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The U6 unemployment rate only counts engineers who are currently looking for work, and ignores those who are employed outside their field, underemployed or who have given up entirely on finding a job.

The real unemployment rate for engineers is probably closer to 15%.

I apologize for interrupting the partial truth with the whole truth.

How is this marked insightful when all the points made are the exact opposite of reality?

Because it fellates the power class with their woo-woo economics. He champions the ruin of local economies by calling a net transfer of wealth to Wall Street "putting the money to work" (as if local business loans by local banks was *a bad thing*) and makes the base assumption that wages keep up with inflation while ignoring massive unemployment, probably by using politically-manipulated data.

Because, everybody knows the big banks are the ones who are hurting in this crisis! Give me a break. Obvious shill is obvious.

How is this marked insightful when all the points made are the exact opposite of reality?

Because it fellates the power class with their woo-woo economics. He champions the ruin of local economies by calling a net transfer of wealth to Wall Street "putting the money to work" (as if local business loans by local banks was *a bad thing*) and makes the base assumption that wages keep up with inflation while ignoring massive unemployment, probably by using politically-manipulated data.

Because, everybody knows the big banks are the ones who are hurting in this crisis! Give me a break. Obvious shill is obvious.

If you want to see not only the actual stats for what inflation has been going on, note that inflation in America has been hovering around about 10% annual on most goods. See also this site: http://www.shadowstats.com/

That would mean that prices have quadrupled since 2000: are rent, houses, gasoline, food, cell phones, jeans four times as expensive as in 2000? Of course not. Many of those things have actually gotten cheaper.

Inflation and CPI aren't particularly well-defined numbers, so people can legitimately get different answers and use/misuse them for various political purposes. But anybody who claims that they are around ten percent obviously is an economic charlatan.

If you want to see not only the actual stats for what inflation has been going on, note that inflation in America has been hovering around about 10% annual on most goods. See also this site:

http://www.shadowstats.com/

It not only shows the real statistics (based upon the formulas that were in use in 1980 and earlier), but explains what sort of manipulation has been going on with the CPI, why it is a bad thing, and why your claimed source with the NY Times is full of the proverbial BS.

This isn't the only site to try and correct the government numbers, but it does use credible metrics for proper comparison as opposed to deliberate understating of inflation. This also impact things like changes in the GDP and other economic health statistics as well.

In other words, you are just flat out wrong about your assumptions that inflation is not happening

Depending on who you believe.

http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement

Have you even tried to read it?
http://www.shadowstats.com/article/no-438-public-comment-on-inflation-measurement
Rules for measuring inflation have changed. They have changed in the way inflation is a lot lower than it would be according to pre-1980 rules. There is no doubt about it. You can argue that new rules are 'better' - in the way of better representing effects of inflation of average citizen. Thats possible, I just don't trust honesty of government as much as you do.

However, the advanced western democracies have done a good job managing the fake statistics. In the USA, the CPI published by biased government stayed under 4% a year most of the time since the 70s.

Fixed it for you. Take a look at
http://www.shadowstats.com/alternate_data/inflation-charts

When oil is $500 per barrel, electricity is unlikely to remain at 12 cents per kilowatt hour.

If power from the wall is 60 cents a kilowatt hour and oil is $500 a barrel, what has changed?

That was sort of my point. It was more or less bringing up the issue of quantitative easing that has been policy of the Federal Reserve for the past couple of years and has really kicked into overdrive this past year. When the money supply is expanded by trillions of dollars, you should expect massive inflation to result.

Yes, this isn't going to be restricted to just oil purchases.

The other "shoe" to drop here too is a what-if possibility that the U.S. Dollar will no longer be the world reserve currency. There is no special status to the U.S. dollar, and a number of countries that are active (in particular China and India) in finding a "replacement currency" to dollars. If the U.S. Dollar loses that global reserve currency status, you will see the price of oil in particular skyrocket and become insanely expensive in comparison to other forms of energy for average consumers.

For those who suggest there is no inflation, assuming that the same standards for measuring inflation in 1980 were applied today, the current inflation rate would be hovering around 10% annually at the moment. Most ordinary Americans know in their gut this has been the case, even though official statistics substantially understate this inflation rate.

