Friday, December 21, 2012

Consumer Price Index - CPI

The Eastpointer

There is no Inflation.

By Richard E. Noble

I don't want to upset all you retired folks out there but I have found out that the Government has been lying to us about inflation.

I know ... I know, you are all shocked. You can't believe I could actually come right out and say the U. S. Government is lying. I am sure some of you think I should be charged with treason and sent to a foreign country to be tortured. I know to actually believe our government would lie is really hard to swallow. There must be some other explanation? Maybe it only appears that they are lying? Maybe I have misinterpreted the facts? Well, I'll let you be the judge.

Inflation is interpreted by the government as CPI. The CPI is the Consumer Price Index. This index was once calculated by comparing the prices of a certain group of goods and services from time to time and then estimating the increase or decrease in their costs. This task was performed by the BLS, the Bureau of Labor Statistics. As the cost of everything in this so called basket of goods and services kept rising, the government decided that something had to be done. Something had to be done because this method was costing the government too much money in cost of living adjustments to retirees, retired veteran’s pensions, Medicare payments, government employees, bond holders and whatever. So they appointed somebody named Boskin and instructed him to form a commission and study this problem.

If you are retired, receiving a pension, have your life's savings invested in government bonds, working under a government contract, or anything that is adjusted for inflation by somebody and you now find that you can only afford to buy half a tank of LP gas, or you can no longer afford to drive your car more than one block in any direction, or you are wondering if cat food can be consumed by humans, you can thank Michael Boskin and his Commission. He and his commission rearranged the methods for estimating the Consumer Price Index.

Mr. Boskin had some "overlooked" economic concepts that he brought into the CPI evaluation like; substitution, hedonics - quality estimations, geometric weighing, seasonal adjustments, along with the elimination of certain incalculable volatile variables like energy, food and local, state and federal taxes. So, for example, when the CPI was calculated without consideration for food, energy and taxes it was often found that there had been no inflation at all. Wow! Isn't that great?

So you ask; why is it that I don't have enough money to live on any more? Well, obviously you are still heating and cooling your home, eating food and paying your taxes. If you will just stop doing those things you will find that you have just as much money as you always had.

But just in case that wasn't enough to bail out the government, Mr. Boskin thought up a few other safety measures to guarantee that inflation didn't go up.

One of his measures he called "substitution." In other words if the price of beefsteak in our typical basket of goods went up from the last time that Mr. Boskin went shopping, he substituted hamburger; and if hamburger was too high he substituted chicken; and if all the meat was too high; he substituted vegetables; and if vegetables were too high one can imagine that Mr. Boskin would have us consumers check out the ingredients on a bag of Friskies. Then, of course, we don’t have to buy the name brand Friskies, we could buy Gritskies and we don’t have to buy Ritz Crackers we can buy Fritz or Blitz Crackers.

Next on Mr. Boskin's list of improvements was "hedonics" or quality compensations. Let's say that Mr. Boskin bought a TV for $329 on his previous expedition and then on his following survey the same model TV cost the exact same price. But the new TV had a better picture, was estimated to last 2 years longer, and due to improvements in technology it had a much better sound. Mr. Boskin figured that even though RCA chose not to charge us for these improvements the government had no obligation to be so generous. Mr. Boskin estimated, for example, that these improvements were worth in terms of quality enhancement, $135. He therefore calculated that a new TV didn't really cost the consumer $329 but only $194. As you can plainly see our CPI actually went down instead of remaining exactly the same.
But hedonics only seems to travel in one direction. If you personally don’t benefit from these new technological wonders because you have grown old and your vision and hearing have diminished or even if you didn’t need and don’t want the new and improved model, you still get billed by Boskin nonetheless.

I could explain to you Mr. Boskin's "geometric weighing" as opposed to the old antiquated arithmetic method and his seasonal adjustments but I don't really think it is necessary. I think that most of you out there will agree with me when I say that Mr. Boskin and the U.S. government who hired him are not simply spinning the truth but are really telling lies.

Friday, December 14, 2012

Are We Not Righteous Men

Are We Not Righteous Men

By Bill Osher

Book Review

By Richard Edward Noble

Bill Osher is an ordained Methodist Minister. He has his PhD in counseling psychology and has been employed as such at a college university.

Politically, Mr. Osher is clearly a Progressive. He helped found the Georgia Progressives. A very lonely endeavor, I would imagine. He now lives in New Mexico and is actively involved in the Democratic Party.

This book is a satirical, rephrasing of many popular Old Bible stories familiar to all Christians. One might say that Professor Bill has modernized and upgraded these tales and placed them in a modern-day, rightest format – telling us these tales as Newt Gingrish might interpret them.

Of course, anyone attempting to use the Bible as a stepping stone to humor is on very dangerous ground. But Mr. Osher manages quite well and makes his points with a laugh. Yet I have no doubt this book will be severely criticized when discovered by political pundits from the opposition.

