Hiding a Recession

[Borodog]

I've been wondering for a while if the final frontier of government economic management would not be to simply fudge away recessions via statistical hocus pocus. After all, the government is the organization that gathers and reports the statistics. How hard could it be? Manipulation of the CPI has become more intense for the past twenty-odd years, to the point where I find the number to be completely ridiculous. Until recently I thought it was being under-reported to the tune of maybe 50%. Now I believe it may be much worse. Consumer price inflation is probably hovering near double digits, as anyone who has been shopping for the past four or five years can attest to.

Intermission: My wife is watching a youtube video where some [censored] just said that lewrockwell.com is "totally in bed with the islamofascists." Ahahahahaha! And now back to our OP.

What is the significance of a 10% CPI? Well, the CPI is used to "deflate" GDP, which we are told was nearly 4% last quarter. Uh, what? How is this absurd number arrived at? Well, they only deflated the nominal GDP by 0.8%. That's right. You read that right. In calculating GDP last quarter, the government assumed price inflation was 0.8%. That's the lowest since the Eisenhower administration.

So let me get this straight. "Consumer confidence" is in the toilet. 92% of people say they are spending less on the holidays than last year. Oil is $100/barrel, Gold is almost $850/ounce, the dollar is at an all time low versus yak turds and every other currency in the world, the Fed just cut rates (twice) and is printing money (it's a figure of speech, Barron) like there's no tomorrow, and price inflation is supposed to be at its lowest point in 50 years?

My point is, that some people (iron81 comes to mind, bless his heart) have previously stated on these boards that they buy into the idea that Fed control of the money supply has led to a "smoothing out" of the business cycle, as evidenced by the last twenty years. I say, no. The last twenty years are evidence of ever better manipulation of economic data and hiding of the business cycle.

In fact, here is my claim:

The last recession has never ended. The US economy has been contracting for some 7 years, give or take a couple of quarters, and this has been hidden by truly heroic inflation of the money supply, running at something like 15% per year, which has itself been hidden by, among other things, massive manipulation of government economic statistics.

Flame on.