Hopefully there are some very smart people at the Federal Reserve that actually care about ordinary people and don't want to see the U.S. economy go down in flames. That is a whole bunch of religious-type of faith in people that don't exactly have a very good track record in deserving that kind of faith.

no other metric shows a 25% inflationary factor for the dollar

The BLS methodology used from the 1970's to the 1990's does.

Okay. I'll bite. Where is the inflation?

It's currently $84B per month, but if you look at the numbers Sen. Lahey's office uncovered, that pales in comparison to the $16T+ in new dollar creation that the Fed secretly engaged in.

If you mean prices, you can look here for the pre-political CPI-U calculations (no basket substitutions, etc.) or you could look at any commodities index over the time period, or, heck, just go to the grocery store. If you buy food for a family, try pricing ground beef, peanut butter, or a sack of flour, both now and 5 years ago. They're up over 50%.

Do you trust the CPI as a measure of inflation?

Not entirely, but there are good reasons why the CPI is measured the way it is, and there's no particular reason why the government would want to mis-measure it. However, if you look at alternate inflation charts (created by someone who thinks that the government is lying about inflation), you will also see inflation from 2009-13 isn't unusually high.

The real issue that a lot of folks have trouble wrapping their brain around different levels of the money supply. What the Fed is doing when it's "printing money" is adding cash into MB, but since the banks aren't lending much that's not causing a big problem with M1 and M2.

As the parent writes, we have many government employees who regularly perjure themselves. This ranges from cops and FBI agents all the way to agency heads testifying in front of Congress.

Of course, we will never see a government employee prosecuted for perjury. The common citizen, on the other hand, is presumed to be lying if their testimony contradicts what the government says - and will be prosecuted accordingly. The classic are the FBI interviews, where the only allowed record are the FBI agent's notes. What you actually said is irrelevant: it's what's in the notes that counts, and no you may not make any other record of the conversation.

You can no longer trust the US government. Real unemployment at 23% and rising. Hopelessly corrupt two-party system. Hopelessly corrupt Congress. No realistic hope for change. Sorry, it's time to bail: there are other countries with better governments - take your pick based on your ideology. I left and handed in my passport, and I expect many, many more will do the same in the coming years.

>> The rapid printing of money is showing up in the 17% growth of the M3 Money Supply [nowandfutures.com],

You are reading the chart wrong (left/right axis). M3 growth includes debt which is deflating and is at about 5%, this is "money". M1 growth is double digits and this is just paper (of course, paper cash is insignificant).

Interested skeptics read http://www.shadowstats.com/alternate_data/money-supply-charts

I checked two [bls.gov] separate [westegg.com] inflation calculators

Yes, they both use CPI, the government-generated inflation calculation that shows no problems with the government's behavior.

Whihc is fine unless you find interesting that the CPI methodology keeps changing to reflect a lower standard of living (e.g. substituting hamburger for steak in the basket of prices), ignoring the price of energy, etc., while the claim of low inflation is trumpeted in the newspapers. Check out what CPI looks like if only the BLS methodology in place from the late 70's to the early 90's is continued as it was previously calculated.

It's not news that people can lie with statistics. It's incumbent upon people who use statistical indicators to verify the validity of those indicators before using them as proof of anything.

Your attention is drawn to http://www.shadowstats.com/alternate_data/inflation-charts
The 1980 calculation means has us closer to 10%, which bespeaks the pain at the grocery checkout far more accurately than the current Ministry of Truth offerings.

no, use an index that includes fuel, food, and housing in the proportions people pay, it's near 6% currently http://www.shadowstats.com/alternate_data/inflation-charts

1) It's not based on anything

Well, neither are any of the major currencies, especially the dollar.

The US dollar is valid for paying US taxes. BitCoins aren't.

There is a common assertion that the Fed has been printing loads of money. Ignoring that it isn't the Fed that prints money but the Treasury, it's worth noting that we aren't experiencing particularly high inflation. Inflation is higher than it should be, but not ridiculously so. It's also worth noting that the estimated M3 is smaller now than it was in 2008. M2 is about the same as it was in 2008. Only M1 is higher. The likely reason is that the multipliers that lead to M2 and M3 being bigger than M1 are subdued by the recession. As a result, M1 is artificially high to counteract the drops in other parts of M2 and M3.

Source: http://www.shadowstats.com/alternate_data/money-supply-charts

The problem with the Euro isn't that it is worthless. The problem with the Euro is the possibility that some of the countries that are currently in the Euro will be kicked out. People will still be able to pay taxes in Euros in Germany, France, and several other countries even if that happens.