Mr. Osher, as with many good Christians today, is obviously fed up with the hypocrisy being spewed out by the high volume Christian Right.

This is a short book, a mere 90 pages but I would imagine it took the author some time to put it together. Along with the sarcasm it is also very clever. It took some thought to accomplish.

This book reminds me of the Ferengi 286 Rules of Acquisicion. If you are a Star Wars Fan, you’ll know what I’m talking about. If not give it a Google. Lots of laughs.

A few poignant quotes from the book:

Blessed are the rich for they have labored mightily and thus enjoy God’s favor.
Blessed are the warmongers for they make the weapons industry flourish.
A hand up is a handout.
Charity beginneth and endeth at home.

I like best, though, this quote on the final page by Upton Sinclair:

“It is difficult to get a man to understand something when his job depends on not understanding it.”

I found lots of food for thought in this little volume, though I doubt if any conservatives will feel likewise.

Khatyn - Book Review


By Ales Adamovich

Book Review

By Richard E. Noble

This book is tragically exhausting, not just for the main characters but for the reader.

The pain and suffering are overwhelming. The physical effort is beyond endurance. And the reader feels it all, every step of the way, page after page.

I think that was probably the author’s focal point in writing the book.

The main characters are constantly on the go … trekking. They are starving. Their hardships are superhuman yet real and not doubted for a second.

It reads like nonfiction. The main characters are physically weak. They are exhausted. But they keep going … and going … and going … and going … and going.
They are involved in a cause in which they are outnumbered and overwhelmed. But they endure.

The cause is apparently the war but in truth, it is survival. They endure because they must.

The reader keeps asking himself how this man can keep going. How can all these people keep going. Why don’t they all just lay down and die?

And this was the Nazi’s psychological intent. Make the enemy want to die. Make him want to give up, quit the fight and surrender. But the persecuted were all too aware that to surrender was to die. They would be tortured and killed whatever choice they made.

So they must persist.

This is a horror story and you are there to witness it all. You see it through the very, cold, war weary eyes of the main characters in the partisan army and the suffering masses around them.

The account is almost devoid of passion. Instead it is filled with endurance.

Again, I think this is also part of the author’s intent. He wants the reader to witness it as he saw it … as they all saw it. He wants the reader to see the senseless persistence in the midst of hopelessness, accepted slaughter, murder and senseless human brutality.

This is the story of war and the atrocities that inevitably come with it. It is the story of burnt and destroyed villages, of tortured, unarmed men, women and children who are murdered in the most horrible, cruel and senseless manner.

There is a love story mixed in with this war of horror but it is secondary. It hardly deals with love. There is the involvement of one man and one woman but it is all mental. There is no sex or romance to it. But it helps to make the book human and tolerable.

The main story is the war and the shock and dehumanization of it all. The reader is torn between the conflicting emotions of wanting to put the book up and stop reading and the moral necessity to turn the next page.

In every war the soldiers’ bodies are tabulated but it is always the civilian population with the majority of casualties.

Belarus in Russia is the setting. The main characters are all a part of the partisan resistance. They are a small but dedicated group. But for every minor victory they achieve, the Nazis repay ten fold.

I’ve read many true historical accounts of this area and the treason, slaughter and massacres involved. The German Nazis and their killer extermination policies are behind everything but they get lots of help.

The Nazis are not just German but traitors and sycophants from the ranks of the local villagers who sold their souls to the devil for the opportunity to vent their hate on their neighbors.

The book does not elaborate on this treason. It concentrates on the actual war experiences of one man and one woman and the small band of partisan, anti-Nazi resisters they are a part of.

I’ve read more non-fiction accounts of the atrocities of World War II than I have novels and fiction. There is truly very little fiction involved here. The author elaborated on the plot and the details, but the facts of the slaughter of Khatyn and Belarus are all detailed and recorded in the historical archives of the war.

The actual history can be even more gruesome. But in a novel such as this, written by someone who was there and experienced it all firsthand, and then creatively fictionalized the events, a different dimension is added.

In my non-fiction reading, I never felt the hopelessness, or the raw spirit of survival or the exhaustion.

I was expecting the hero and the heroine to simply lie down and die at some point. What was the sense to it? Who was there to come to the rescue? Nobody. It was all on their shoulders.

This is one of those books that we would all rather not read but once we have finished it we feel a sense of achievement.

Read it and weep.

The reader will have to be the one to weep because the participants had reached a point where tears were impossible. They had none to offer.

They just stand and stare.

The High-Beta Rich

The High-Beta Rich

By Robert Frank

Book Review

By Richard E. Noble

This book, written by a Wall Street Journal senior writer, consists of a small selection of super wealthy individuals who suffered substantially from the economic crash of 2008.

Some went from billionaires to millionaires, some multi- millionaires to lesser status millionaires, and some went bankrupt.

