Fudging Inflation

The boys that make the Consumer Price Index, or CPI, are cooking the books. We use the CPI to keep track of inflation, which is a measure of how prices are going up. If inflation’s negative, then it means prices overall are going down. Simple enough… so how do they cook the books if all they do is look at prices?

Well, they take $4500 off the price of every car in the USA because the “Cash for Clunkers” program was in effect. That’s a fudge of biblical proportions: now all the inflation-indexed payments will be slashed because if inflation goes negative, everything tied to inflation for monthly adjustments also take a walk on the negative side.

While I think deflation is on its way, this is just a way of the USG dodging its financial commitments. It has the power to do it and get away with it. It wouldn’t matter who runs the Congress or presidency: this is a bureaucratic thing, for which the only cure is stronger leadership.

25 thoughts on “Fudging Inflation

  1. Nolan K

    I’m willing to bet that you’re average Joe doesn’t even know what CPI is. They’re only going to hear that inflation isn’t serious from the media. This is like 1984 or Animal Farm where the public is always hearing that everything is going great or even better than before. This is kinda scary.

  2. Hugo Espiritu

    I thought the plan to fix the recession was to make inflation increase, why is the government making inflation go down?

  3. David Truong

    I think they forgot to think about that when they decide to implement “Cash for Clunkers”. I believe It was originally designed to stimulate the economy and save automakers by giving an incentive to spend a couple of tens of thousands of dollars. To avoid deflation, couldn’t they just not consider the $4500 taken off by “Cash for Clunkers” and treat it like someone bought a car regularly?

  4. David Liou

    Hugo: they are trying to make inflation go down, so people will have money to invest into the next bubble they are going to make.

    I don’t think a stronger leadership will be effective, since monarchs and dictators who have almost absolute power have had problems with bureaucracy.

  5. Hugo Espiritu

    Well David Mr. Webb had said that the reason Obama was doing all his spending was because he was trying to use it to fix debt. It makes sense because the other way to do it would be to allow deflation to occur which would only make the US’s debt harder to get rid of.

  6. Emily S.

    Im with Mr. Webb, We need stronger leadership. Not necessarily leaders with more absolute power, but there is an obvious lack of incentive to do the “right thing”.

  7. Chanel Wan

    We need someone with the drive to make our country better, they need to have the drive of like a dictator, because damn they are hella strong leaders. I am not saying that the United States should be ran by a bunch of dictators but they should at least have the drive of one. It seems like that would only help the United States figure out what the heck they have been doing so wrong.

  8. Chanel Wan

    I know that makes me sound like i want a dictatorship but i dont, i meant that dictators are dictators due to the drive that they have within themselves to control. Although it may not be the best idea it is one, dictators may not want the best for their country but we need a modified one that actually wants to do good for our country.

  9. Hugo Espiritu

    Well in the mind of every dictator that there has ever been in history, there has been the belief that they were doing good for their country. In some cases it has been true or partially true but by the time the need for their strong leadership is gone most dictators have gotten so used to their absolute power that they find it hard to give it up. But a good example of strong constant leadership during a time of crisis is FDR who did a pretty good job considering the circumstances.

  10. chanel wan

    Basically we need FDR back or someone with the same drive as him.

  11. David Liou

    But someone with a strong drive like FDR and adequate amounts of other necessary characteristic, isn’t found everywhere. So we have to find a way to make do with what we already have. Congress needs to stop thinking about political consequences and get things done NOW!

  12. Diane Stout

    I think appointing a president with a “drive like a dictor” might not be a solution. We need a president who puts the poor first, not the rich. Instead of having a president with “favors” he owes the rich, we would have a president free from messy favors and can run the country as he needs.

  13. Chanel Wan

    We need a man who didn’t grow up with money. They say Obama didn’t grow up rich but he did, he went to one of the best high schools offered in the United States although it is in Hawaii.

    We need someone who understands all of the rough parts of life and rose to the position that he is at due to his hard work and getting out of the system he grew up in.

  14. David Liou

    Favoring the poor may not a good idea, because then the government would have to spend massive amounts of money, that they don’t have, to try to make the p’ and po’ people into poor people. On top of using money they don’t really have, money used on current projects would have to be cut to compensate.

    We need a president, that was really a common man, not a man with common backgrounds, so he/she will know what the normal people are feeling.

  15. deanwebb Post author

    There are ways to lead without being dictatorial – a team of leadership offers many voices and the opportunity for minority groups to be heard. Leadership, however, also involves taking courageous actions and having the guts to face the voters after such actions.

    We don’t have such men. We’ve got people concerned more with getting re-elected than in standing by their principles. That means we get lots of laws that get passed under the radar without us knowing what’s really in them.

  16. Katie Wilson

    I like the idea about FDR, but it wasn’t as if he himself did everything. He got groups of creative people to come up with ways to fix the economy and let them have free reign. It’s because he was willing to experiment and try some insane ideas that he was actually successful. I agree with David, we need people to stop thinking so hard about the consequences and just be creative! Not everything FDR let people do worked, but a lot of it did. Like Mr. Webb said, leadership should involve many voices being heard, and many brains thinking, not just one person taking total control.

  17. Hugo Espiritu

    You have a point Katie but if you have alot of people with opposing ideas(which is what happens in the real world) nothing gets done. There has to be someone to put things together. Being a leader doesn’t necessarily mean being in charge of doing everything. A leader can be someone who gets a common goal done without being in the spotlight.

  18. deanwebb Post author

    FDR did some things that were bat-guano insane and quite possibly extended the depression. The key to leadership is hearing many voices, but choosing the path to take and being consistent. The US didn’t have consistency until WW2.

  19. Katie Wilson

    I know that not everything he did helped, and that some things may have actually hurt the economy, I’m just saying that our leaders need to loosen up a little and try something creative. It may have taken awhile to reach consistency, but maybe it would have taken even longer if FDR hadn’t done what he did.

  20. Sagar Patel

    It seems like we’re getting off topic… but the “clash for clunkers” didn’t really save money for any of the buyers. Companies would just jack up the prices on cars and put a sale on it to make it at regular price and avoid deflation

  21. Matthew Wong

    If Obama is using money to fix inflation, then the government is printing off more paper money? causing deflation? so the dollar would not be worth anything. what would we do? what currency do we go to? the euro? which alot of places are turning to right now..

  22. Chanel Wan

    Actually some places up north are taking the euro instead of actually U.S money because it is actually worth more! i heard it on the news a couple months ago and was thinking WTF is going on, and now Obama-rama is printing off more money thinking that it would fix the economy?!?! did he not go to college and know that by printing off money it will lower the value of the dollar?

  23. Hugo Espiritu

    It’s in the US’s favor to lower the value of the dollar so it can pay off its debts off with lower “real money”

  24. Katie Wilson

    He’s also trying to print off more money so that there is money in the markets, which entices consumers to spend more, which helps the money to circulate, which in turn supposedly helps the economy. And it’s better to have inflation than deflation. Obama is causing inflation, not deflation, by printing more money.

  25. David Liou

    If consumers spend more and buy more goods, won’t we have a higher debt? Then the government would have to print even more money and then a endless loop would start until the dollar loses all value?

    @ Matt
    There isn’t really any currency to turn to, since this economic crisis is global and everything else is weak too.

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