I don't have a strong opinion on the possibility of BitCoins taking off. I do have a strong opinion on the value of national fiat currencies. So long as they are accepted for tax payments, national fiat currencies will have an advantage over currencies that are not. Competing currencies will therefore have to find or develop their own advantages to compensate.

http://shadowstats.com/

You are the product of the propaganda machine that I am talking about. The real inflation in USA has not been reported since Nixon either, they have changed the way the inflation is counted enough times for it to mean absolutely nothing.

Same with the GDP numbers, they are completely meaningless. It's a number, it means nothing. It's reversed engineered to fit the necessary levels of propaganda. 70% of it consumption, not production. Consumption of imported goods. 40% of economy is financial manipulations, banking, stock market, whatever. Again, that's not production. Maybe 5% of it is all the manufacturing and agriculture that still exists in USA. The rest of it is government spending, military, all sorts of government contracts.

The real GDP in USA has been falling since 1971. There WAS a bump in 1981, that's when Paul Volcker took the interest rates to 21.5%, which was high enough for people to get back into dollars and government debt purchases. Since then it has been falling steadily again. The GDP is supposed to be deflated by the real inflation numbers, and the real inflation numbers are reverse engineered, manufactured by the government for your consumption.

The real inflation numbers in USA vary between 11 and 15% year to year, and you can trace them by looking at a basket of commodity prices going up, precious metals, oil, even food, etc.

Some people still track inflation the way it was calculated before Nixon's time.

CPI? You are serious, aren't you? CPI?

It's been a long time since 1970s, and they have redrawn the way they measure that pathetic index in so many ways, it is absolutely irrelevant. They are going to pass more measures this year to make it smaller, they are saying even now it 'overstates inflation'.

If inflation is measured the way they used to during Nixon, it would be anywhere between 11 and 15%, and it's been there for a couple of decades.

Of-course there are plenty of my comments, where I show simple examples of inflation based on commodity prices, I don't need to redo that, I can just link to one of them.

As to my world view - at least I have one and I base my decisions on my world view, that's how I do business, that's how I invest my money.

You do realize that the federal government has been sandbagging inflation rates since 1990? In what most of us would call a "bad" economy, necessities are often the worst hit (and hurt the poor the most), yet those are exactly the items that the feds do not count.

Oh, and you should stop looking for fake sources on inflation rate, simply take any commodity or best - monetary metal, gold, look at the value of dollar in terms of gold in March of 2009, it was exactly 1001USD/ounce.

Now it's 1721/ounce (it's bouncing around).

In 1971 after gold shock, the price went from 25USD/ounce to 800USD/ounce by 1980 and then interest rates went up to 21.5% and only then the bleeding stopped. From about 1985 to 2003 the prices on gold were mostly moving sideways, and it started gaining momentum by 2003, which is consistent with 0% interest and all the money pumping.

Real values of houses went down by almost 50% since 2009 (in gold ounces) and went down somewhat in nominal terms too.

Real inflation can be calculated from these numbers, and it's very high - double digits. There are people who calculate inflation the way it was done before hedonics and substitutions and reverse engineering that they apply today. The way it was calculated during Nixon's time, when only 4% inflation caused him to introduce wage and price controls (another failing gov't policy).

From the "BPP Project":

we do not cover 100% of CPI goods and services. The price of services, in particular, are not easy to find online and therefore are not included in our statistics.

Oh, my, and look how well they track the government's CPI. Pretty close. And they're "independent", so it must be true! Hmmm... no details on what they track though, and apparently it only includes stuff they find online. Say, do you know how money gets into the system? Do you get where inflation shows up first, how it flows down?

This pair of charts isn't from some conspiracy, it just shows the difference in today's CPI, and the same statistic the way the CPI was calculated in the 1980's. Interesting, if inflation were calculated consistently, it would be much higher. Actual inflation using non-cooked numbers is 10.5% in the year from Jan. 2011 to Jan 2012 People that work for a living and shop for their own groceries understand this. Why can't you?

We can't see inflation in agricultural commodities or base metals, both of which are cheaper than they were a year ago.

