[sdsaga12]

"In 1996, five economists, known as the Boskin Commission, were tasked with saving the government $1 trillion. They observed that if the CPI were lowered by 1.1 percent, then a $1 trillion could indeed be saved over the coming decade. So what did they do? They proposed a way to alter the formula that would lower the CPI by exactly that amount!

This raises a question: Is economics being used as science or as after-the-fact justification, much like economic statistics were manipulated in the Soviet Union? More importantly, is anyone paying attention? Are we willing to give government agents a free hand to keep changing this all-important formula whenever it suits their political needs, simply because they think we won’t get the math?"

This was written by Edward Frenkel, a math professor at UC Berkeley who was born in the USSR in 1968 and so, we can assume, had some familiarity with statistical games played by regimes trying to hold onto power.

I invite you consider that you might extend too much faith toward federal institutions that have presided over a ceaseless rise in inequality and erosion of rights in recent decades.

https://slate.com/technology/2013/02/should-algebra-be-in-cu...

[ChrisLomont]

>This was written by Edward Frenkel

And he is not an economist, yet he is a well known econ crank.

Here's an actual economist [1], looking at the evidence one decade past the Boskin report - concludes the same thing.

And, the really cool thing about inflation over that length of time, is you can check it for yourself (which I have showing people why ShadowStats is complete nonsense).

Get some old ads from the start of the period (say 1996, the year of the Boskin Report), and look at prices. Put them in excel. Do the same for now. Compute a reasonable basket.

And here is the really neat part - see if the BLS reported CPI over that period matches reality, or if adding 1.1% annually matches reality.

I will spoil the result - BLS is correct.

From the CPI calculator, Jan 1996 to Jan 2021, inflation is a 1.69 multiplier, for an annual rate of 2.12%. Add back the supposed 1.1%, take the 3.22% over the same 25 years, get a 2.21 multiplier, quite a difference.

And, for the record, there are lots of other places tracing inflation, like the Billion Prices Project, that reach the same conclusions. If the govt lied about it, there would be awesome arbitrage opportunity (and like all such things, people have even investigated that - no such lies - papers on Arxiv).

[1] https://www.nber.org/system/files/working_papers/w12311/w123...

[SpelingBeeChamp]

What awesome arbitrage opportunity would exist if the government was understating inflation?

[ChrisLomont]

Google any inflation linked asset, from bonds, ETFs, swaps, all sorts of derivatives. If you know inflation is consistently wrong, all such things are mispriced. Then it's simple to hedge against non inflation versions of the same, or buy derivatives constructed against them, to extract the risk free difference.

If you dig around you'll find finance papers measuring such things, demonstrating no one has found any such exploitable gaps. Plenty of groups try.

[sdsaga12]

Thanks for the thoughtful reply. Will take a look

[praxulus]

>In 1996, five economists, known as the Boskin Commission, were tasked with saving the government $1 trillion. They observed that if the CPI were lowered by 1.1 percent, then a $1 trillion could indeed be saved over the coming decade. So what did they do? They proposed a way to alter the formula that would lower the CPI by exactly that amount!

I know this is a direct quote from a Slate article, but it's a blatant lie. The commission was officially the "Advisory Commission to Study the Consumer Price Index", i.e. it's founding purpose was to evaluate the accuracy of the CPI, not an open-ended mission to save the government money.

[serverholic]

This is why cryptocurrency was invented. Satoshi even signed a statement about government bailouts in the first bitcoin transaction.

The truth is that the game is rigged. Like entropy, government power always increases over a long enough timeframe. Anytime the spotlight is shined on government they manipulate the game or blame corporations. Then they introduce regulation to "protect" citizens but these regulations add up to just keeping big business entrenched.

[stjohnswarts]

Satoshi doesn't get any credit for stating what people have been stating literally for decades before "he" came along. Let's not give him credit for anything other than the bitcoin algorithm.

[serverholic]

I think you misread my statement. The first bitcoin block literally had a political statement embedded into it. That's all I'm pointing out.