure sent waves after waves of marauding Vikings out into the world, going as far as the Volga and the Black Sea, Rome, North Africa and the Hebrides; colonizing Iceland was just a treat, and even the Skraelings of North America had Viking problems.

    Had agriculture not failed, perhaps there would have been no Norman French and English wouldn’t have the word Skirt or we wouldn’t have a play about Hamlet or there wouldn’t be a thousand burned abbeys throughout the British Isles. But the agriculture did fail, consistently, over 2-4 generations, and the people had to look elsewhere. (Theory: Krakatoa might have been responsible for the collapse of civilizations and agriculture throughout the world at the time).

    So the failure of the US might turn the US into something other countries might not like. That’s a distinct possibility. An aggressive, entirely self-interested US (instead of one that tries to create and maintain global institutions of any kind) might not be in the interests of, say, Mauritians, Romanians or Canadians. Especially Canadians. Actually, I’ve read some Canadian authors on the US, and the Canadians have a realistic and often sanguine approach to US-Canada relations that never forgets that the US is 9 x the population. Still, they’re smarter than us, but then again, they have to be.

    The Mexicans seem to be pre-invading, so what is there to do?

  8. Gorbachev says:

    And just like 19th century America was filled with problems, so is China. But there will be the same transition to Asia that was from Europe to America.

    Watch how tenaciously you cling to this assumption. While this is true – in general – in specific, before this has fully happened, some tragic factors are interceding.

    1) Demographics. Almost all social change is led by demographics. The demographics in China are wholly disastrous – actually, beyond disastrous – on several fronts. China *would* have been able to pull this off easily, without this problem. It’s too late now. Inside analysts admit that this single fact tosses a massive monkey wrench into China’s plans, and any positive analysis. Japan and Korea are also completely fucked; their economies will now retreat continuously and permanently for at least one, if not more, generations. Korea is in a much worse spot than Japan. China is in an infinitely worse spot than Korea. When it hiccups, it can cause a heart attack.

    2) China’s economy is a confidence trick of monumental proportions, not in the metaphorical way I said above – in a more direct and literal sense. When Chinese dismiss criticism of its being corrupt, they make a monumental mistake: the corruption is so complete, so devastating and so dysfunctional, and infects every possible decision and power level, that there’s very little accountability or flexibility in the system left. It’s brittle and ready to crack.

    3) Brittleness. The Chinese government has the means to mop up spills for a while, but that’s all it is. The transition to a functioning system , one that regulates itself and is stable, is agreed by many to be impossible, without a savage level of accountability, and this will cost those in power in China too much, personally. Even the Chinese know this. The entire Chinese attitude is – “Don’t say that! You just hate China!” and “The government will fix it, they have control.” Both reactions actually fuel the problem and make it much, much worse.

    China will implode, economically, and then social and political implosions will occur.

    China won’t replace the US. The US is going to let Chinese bondholders go bankrupt before this will happen. The US can wipe out a decade of economic saving by the Chinese by letting the US dollar freefall for a while. This is what’s happening and what’s pissing off the Chinese financiers: there’s nowhere else to park their cash. Anyway, vast chunks of this cash are disappearing into foreign back accounts and investments. Increasingly large chunks. When the government either reforms itself or switches over, believe me, a lot of people in China are going to male out like bandits, and billions will be left penniless. It’ll be Russia all over again, but A Russian Reform with Chinese Characteristics.

    The Eurozone collapse-as-we-watch is another case in point. If America falls, so goes the world – just watch.

    You shouldn’t wish for it.

    When the Roman Empire collapsed, it was often better for a short time for individuals, but in the end, everyone suffered. The truth was, it was impossible to reform at that point, and the military/political/economic collapse was just too deep by the time it was knocked over. But while a freeing element for some people, it heralded 3 centuries of chaos–

    Chaos, from which many whole ethnic groups didn’t emerge. It saw the rise of the Arabs and Islam, the settling of the Magyars, the attacks and extermination of the Goths, the elimination of the Eastern Germanic peoples, the spread of the Slavs, the extermination of the Bulgars, the wave after wave of Turkic invaders, the near-extermination of the last of the Celts, …

    Not to mention the loss of specific states, knowledge, accumulated social and cultural capital, …

    The same with the collapse of the Mayan world. I’m sure lots of peasants were better off afterwards, for a time, but foreign invaders (the central Mexicans: Chichen Itza as a foreign state, etc.), the disappearance of trade and wealth, …

    Almost always, the baby gets thrown out with the bath water.

    It’s one thing to note trends and changes. It’s a sign of excessive youth when you wish for it.