We can, you're just not looking. This looks like some pretty hefty inflation to me. You can also go here to draw your own chart. Pick anything traded on the global market. Prices on wheat, grain, and many other commodities are rising right in step with gold and crude oil

You're wikipedia posting is really clever. What you seem to have missed is who is behind most of it, and why it's happening.. Do you really think that some band of Libyan "rebels" were all about human rights when their first actions as they took over government was to create an oil company and a central bank?.

Might I suggest that perhaps your limited understanding of the global economy and the Federal Reserve fractional lending system could have a few blindspots?

You can suggest it, but you would be wrong. I think you're just buying the PR from the mainstream and avoiding doing any critical thinking for yourself. Understandable - that's how they train people in the public schools these days.

Seems a bit more likely that your "invisible inflation" theory.

I never said anything about "invisible inflation" - it's not invisible at all. It's just that you're blind or refuse to see.

I am talking about real inflation, the real money printing that causes it and the increase of prices that is coming to USA due to it, though it was able to severely delay that by exporting all of that inflation (specifically because the printed money leaves the country to buy foreign goods, where it is accumulated).

Real inflation, the kind of inflation that should have been used as deflater to the fake GDP numbers (GDP has been shrinking in USA for over 20 years, not growing, and in all cases, GDP is 70% spending of imported goods, and there are bail outs and military spending there too). Real inflation, which is the real tax on everybody holding US denominated assets.

Real inflation, the way it was calculated during Nixon, when simple 4% was enough for the gov't to set wage and price controls (misguidedly, as all economic and fiscal things gov'ts do). It was calculated without substitutions and hedonics, without reverse engineering the numbers to fit the narrative.

Or real inflation as calculated from rise of commodity prices (and no, it's not 'speculation', that's a cop out for the gov't inflating its money, buying its own debt, there are always 2 people in each transaction - one buy, one selling).

Real inflation, which does not need to see increase in wages, that's Keynesian nonsense. Wages don't increase because there is nothing manufactured.

Are you familiar with the concept of relative value? You know, the underpinning of modern economics?

I am talking about real inflation, the real money printing that causes it and the increase of prices that is coming to USA due to it, though it was able to severely delay that by exporting all of that inflation (specifically because the printed money leaves the country to buy foreign goods, where it is accumulated).

Real inflation, the kind of inflation that should have been used as deflater to the fake GDP numbers (GDP has been shrinking in USA for over 20 years, not growing, and in all cases, GDP is 70% spending of imported goods, and there are bail outs and military spending there too). Real inflation, which is the real tax on everybody holding US denominated assets.

Real inflation, the way it was calculated during Nixon, when simple 4% was enough for the gov't to set wage and price controls (misguidedly, as all economic and fiscal things gov'ts do). It was calculated without substitutions and hedonics, without reverse engineering the numbers to fit the narrative.

Or real inflation as calculated from rise of commodity prices (and no, it's not 'speculation', that's a cop out for the gov't inflating its money, buying its own debt, there are always 2 people in each transaction - one buy, one selling).

Real inflation, which does not need to see increase in wages, that's Keynesian nonsense. Wages don't increase because there is nothing manufactured.

Yes, exactly like unemployment figures, which are manipulated to meet political goals, not to report facts.

You'd probably find the free data at

http://shadowstats.com/

to be very informative.

The numbers have been cooked for a very long time, and when they are calculated as they were during even Nixon, they are much closer to reality.

Of-course I calculated the inflation numbers myself based on a basket of commodities long ago.

What'll really bake your noodle is when you realize that they're both lying to you.

Banks have to charge a spread on interest at least equal to the rate of inflation, which is 6-8% right now. Otherwise, the principal deflates with time and the bank loses money.

In the U.S., "official" inflation has been considerably lower than that for the past decade and more, around 1-4%.
http://inflationdata.com/inflation/inflation_rate/currentinflation.asp

That being said, I'm one of those folks that believes changes in measurement methodology over time have led to a systematic under-estimation of inflation:
http://www.shadowstats.com/

I am now not sure what your point is any longer. My point remains simple: keep government out of it unless you want it to grow to a point where the system, the entire economic system collapses.

I think hyperinflation is actually possible in USA, given current inflation levels (11-15% if you look at numbers the way they did during Nixon, who implemented *wrongly* wage and price controls. I count 13% inflation, which means GDP has been going down steady by 10% a year for years now.)

--

I see all this people in this thread (and if you look at my comments page, you'll see just how many people are replying, so it's hard), and they would never be able to answer a fairly simple question, which I do have an answer for.

