How the Bureau of Labor Statistics committed fraud on the American people

[w¡n9Nµ7 §£@¥€r 123]

In 1983, the Bureau of Labor Statistics was faced with an awkward dilemma. If it continued to include the cost of housing in the Consumer Price Index, the CPI would reflect an inflation rate of 15 percent, thereby making the country's economy look like a banana republic.

...

The BLS's solution was as simple as it was shocking: Exclude the cost of housing as a component in the CPI, and substitute a so-called "Owner Equivalent Rent" component based on what a homeowner might "rent" his house for.

The result of this statistical sleight of hand was immediate and gratifying, for the reported inflation index quickly dropped to 2 percent.

...

While the BLS was correct in assuming that this statistical ruse would fool the average citizen into believing that inflation was only 2 percent (and therefore be willing to accept a meager 4 percent return on his bank savings), what is remarkable is that the ruse also fooled the bond traders, and apparently continues to do so, leading analyst Peter Schiff to describe these supposed savvy bond traders as the "hormonal teenagers of the capital markets."

The present subprime credit crisis can be directly traced back to the BLS decision to exclude the price of housing from the CPI. It is now clear that the "benign" inflation figures reported over the last 10 years in no way reflected the skyrocketing rise in home prices, with states like California experiencing annual home-price increases of as much as 30 percent. With the illusion of low inflation inducing lenders to offer 5 percent and 6 percent loans, not only has speculation run rampant on the expectation of ever-rising home prices, but homebuyers by the millions have been tricked into buying homes even though they only qualified for the "teaser" rates that quickly escalated to unaffordable levels.

http://www.thnt.com/apps/pbcs.dll/article?...NISTS/708290339

[bszoom42 0]

Is there any plan to re-adjust how they calculate the CPI?

[one...two...tree 2,762]

Who made that call? Methinks it was a Bush appointee...f##king cronies.

[w¡n9Nµ7 §£@¥€r 123]

Who made that call? Methinks it was a Bush appointee...f##king cronies.

Steven,

Read the first two words of the article.

[one...two...tree 2,762]

Who made that call? Methinks it was a Bush appointee...f##king cronies.

Steven,

Read the first two words of the article.

f**king Reaganomics.

[mawilson 2,133]

Interesting.

[peejay 327]

Just more shenanigans in a plastic contrived economy. Can you say "subprime' or "A.R.M."? Enron anyone? S & L debacle? The rich get richer and............

[natty bumppo 297]

Who made that call? Methinks it was a Bush appointee...f##king cronies.

Steven,

Read the first two words of the article.

f**king Reaganomics.

f**king democrats in the house ... all 272 of them (97th congress) and their appropriations