    You’re very bright, but you’re also extremely young. Your opinions show it. While such change may appeal to you, the very real consequences, when the wheels spin out of control, may surprise and shock you and you almost definitely won’t like them. Personally. And collectively.

    Sure, sometimes it has to happen – but it’s almost never happy or pleasant. In fact, it’s usually catastrophic.

    It’s why the managers of the system try to keep it going for so long, and even when faced with personal ruin, often side with the system instead of their own interests – the reality of a collapsing system and worldview is so devastating, collectively, that even the most greedy and self-interested are often appalled by the notion.

    Be careful what you wish for.

  9. Polymath says:

    If collapse is inevitable then it is not wrong to wish for it to come quickly, when the damage might be less severe.

    Letting all the American banks collapse in 2008 would have thrown the world into a depression, but putting off the problem only makes the collapse bigger and harder to recover from when it comes. I would rather have a 10-year depression starting now than a 20-year Dark Age starting in 2015 or a Thirty Years’ War starting in 2020.

  10. Gorbachev says:


    It won’t be a 30-years war. It’ll be 1 year at most. There may be proxy conflicts for 1-10 years, but it will reach a head. This will be:
    1) Nuclear/WMD exchange. Short or massive. No easy recovery.
    2) At the brink – and then withdrawal, with no clear conclusion, in effect a win-lose for both sides, and entente. Slow decay followed by slow recovery on all sides. Also bad.

    And you’re right: We should have corrected now.

  11. Gorb, the problem is that when the US will fail, nobody will take your dollars for oil, so you will be stuck. And also, you describe the actions of a homogeneous society instead of what happens when a diverse one implodes – it collapses into a lot of infighting in between warring groups. The future for the US will be worse than the Great Depression and Americans aren’t really civil like they were. So the American army will be busier with controlling Americans than going anywhere else. Also, most American man are so pathetically fat that they’re unfit for military duty. lol

    And by the way, the biggest dollar holders aren’t Chinese, they are American. Along with the Chinese, who by the way, have most of their assets in other things than dollars, every single American will be bankrupt. Annuities, insurance, deposits, savings – everything will be rendered worthless. And the Chinese will still have factories while Americans will have a printing press that prints a currency that nobody accepts as payment. And related to China’s demographic problem, unlike the rest of the world, they can let their old people starve. It’s not like they have ponzi schemes as welfare benefits for old farts. And the gender disparity can be solved easily through war.

    Related to the Euro zone, do you know what you’re talking about? The troubles in the Euro zone are related to sovereign debt, just like the problems of IL, CA or NY. And the Euro was a flawed currency from the get go, most economists worth listening to said that it will fail.

    The future of America is nothing short of a mix in between African and Mexican politics and economic policies. Also, the collapse of America might not be desirable if you are American, but on the long run, it benefits just about everyone. Economics wise because other economies no longer have to drag a bankrupt country with 300 million consumers who use more resources than they are worth and culturally because Americanism is something that is threatening to wipe out entire peoples from the face of the Earth. It’s time to remove your chauvinistic glasses through which you view the world and realize that America’s success doesn’t benefit anyone, except Americans. And sure, getting rid of imbalances is as pleasant as coming off a heroin high, but the other solution is overdose.

    And it won’t take three centuries for the world to recover. Everything is much faster nowadays, including the collapse of empires.

  12. Oh, and Americans won’t have the same living standards for generations. Economics wise, Americans won’t afford to buy all the nice stuff they bought in the last decade for 20-30 years. Right now, the US is on the road of the Wiemar Republic.

  13. Gorbachev says:

    RV, you’re tight.

    The US is in Weimar territory.

    With all that that implies. Which was what I was getting at.

  14. Gorb, the difference though is that the US isn’t homogeneous, like Germany was. Which means that it will implode into pieces like the USSR did.

    And the idea that the world needs the US to consume is so preposterous as saying that if you had a farm and me and Polymath had one each and I made apples, Poly made oranges and you made bananas, we’d somehow benefit if you stopped making bananas, but still gave you apples and oranges like you did make them. No, we’d just have more of each of the fruits for ourselves if we told you to take a hike. It’s not like Asians like washing clothing by hand or riding on bikes. They can’t consume because they don’t afford to and they don’t afford to because their currencies are suppressed.

    You somehow think that Americans are able to be as disciplined as Germans were in the interwar period, when you trash your own cities when a basketball team wins a championship. Just think of what will happen when people won’t afford to heat their homes all the time or if food quadrupled in price(which right now is inevitable on the long run). Most American cities will be in smoke and flames. And the way it will play out is Americans waking up one day with the USD index at 35, instead of at 79.