Here is the question:

What's 'fair'? What is the number that you believe people must pay into the system via taxes? (I of-course am completely against all income, corporate, payroll and investment taxes). What's the number?

They will never be able to say what it is.

I know why they can't say it. It's because they don't know what the cost will be, but the one thing is for sure: cost will be going up. There is just NO WAY for cost to go down. The way that gov't deals with the cost and run-away pyramid scheme is by increasing the revenue through higher taxes and lower benefits (the way Reagan did it for SS).

So taxes are sure to go up, not just in absolute numbers but percentage wise. Benefits are sure to go down.

But in the inflationary system and government ran medical system this means that you can NEVER put a finger on the number that you want to collect from people, because you in fact will ALWAYS have to increase that number in a government system. Of-course inflation by gov't is some of it (costs going up), but most of it is gov't ran medical care and insurance, just because it's gov't.

Some people make very little money, maybe 12K USD / year. Well, in extreme cases that's how much ONE DAY of hospital stay may cost in USA!

So that's interesting. Imagine that health care costs go up to 100K/day for some cases. What if they go up to 500K/day?

What is the appropriate taxation then to provide medical care through gov't system and is it even possible?

Well, that would be the reason why nobody will answer the question of: what's fair.

--

Of-course those who actually own businesses and create jobs (cliche, but then again, poor people don't create jobs), those who do create jobs already do more than their fair share before they pay 1 cent in taxes. That's because they increase the wealth of the society by increasing economic production output and they provide jobs, and salaried people pay taxes and they don't have to ask for gov't assistance, etc.

Sure, there are people who are feeding at the gov't trough - certain Wall Str. bankers benefit from the collapse by getting hundreds of millions in bonuses - well that just another reason to stop the government from economic participation. It doesn't know what it's doing by bailing out banks. It doesn't know what kind of damage it's causing by messing with the economy this way and by propping up zombie banks at the expense of everybody.

Anyway, I gotta write a few more responses and split, it's late and I have a day trip tomorrow. Cheers.

For the same reason that China and practically every government in the world is investing in the federal government:

- yes. The same reason - misunderstanding of basic economics.

It's the most secure investment in the world. That's why everybody buys them.

- you can't have something that 'everybody buys' being the most secure.

But you can have a bubble in it.

They don't have to "beat inflation" they are barely paying anything at the moment. Countries invest in them because they are secure, not because they are profitable. They're like putting money in the bank.

- ooooh, they are paying.

They are paying negative real interest rates with inflation being over 11%

I understand you are trolling, so your sig says, but for how long can you keep it up?

--

Long-term, sure. But there are costs associated with moving,

Looking at the list of current plants and plants closed in USA, the numbers of workers for just the Ford company is revealing that the long-term is here now.

The babies line was about the absurdity of your position

- why is my position absurd? I never talked about babies, I am talking about unemployment in USA, which is nominally over 9%, but in reality is over 20%.

A minimum-wage job is not a worthwhile use of anyone's time

? No? Really?

What if you are unemployed?
What if you have over 20% unemployment?
What if you have underproduction?
What if you have huge debts and are printing fiat to support the debt based consumption?
What if your kids are in colleges, getting worthless degrees, while without minimum wage laws at all, they could be hired for nominal fees and actually become apprentices, and learn at work to do something useful and then in 4 years, while other kids get their BSc in Sociology, these kids would have 4 years of work experience and NO mortgage without a house?

What if you don't produce anything and have 90% of your sea food imported from elsewhere?
What if your money is quickly becoming worse than toilet paper, because you can't really use it for that, it's too dirty?

What if China will STOP subsidizing you (and it eventually will)?

So wait, is the money worthless or isn't it?

- USD is worthless for the Chinese, they can't buy anything for it, so they buy your debt, which means they are buying your FUTURE with worthless paper you give them.

Debt is deferred taxation, do you understand the concept? It means taxes that must be paid later. But who is going to pay that? I don't even think Chinese will get anything back (anything useful), even from your future generations, because your future generations will wake up and LEAVE. And WHO is going to give you anything when you are old? You think you'll have your SS check? Sure, the gov't will print it, but it won't be coming out of production and it won't buy anything.

If he's not cycling his profits through Ireland and paying less than 10% at the c

- maybe he isn't paying the taxes by using all the tricks available in accounting, then he shouldn't be in a position to preach about taxes, should he?

