IT'S ALL IN THE WEIGHING

Since June of this year after several players on Mexico's national soccer team tested positive for a steroid, clenbuterol, Mexican officials have struggled with tracking down ranchers who supposedly spike livestock feed to make their cattle more attractive come market time.

Steers usually yield about 55% meat. On clenbuterol that yield jumps to around 62-65%. Cattle on the steroid for a month or two, according to some sources, can pack on 100 pounds or more of beef in each steer. If you can hear an old fashion cash register ringing somewhere in the background, you're getting the picture.

Problem here is one man's cash is another's poison, in more ways than one. Innocent people can get caught up like those soccer players who were later exonerated. Other unsuspecting, innocent souls just get sick from eating the contaminated beef, many winding up in the hospital.

The above is an excerpt from a story we penned in October, 2011. The point for here is, the cattle weighed more. In this case they were bloated by the steroids, something the ranchers sought, good thing perhaps for them and not so good for the unsuspecting. 

So it depends on who is controlling the scales. Here it was the ranchers. So keep that in mind as you read the following. It's from the June 4, 2008 issue of the Economic Policy Journal.  


So Just How Did ‘Core Inflation’ Come About?

‘Core inflation’ takes food and energy out of the inflation index. Many mainstream economists and Fed members pray at the ‘core inflation’ altar. So what economist came up with the wacky notion. Was it some Einstein type creating a concept that few other earthlings can understand? No.

‘Core inflation’ was created at the behest of Tricky Dick, himself, Richard Nixon.

Kevin Phillips, a political and economic commentator for more than three decades and onetime Nixon strategist, reports that President Richard Nixon asked his Federal Reserve chairman, Arthur Burns, to concoct a new inflation number that would be split off from traditional headline CPI, dubbed “core” inflation—and thus make inflation look less threatening.

Writes Phillips:

Richard Nixon, besides continuing the unified budget, developed his own taste for statistical improvement. He proposed albeit unsuccessfully—that the Labor Department, which prepared both seasonally adjusted and non-adjusted unemployment numbers, should just publish whichever number was lower. In a more consequential move, he asked his second Federal Reserve chairman, Arthur Burns,to develop what became an ultimately famous division between "core" inflation and headline inflation. It the Consumer Price Index was calculated by tracking a bundle of prices, so-called core inflation would simply exclude, because of "volatility," categories that happened to he troublesome: at that time, food and energy. Core inflation could he spotlighted when the headline number was embarrassing, as it was in 1973 and 1974. (The economic commentator Barry Ritholtz has joked that core inflation is better called "inflation ex-inflation"—i.e., inflation after the inflation has been excluded.)
But, they all mess around with the numbers

In 1983, Phillips says the Reagan administration monkeyed around even more with inflation data, when the Bureau of Labor Statistics decided that housing, too, was overstating CPI.

Phillips says in the 1990s, the CPI has been subjected to three other adjustments, all delivering a downward bias and all dubious:

*Product substitution: If flank steak gets too expensive, people are assumed to shift to hamburger, but nobody is assumed to move up to filet mignon, he says;

*Geometric weighting: Goods and services in which costs are rising most rapidly get a lower weighting for a presumed reduction in consumption

*And, most strangely, hedonic adjustment: An unusual bit of monkeyshines by which the government says that product improvements in things like computers, cell phones or television actually amount to a reduction in price, so a $2000 laptop with a built in camera is less expensive than a $1500 laptop without one.

Under Bill Clinton, Phillips says, the nation’s employment figures were massaged.

In 1994, the Bureau of Labor Statistics redefined the work force to include only that small percentage of what it called “discouraged workers” who had been seeking work for less than a year, Phillips says. The longer-term “discouraged”-some 4m U.S. adults who simply are not working-fell out of the main monthly tally. Some now call them the “hidden unemployed.”