    Oh, and if the Chinese keep the peg, they will have hyperinflation since they’re importing America’s inflation due to it. Their forex is already worthless. It’s the equivalent of Madoff’s clients coming with more money so that they don’t lose what they already gave him. lol

  15. Alvis Velthomer says:

    Speaking on countries collapsing, Tunisia seems to have done just that. Heck, the dictator who had been ruling the country for about 25 years actually fled. Now there is widespread looting and chaos in the country. What is interesting was that this was mostly caused by rising food prices and high unemployment (especially among the youth). I believe this was the first time that there was a popular revolt in an Arabic country. There are rumors that there are even some riots going on in neighboring Algeria.

    Oil becoming extremely expensive is going to be bad, not just for American but the entire world.

    Also, RV is right that American cities will basically become burnt down warzones if there was ever another economic depression here. The United Stares is almost a completely different country now compared to what it was in the 1930’s.

    Also, Obama’s approval rating is back up to 50% so I suppose the media’s hatchet job of blaming the Tea Party for a psycho’s schizophrenia worked. I expect the media will have many other aces up its sleeve during the election cycle. However, if I were Obama I would not want to be president for the next five years, however, I am sure that he is confident that he will be able to kick the can past 2016. The media keeps parroting that we are in an “economic recovery”, if by “recovery” they mean we appear to be bleeding less, then perhaps “recovery” might be the apt description. However, one thing I noticed is that more and more people are describing the media as propaganda organ and don’t take it seriously anymore.

    Also, I don’t think the Republicans will do much to repeal Obamacare, further cementing them as being slow-go leftists. Modern conservatives only like conserving the status quo, even if the new status quo was created as a result of a successful liberal advance. RV and I predict that Republicans will eventually become what Democrats are today, and Democrats will go even further left. Heck, anti-abortion activists now oppose abortion because its “racist” since more black babies are aborted percentage wise than other racial groups. I think there was even a billboard with a black baby that said, “black babies are becoming an endangered species due to abortion”., which is funny considering that the black birthrate is still above replacement and is higher than the white birth rate (which is below replacement). Expect more rightist causes to use leftist arguments to justify their support for them.

    I think the decline of the United States will be gradual. Taxs will probably be around European levels in 10 years which will keep things afloat for a while. The United States will simply sink into becoming a third-world nation, and people will only realize it when they think about how things “used to be”.

    As to East Asia’s demographic crisis, they actually produce things and I think robots will supplant the number of declining workers, plus their birth rate will rise in the long run as property becomes cheaper and living space is freed up after much of the elderly die off. Also, due to practically non-existant immigration, their countries will still be ethnically East Asian.

    Its the West that faces a much worse demographic crisis because not only are the countries still growing in population despite its abysmal birth rate, much of the birth rate and population growth are from foreign tribes who are less capable than the natives they are replacing. A growing population means that in the West, that property will not become cheaper and there will even be continued shrinking living space, which means continued depressed birth rates for the Westerners. Low-IQ tribes don’t care about economic or environmental when they have children so their birthrates will be not be depressed when economic conditions decline in the West. Unlike East Asia, many countries in the West (Europe and the Anglo-sphere) will either be majority non-European or majority-minority by the end of the century.

    There appears to be some glimmers of hope though. Eastern Europeans seem to be opposed to the expansion of Americanism into their lands, some even violently, and many of these people are young. There also might be a growing nativist youth movement among Western Europeans as seen by the success of the Swedish Democrats.

    The key will be to put the Anti-West Regressives on the ropes. The Regressives still determine the narrative for the culture and dispension of information, even things that would normally be seen as a blow to their backward worldview. A good recent example of this would be the recent suicide bombing in Sweden in which the media blamed the Swedish Democrats for creating an atmosphere of “intolerance” and simply talking about a possible “unwarranted” backlash against Islamic immigration. They were able to present the narrative as the problem being people who object to Islamic immigration despite the catastrophe having been caused by Islamic immigration. It is imperative for the youthful Restorationists to use their vigor to capture the citadels of power and go beyond merely mocking them and discrediting them on private blogs and message boards, and to turn the Regressive’s own narrative against them.

    Also, Restorationists need to construct a mythos for themselves. While Christianity is opposed to many of the modern social nihilism and sexual degeneracy, its universalism has been released out of the Pandora’s Box and it will likely never be shut back in. However, it is also worth noting that Islam is also an universalist religion yet the ethnic groups under Islam are still very much tribalist and hate other tribes that are Islamic (though they might work together when a non-Islamic tribe threatens their Islamic enemy).