In any case, giving any money to government is destructive to the US economy in the long run. There is no difference if the money is coming from China or taxes, at this point it worsens the situation by causing greater debt, and this explodes the Keynesian heads in government, now they believe they have no choice but to keep interest at 0%, which PREVENTS the economy from restructuring, they print more money, and this worsens the situation.

This is a vicious cycle, that can only be interrupted by categorically denying any new money to the government.

Again, which is it? If the money is worthless then surely it makes no difference how it is distributed.

- printed currency is worthless. Printing currency makes it worthless. EARNED money is CAPITAL savings. Capital savings can be invested, organized with other resources - land and labor, to produce new value. Government confiscating earned money is surely destroying the wealth, because that's the money that is actually was produced for, earned, and it could be invested with by the people who earned it.

Of-course in today's USA there are too many people who got their millions from government itself,

What are you talking about? The inflation kills any incentive to invest, it's over 11% (again, my count says 13).

You can't invest in these insane conditions and expect a meaningful return! NO. A smart rich person is investing abroad, into various vehicles that keep their value during inflationary periods of time.

I have almost entire essays on these topics here, and they come in handy, because retyping the same thing over and over is tiring.

US stocks are only going up due to inflation, and they are really nowhere at all compared to commodities in the last 15 years by the way, but the US currency has gone down dramatically (as all of the above links indicate.)

GDP in USA is cooked at the same rate that CPI is cooked, and CPI, the way it was calculated during Nixon's administration is at 11%, though I count 13.

GDP in USA has been on a steady decline for over 2 decades, and since 2000, the decline has been over 10% a year. Those are not the numbers you will find in government sources, you have to look at people who calculate the numbers as they were before the government came up with a clever way to reverse-engineer the numbers by applying statistics tricks, hedonic adjustments.

Again no, we are well below the median -- except for the Defense spending thing. We are far out in front there.

- USA outspends all other nations in health insurance and care, in education for example per capita, of-course wars are not helping at all.

The GDP is a joke for yet another reason - the "domestic" part, but 70% of it is spending on consumption, and USA has 53Billion USD trade deficit, which tells you something about that "domestic" part being a very loaded term.

AFAIC there shouldn't be any income or payroll taxes, but that's a different story.

Unfortunately, the recession you're welcoming with open arms would end up being deflationary.

- no, that's FORTUNATELY, not unfortunately. Recession must be deflationary, as bad investments must be restructured, debt must be paid out partially and the investors must eat part of the loss as well.

Deflation is much better than inflation in case of recession, because it allows the poorest people to survive, as they can buy more with whatever meager savings they have.

The important point to understand that deflation in this case is the cure. The disease is the counterfeit currency printing and vendor financed consumption and debt and trade deficit and lack of production.

Inflation isn't good, but deflation is deadly..

- that's nonsense, both of those statements. Inflation is actually eating your economy alive right now, while deflation would have allowed the bad debts to be liquidated and people would save and restart production.

Inflation is Adam Smith's way of forcing the wealthy to invest their money

- pure nonsense on its face, as what you have in USA (and in the West) is inflation - counterfeiting of the fiat currencies, which is then being distributed to the largest government propped monopolies and the poorest and middle class end up shafted with higher prices.

but a small, stable amount of annual inflation (let's say ~3%) is a good thing.

- more Keynesian nonsense, but also funny, because the real inflation in USA is over 11% and I count it as 13.

In my top comment I gave a link, which provides data that MIT is not collecting, because MIT is looking only at final goods sold in USA, and since USA exports the inflation to other nations, who buy US dollars and debt, and those other nations produce the stuff USA consumes (53 Billion USD/month trade deficit), it's those other nations that suffer the rising prices immediately, while USA is kept isolated from the very inflation it creates. However the consumer goods are now beginning to reflect the real inflation back at US consumers.

Inflation as calculated by methods used during Nixon's administration is over 11% right now, though numbers I calculate are just a bit higher than that.

Don't forget, during Nixon 4% inflation was enough for government to start price and wage controls (which don't work, they create shortages and black markets).

the government doesn't lie about the inflation rate. It is caculated by a multitude of different organizations, both private and public.

Uh-huh. And if you calculate it the same way it was calculated thirty years ago, before the government changed the formula for some mysterious reason, you'll see that the real rate is actually much higher than the official number.

