Sunday, February 5, 2012

Lies, Damned Lies and Statistics

I was going to write about how the BLS (Bureau of Lies and Stupidity) cooks the unemployment numbers, but Peter, Bayou Renaissance Man beat me to it,  with a long, excellent overview.  Go read.

Friday afternoon, I got stuck in a waiting room with a TV tuned to CNBC, the perma-bull network.  The  market had been closed for half an hour, and the buzz was about how fantastic the numbers are: the market hasn't closed this high since (whenever).  Here we have a network of financial commentators and they went for 20 minutes without once comparing the stated numbers corrected for inflation.  Finally, one commenter said, "in a QE world, stocks will be going up" - in other words, the larger quantity of dollars created forces prices up.  The term for that we use in flyover country isn't "in a QE world", it's inflation.  If John Williams at Shadowstats is right and the year over year inflation is running around 11%, when measured how it originally was measured, that 12,862 closing on the DJIA would have been 11,587 - much less worthy of song. 

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