    Christians today have become utter weaklings basically taking abuse and criticism that other religions would never tolerate. Due to Christianity have relinquished its position of being the “father” for society, the West’s primary ideology today is nihilism. This is why you see so many fools worship sports teams for which they have no connection (other than the geographic proximity from their tv set) and people obsess over material possessions that will only entertain or please them for a week at best. When nothing has meaning to you, then to the modern Swede, a sub-Sarharan is just as much as a Swede as their father.

    However, I do not think paganism is necessarily the answer seeing as most of the modern pagan revivals have brought in universalism and new-age concept crap with them (drug use, free love, gaiaism, “we are the world”, etc.).

    I think also the concept of White Nationalism may also be a dead end considering it would be trying to get a bunch of European tribes that have different outlooks and have long opposed one another to work together. Puerto Ricans seem to find racial solidarity with Mexicans despite them both being pretty different tribes. Also, as long as memories of Nazism haunt the Western mind, I can never see a racial nationalism taking place outside of Eastern Europe.

    Instead, perhaps a new exclusive ideaology or mythos will have to be conceived. Whether its possible for a new ethnocentric mythos to be birthed for Hi-IQ tribe suffering from nihilism in the modern age remains to be determined. Is it even possible for a people to recover from nihilism?

    The cards are stacked against us, and there is currently no way I can see things changing. Perhaps the only “game changer” that could change the West’s current outlook would be the scarcity of resources, such as oil. In that case, many different things could happen.

    These are truly interesting times, in the Chinese curse sense.

  16. To answer you, a people can recover from it, a culture can’t. Cultures reach dead ends and are wiped out. But people can change their culture.

    And the gradual collapse of the US requires the world to continue to maintain the US without any return.

  17. Oh, and I forgot to mention, Islam says that Muslims go to heaven. In Christianity, non-Christians go to the Christian heaven too. Also, in Christianity, Europeans aren’t the descendants of Jesus, while Arabs see themselves as the descendants of the prophet and a different people.

  18. RV, For biomedical research alone the United States is a huge benefit for the world.

  19. Gorbachev says:

    You’re right, RV.

    The world would have been better off without the US. I mean, the Soviet Union, China and even Nazi Germany are or were much better global powers. Maybe even the British.

    I can see that now.

  20. Alvis Velthomer says:

    This might warrant a new entry but the head of NASA’s laboratory says that America should have Chinese-style dictatorship because climate legislation.

    The nation’s most prominent publicly funded climatologist is officially angry about this, blaming democracy and citing the Chinese government as the “best hope” to save the world from global warming. He also wants an economic boycott of the U.S. sufficient to bend us to China’s will.

    NASA laboratory head James Hansen’s anti-democracy rants were published while he was on a November junket in China, but they didn’t get much attention until recently. On Jan. 12, the hyperprolific blogger Marc Morano put them on his Climate Depot site, and within hours, the post went viral.

    LOL. I hope the leftists abolish democracy, that way all the punks and antifa who “rage against fascism” know who the true totalitarians in the Western world are, but I bet that they will continue to be the jack boots of leftism even when people who post on blogs like this will be sitting in a prison for “thought crimes”. I wonder what conservatives will say America is about when democracy and the constitution are abolished by leftists. Diversity? lol

    Seriously, the leftist elites are no longer hiding their disdain for us anymore.

  21. Alvis Velthomer says:

    Ironically, China has practically no environmental laws, and cares nothing about things such as civil rights, diversity, and homosexual rights. And leftists want China to be more powerful? I am starting to think they may be as stupid as they are deluded.

  22. Gorbachev, without the US meddling in WW1, Nazi Germany wouldn’t have even existed. Also, the Bolshevik revolution got massive funding from two parts – Germany due to them trying to abolish the two war front, after the US got involved in the war and from Wall Street.

    And I prefer even the Ottoman empire to the US – at least you knew where you stood with them.

  23. RV, Being young and pretty does not make up for being a fool. Try outgrowing your irrational prejudices.

    Editor: This is too personal and non-substantive. Specify what is foolish, irrational, and prejudiced, and try to avoid personal remarks.

  24. Gorbachev says:

    RV is young. Her boundless self-assurance and tendency to see absolutes and guarantees is based on lack of experience, not stupidity or blind prejudice.

    Give her 10 years. And then another 10. Tempered steel.

  25. Randall, I actually mean what I say. For Europe, the US has been a bigger problem than the Ottoman Empire. Don’t worry though, if Islam will become dominant in Europe, we will be brainwashed into thinking what a good thing the Ottoman Empire was too.

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