"Good," I say. Bringing education online will reduce the costs and increase the availability. Of course there will still be costs associated, Stanford shouldn't expect to offer these for free, but the current rate of cost increase is unsustainable. So, perhaps this will align interests better.

I realize that chart compares the rise to CPI-U, which is rigged for political convenience, but even still the cost rises are too much to continue unabated for decades to come. There will be downstream consequences for the economy to having millions of college graduates starting life under a heavy debt burden. When the 18-35 year old demographic no longer has much disposable income, many changes will have to occur. Instead of buying new washers and dryers for that new house, they'll be paying interest to bankers. Some people don't even know that the student load industry was recently nationalized to hasten this transition.

My daughter has 10 more years until College and I really doubt a traditional live-away 4-year program will be the prevailing model by then. People tell me that's too soon until I point out that we just celebrated the 20th anniversary of the first web browser. 10 years ago, lots of people thought AOL on dialup was pretty neat, then we throw in Moore's Law for the next ten years, along with those slopes, and I think it's more likely we'll see online education with live-away intervals for labs and such.

Unemployment is closer to 25%.

Citation provided.

Furthermore, the way governments calculate the inflation rate is somewhere between hokus-pokus and a shell game. Since Clinton's day, the USA has been using the Boskin Commission guidelines which include such "creative" ideas as substitution, weighting, and hedonics.

For example, last year you bought a 27" flat-screen TV for $295. This year the same model has a higher resolution screen but has the same price. So they calculate the price as $245, since you're getting more "value" for the same price. They also have ways of fudging the numbers the other direction, and may even go both ways on the same product in different contexts (say, inflation vs. GDP).

Check shadowstats.com for details.

More correctly, the government manipulates the calculation of inflation to show it maintains steady inflation, but I'll start by assuming the inflation number is correct.

Inflation steals wealth. If I work for a year at age 25 and save from the year $5000, that money will depreciate in value. At a 2% rate when I retire 40 years later, the $5000 will only be worth about 55% of its original value. (Personally, I consider this to be immoral because it is the theft of my wealth, but I'll also leave such moral arguments out.) Because I know that my wealth is being siphoned off, I feel that I must protect it by investing. However, for the sake of this discussion, my specialty is being an electrician, not an investor. I wouldn't know a good investment if it hit me on the head, but I know that I must invest or I lose my wealth. Most likely I make a poor investment decision. I buy tech stocks in 1999. I buy real estate in 2007. I have two mutual funds that always lose money. Even a 'small' amount of inflation will strongly encourage these types of malinvestment.

However, with deflation the opposite is true. I know that my wealth will increase with time. This makes it much harder to convince me to part with my money, thus discouraging malinvestment. Additionally, I may actually save up enough money on my own to create my own investment into something I know well. Perhaps a good or service in the trade I have participated in my entire life. This would make the investment much more likely to succeed and thus be a much more efficient use of capital.

As for the actual inflation rate, you might want to take a look at Shadow States.

http://www.shadowstats.com/

You may find it beneficial to your financial health.

The real rate, or the artificially manipulated "non-Farm" "seasonally adjusted" "haven't given up all hope yet" rate? The government didn't start tracking numbers until the 1940s so nobody knows what the unemployment rate was 160 years ago. Here's the official numbers since then. The unmanipulated numbers are significantly higher (even the U-6 numbers published by the DOL and ignored by everyone so they can cite the nicer-sounding U-3)

The entire concept of retirement is a technologically-aided invention, before we'd have worked everyone until they dropped dead or were ridiculously rich... and the ridiculously rich would still be working to manage their investments and doing the things that got them rich in the first place. Then the rich people said, "you know, I could hire someone to do this for me" and so brokers that did the work of fifty rich people were born. Now, there are places in the world where people will carry your umbrella and hold it over your head for you for a small fee, because there is no actually productive work for them. This is the future of the "service economy". I'll wipe your ass for a buck.

Here is a chart of the spending by department.

http://market-ticker.org/akcs-www?get_gallerynr=172

In my post, I may have overstated the size a bit. So I guess we have one additional option -- instead of eliminating two programs, we can eliminate one and then all other government spending. :-)

Here is an article placing the current US deficit at $1.5 trillion:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNaqecavD9ek

Another interesting site is ShadowStats which shows a more accurate representation of government figures that they have been manipulating over the past three decades.

http://www.shadowstats.com/

I know the parent was moderated funny, but it may not be too far off the mark.
http://www.shadowstats.com/alternate_data/unemployment-charts

I understand that.