“The year 1982 marked the year of the high-beta wealth.
“For nearly thirty years after World War Two, the American wealthy were a small, quiet, financially conservative group … There was plenty of wealth created in America during the postwar years. But it didn’t pile up at the top the way it did after 1982. Wealth was more broadly shared, thanks to high taxes on the wealthy, strong unions, New Deal programs, protectionist trade policy and the nations manufacturing power … From the wealth perspective, 1947 to 1982 was a sturdy bridge built by the working class.”

Most of the millionaires and billionaires in this book were certainly not geniuses.

The author’s main thesis has to do with the rotation in the ranks of the top 1 percent and the perilous volatility created in a world or society dependent on this class for its revenue.

He accepts the inevitability of this scenario which is that our nation is and forever will be a country dependant on the erratic and extremely volatile income of a super wealthy class of gambling casino junkies.

At the conclusion of the book he offers possible alternative solutions available to the U.S. government and the state governments as well.

This book is, on the one hand, a political statement and on the other hand a presentation of entertaining stories. It is my opinion that the one has nothing to do with the other.

The stories are good. The political statement by the author is in my opinion confused.

The author makes reference to “The Gilded Age” throughout the book. I think it must be understood that the Gilded Age was a satirical phrase thought up by none other than Mark Twain. He coined it to describe a period in American history marked by deceit, corruption and exploitation of the poor and working class by the wealth mongers and greedy and “gilded” with a thin veneer of gold by the press, media and political propagandist of the time to give it the appearance of a proper and righteous prosperity.

The author’s political statement is:


The author never says this outright. In fact, he would deny it, I’m sure. But this is the basic message I get and it would be consistent with the general dogma preached by writers from the Wall Street Review.

I think his suggestions at the end of the book on how American government is to manage are tongue in cheek. If the author is truly sincere, he is clearly severely confused by his own research.

Let me make my case.

To deal with the author’s message, skip the stories about the lives of the rich and famous entirely. They are interesting and entertaining but have little to do with the author’s underlying message.

Read the introduction and then skip to the back of the book and start reading the chapter entitled “What’s Wrong with California.”

Before we do that let’s have a reality check:

Taxes are necessary.
Everyone must pay taxes.
The rich are required to pay taxes and they should.

Now we move onto the author’s elaborate contention.

The top 1% of America’s wealthiest people are no longer a consistent, stable group of people. There is rugged competition for the top earner positions and the names of those in the ranks of the top 1% change every year. The lives and incomes of these individuals are precarious and extremely “volatile.” Therefore the money coming from these individuals in taxes is also extremely “volatile.” An individual from this group may make a tax payment of 100 million dollars one year and be bankrupt the next year and send the government nothing. This puts the government in a boom or bust situation according to the author.

Well, it seems to me that if we are talking about consistent income changing hands in the upper 1%, the government’s income would remain stable and consistent. It would be collecting equal amounts of money but from different people each year. If this is not the case, then we are dealing with other factors here that must be analyzed. Money simply changing hands should not affect government revenue.

The volume of money that is changing hands must change to affect government revenues.

If it is the volume of money that is changing then we are looking at another problem.
If the volume is changing then money is disappearing.

The money could be disappearing for a number of different reasons. If the volume is disappearing then money is leaving the state or the country without being taxed or the money being taxed each year is from one time liquidations of capital goods, services or businesses.

In other words businesses are liquidating their assets and disappearing from the various states and the country.

We have known this has been happening for a long, long time. This is nothing new. Huge amounts of money are also being secreted out of the country and into offshore accounts or put into approved tax shelters with no taxes being paid.

The author does not address any of the above and concentrates on the “volatility” of the situation.

It may not really be all that volatile. The volatility may be a temporary factor resulting from the continuing abandonment of moneyed interests from American shores.

The solution would not be to adapt to the temporary volatility being created via the abandonment and liquidation of assets by more and more American companies, millionaires and conglomerates but to institute policies that take action against this ongoing bankrupting of American wealth and the American people.

In the beginning of this review I quote the author on his understanding of how we maintained prosperity and stable growth in the hands of a strong working class from 1947 until 1982.

The formula seems simple enough … why not work to reestablish that situation on those basic principles once again?

Rebuild our middle class, increase the wages and earnings of the poor, and the middle class, re-establish viable and futuristic industries that will supply the energy and material needs for us and the world, establish jobs with a future here in America and guarantee their longevity. As the middle and bottom earn more they will then pay more and be once again the breadwinners and the stability of our country and government.

Make the wealthy pay their dues but wean ourselves off a dependency on this group of spindly legged gambling casino junkies and put our burdens back onto the strong shoulders and burly arms of our stable working class. Improve our education system, retrain our workers and pay attention to the foundation of our home base. Rebuild America, its roads, highways, bridges, factories, and its working class.

Come on America there are choices here and good ones.