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New article: The Implausibility Of The Chapwood Index
Yes, “Shadowstats 2.0” gives implausible results. http://www.bondeconomics.com/2021/01/the-implausibility-of-chapwood-index.html
Yes, “Shadowstats 2.0” gives implausible results. http://www.bondeconomics.com/2021/01/the-implausibility-of-chapwood-index.html
My stance is pretty standard for fixed income people: trust, but verify (ah, the good old days of The Cold War).
Since you are verifying, you don’t actually trust them, but you pretend to do so as a form of professional politeness.
Since you are verifying, you don’t actually trust them, but you pretend to do so as a form of professional politeness.
Although the Chapwood Index looks simple, only way to validate it is to get their raw data. That data does not appear to be publicly available.
The first leg of my discussion notes how the “cost of living” for an individual can be higher thanthe CPI. There is no doubt that one could make a good faith attempt to measure the concept, and get a higher number.
After all, technical changes to the CPI resulted in lower rates.
After all, technical changes to the CPI resulted in lower rates.
The issue here is that the gap is implausible. With the exception of a single data point, every one of the 50 cities allegedly had an inflation rate of at least 6%. The median 5-year rate was 9.5%. This implies an incredible divergence from CPI as it compounds.
No matter what you think about costs of living, from a macro perspective, we want to know about the “price level.”
We use the logic used to utterly skewer Shadowstats (done long before I started blogging).
9%+ inflation rates are incompatible with GDP data.
We use the logic used to utterly skewer Shadowstats (done long before I started blogging).
9%+ inflation rates are incompatible with GDP data.
Roughly, nominal GDP growth = (real GDP growth) + (GDP deflator change).
Although there can be a wedge between consumer prices and the GDP deflator, implausible that it can be sustained for years.
Although there can be a wedge between consumer prices and the GDP deflator, implausible that it can be sustained for years.
So we must have nominal and/or real GDP being “manipulated.”
Remember that is not just a pair of series, it’s the whole set of national accounts that are used to calculate those aggregates.
Remember that is not just a pair of series, it’s the whole set of national accounts that are used to calculate those aggregates.
Let’s look them.
Nominal GDP = nominal gross domestic income. If much higher, nominal incomes are growing much faster than reported.
Are wages? LOL.
As for capital income, tons of underemployed equity analysts pore over national accounts profit data, and compare to private.
Nominal GDP = nominal gross domestic income. If much higher, nominal incomes are growing much faster than reported.
Are wages? LOL.
As for capital income, tons of underemployed equity analysts pore over national accounts profit data, and compare to private.
Real GDP is an intellectual monstrosity, but it should correlate to particular real activity indices (and we have sectoral national accounts data).
The private sector produces a lot of aggregate production data - autos, paper, rail car loading, oil production, etc.
The private sector produces a lot of aggregate production data - autos, paper, rail car loading, oil production, etc.
On again, equity/macro analysts are over that data. They compare to national accounts data.
If the private data were not coherent with national accounts data, they would notice.
This means that *private* data providers have to be part of the conspiracy.
If the private data were not coherent with national accounts data, they would notice.
This means that *private* data providers have to be part of the conspiracy.
As a result, no particular reason to take this data any more seriously than Shadowstats.
As a post-script, they have “cat grooming” in the index. Are there really rich people gullible enough to pay for cat grooming?