I think this one is different- a paradigm shift.

You say, "A machine that can replace farmers".

I'm saying, "A set of machines that can replace ANY physical labor."

Plus, since the 1990's they've been messing with unemployment numbers.
Real unemployment is now over 20%.

http://www.shadowstats.com/alternate_data

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Now, on top of those factors add a huge number of highly intelligent, well trained indians and chinese willing to work for $15k as well.
So we lose jobs both at the bottom (due to automation) and the top (due to offshoring).

---

That's part of what makes this decline so ugly- if you have a job, you are fine. Once you lose it, replacing it is difficult. (I have friends with degrees, experience, and under 50 who have been unemployed over 2 years and a lot more who are scared it will happen to them).

http://www.shadowstats.com/alternate_data/unemployment-charts

Looks more like 23%.

And starting next month, 1,000,000 people a month go off the unemployment roles unless benefits are extended. So we'll start seeing the 9.6% rate dropping while folks without money for food.

I have no idea how to fix it. I really am starting to think machine productivity combined with 3rd world cheap labor has reached a point where there are not enough and will never be enough jobs again.

Which means a new paradigm.

Starting sometime during the Carter administration, they changed the way they calculate inflation in order to understate it. They introduced techniques like hedonic adjustments say and that they can say meat's cheaper this year because this year's hamburger prices are cheaper than last year's steak. If this year's computer is twice as fast as last year's, then the "price" fell by 50%, and so on. They also leave out the bubble assets like housing to tweak it further.

Everything in our economy, including GDP and your salary adjustments are based on that now phony figure and that's why pay no longer syncs up with real inflation. It also means most people are actually losing wealth on most of their market investments. Shadow stats has continued to calculate the CPI using the old techniques:

http://www.shadowstats.com/

Why do you assume I vote Republican? Actually, I voted for Cynthia McKinney in the last election, and Nader in years before, mostly as a protest vote. :-) I'm in a "safe state" so I knew the Democrats would win in those states anyway.

Do you see how your assumptions could be part of the problem? Also, Democrats, like Republicans, are a big part of the problem... Democrats are not engaging with these bigger trends. Obama is a mostly a corporatist and upholder of a broken status-quo relative to what we could see. Look at who he put in charge of US economic policy (people from Wall Street). Look who he put in charge of "education" reform (people from big schools). He's also a militarist -- within three days, he used military killer robots (drones) in a way that lead to the (claimed) deaths of three children.
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5575883.ece
http://www.theatlanticwire.com/features/view/feature/Obama-Finds-Predator-Drones-Hilarious-1171
Solutions to moving beyond that:
http://www.pdfernhout.net/recognizing-irony-is-a-key-to-transcending-militarism.html

You're not engaging with the factual information I presented (as factual as stuff is from the US Government http://www.shadowstats.com/ ). Why? Is it perhaps just too unsettling to think about the implications? Those jobs and population figures are not much of calculations as a statement of facts as presented by the US government and a simple prediction of population growth the next decade based on the last decade.

It's true there are retirements coming up, but that is not going to fix the big trend. And in the short term (next decade) many people in the USA lost much of their retirement nest egg and are working longer, either postponing retirement or going back to work after the had retirement (incidentally, depressing wages).

So, again, where are thirty million net new jobs going to come from in the USA over the next decade?

Are you suggesting people stop trying to make sense of macroeconomic trends? Sure, doing volunteer stuff etc. is great, and I do, but you also just can't stick your head in the sand. Also, how can anyone start a business and hope for success in it if the fundamental dynamics of the economy are changing and they are not aware of it?

Also, if you look at the basic demographics of what is going on in the world (see Hans Rosling), you will see that "foreigners" are rapidly increasing in their ability to produce their own stuff. The USA has very little relative advantage anymore, the way it did when it was the only major intact economy after WWII.
    http://www.gapminder.org/
    http://www.ted.com/speakers/hans_rosling.html
And, you'd also see that even China is automating to cut labor costs...
    http://www.plasticsnews.com/china/english/headlines2.html?id=1278958338

Anyway, you might want to think about how you are filtering, spinning, and assuming information here.

The good news is, this all helps me get a better sense of how to present things, so thanks.