The Inflation Problem

n/t

So it's ok to use Krugman if he supports your view... but ok to denigrate him if he doesn't? :)

It would help if you read the citations from Krugman before you try to use him to support your point:

"...it remains true that the rate of economic progress over the past 25 years has been much slower than it was in the previous 25. Even if Boskin's numbers are right, the income of the median family - which officially has experience virtually no gain since 1973 - has risen by only about 35 percent over the past 25 years, compared with 100 percent over the previous 25.

Furthermore, it is quite likely that if we "Boskinized" the old data - that is, if we tried to adjust the C.P.I. for the 50's and 60's to take account of changing consumption patterns and rising product quality - we would find that official numbers understated the rate of progress just as much if not more than they did in recent decades. (Many observers would argue that the qualitative changes in the way ordinary people lived were far greater between 1945 and 1970 than between 1970 and the present.)

The popular impression that the first postwar generation experienced an immense improvement in living standards, while the second did not, is still correct; the American dream may not be dead, but it is certainly not what it was. Moreover, while workers as a group have shared fully in national productivity gains, they have not done so equally.

The overwhelming evidence of a huge increase in income inequality in America has nothing to do with price indexes and is therefore unaffected by recent statistical revelations. It is still true that families in the bottom fifth, who had 5.4 percent of total income in 1970, had only 4.2 percent in 1994; and that over the same period the share of the top 5 percent went from 15.6 to 20.1.

And it is still true that corporate C.E.O.'s, who used to make about 35 times as much as their employees, now make 120 times as much or more. The living standards of most people may be up in absolute terms, but these growing disparities still make it increasingly questionable whether it makes any sense to think of ourselves as a middle-class society.

And despite the revisions, there is not much question that the incidence of really severe poverty in America has increased, not fallen, over the past generation..."

Seems to me that, far from rebutting Mr.  Herbert, Dr, Krugman here is affirming his views rather than yours!

I am all in favor of more and better numbers; indeed one of the worst excesses of the GOP and Bushco was the absolute lack of respect for the truth, when a lie served a better political purpose. 

I am very heartened and overjoyed to find that the people Obama has chosen are returning the old values to Government numbers and statistics, starting with adding the hidden costs of the wars and military and the AMT adjustments to the budget rather than hiding behind supplementals and obfuscations to work the political angles.

We can sit and go over the research of worker wage increases however:

1. This is mainly about the transperancy or reliablity of economic indicators. Bush was the absolute worst with this and it seems that Obama is doing better. However, what is the ideal target reliable economic indicators. To be honest, I think an upfront, transperant budget is as good as it gets, and then let non-governmental economists spare over the implications.

2. Even if worker wages are increasing (which I don't see that happening now), using that arguement politicaly is unviable. Not even the dip-shits in the House are going to run on a platform "The Dems are wrong, you don't have it so bad. Vote for me!" That's an incumbant strategy in better times.

As I've been seeing in the media, Reps have no strategy. Moderates (the people who swing elections) have basically been saying the Reps have no game. Obama still has free reign for a while. The Reps can try to tie Obama to the DOW, but that strategy worked disasterously for the Summer of High Gas prices. Everyone but Obama got whipped up in a frenzy, that when prices came down from natural market forces, he look smart. Everyone else looked like the pandering politicians they were being. If Reps tie Obama to the stock market, then he takes credit if it goes up. And he will take credit, and the market will go up. It's just a matter of when. People will de-leverage and credit will bottom out. Obama has at least a year and more likely two before he has to worry.

You did kind of skip an important fact: That was Paul Krugman in 1997, and the adjustment to CPI he's talking about was in fact made (go to www.shadowstats.com/alternate_data to see how CPI as reported has differed from the pre-Reagan definition because of changes made to the formula in 1983, 1994, and 1997).  So your entire argument is moot at best and more likely deliberately misleading.

1997 called, they want their bad statistics back.  These days, most economists are wondering if the "corrections" to CPI were part of the problem, by hiding real inflation of the money supply created by loose Fed credit they kept interest rates low and fed the speculative leveraged bubbles. 

Including the gains of the winners as an argument that the losers are doing just fine is not an honest argument.  If you look at any income bracket but the top 1% as a percentage of GDP you see a marked decline that matches almost exactly with the divergence between pre-Reagan CPI and the adjusted version.