I'm aware that the government keeps changing the standards, but that's necessessary and I think the fact that the different pieces of data still track against each other bears out that the adjustments in the calculations are correct.
Considering that it was changed in the late 90's I would hardly call it necessary. The problem is that the government can use this new method to manufacture low inflation, even when prices are going up and up and up. And still, the official inflation no longer includes food and energy, while the previous measurements from 10+ years ago did, which makes this whole thing seem like comparing apples and oranges.
Besides, it isn't just the inflation figures that are out of whack, it's also the unemployment . In addition to that I'll share some anecdotal evidence: In 2003 I left Portland (Oregon) for a couple of years. Back then once in a while you'd see a homeless person with a handmade cardboard sign standing on a street corner near an intersection, but not too often. In '05 when I came back to visit my folks before moving to China, I was shocked to see them at most of the intersections we drove past, and what was rather eyecatching was the people doing this, for the most part, were young (they looked like they were in their 20's) and were wearing clothes that were in good condition, almost like they were thrown out a few before I say them. And this was when nothing was wrong with the economy? I hate to imagine what it is now.
Remember, the economic crises of the '30s and '70s manifested physically with things like gas lines and investment bankers jumping out of windows.
Again, apples and oranges. The gas lines were caused by an embargo, caused by a political problem that had economic consequences. In 1930 our banking system had completely collapsed, and we aren't there yet. It's still too early to tell if our current crises will devolve to that state. Unlike during these previous financial crises ('30, '89, etc) that accounting system the banks use now is actually the same kind that Enron used. They hide their debts and use mark to market accounting to inflate their profits. There was supposed to be a new federal accounting standards amendment to ban this practice for good and force them to put all this in the open, but because of this crises the implementation was pushed back from january 2009 to january 2010, so we won't know for a year and a half how sick our banks really are.
What we're seeing now is a dead cat bounce, in a while it will get much worse than it is now, and then we will see the true extent of the recession.
What you and the writer of that article are actually arguing is that the standard of living is going down, depsite government evidence saying it is going up.
So you're trusting the government even though it is blatantly obvious that their statistics for the last 10 years are untrustworthy?
But at the same time, things like computers haven't just gotten cheaper, they actually didn't even exist 30 years ago.
Wrong, the Apple 2 was released in '77, 31 years ago. Even before it there were computers, although the home models at the time were targeted at the DIY type. Even so there were still plenty of mainframes and minicomputers lumbering about the corporate landscape.
But I actually argue the opposite point: the goal posts are being moved too far in the other direction and today we allow someone who owns a tv with satellite connect, an air conditioner, and a microwave
My parents were middle class and couldn't afford either an air conditioner or satellite TV. Did have a nice house though.
But really, the cost of appliances has gone down in real dollar terms. My microwave does the exact same thing as its ancestor 30 years, it just costs less. Poverty is kind of relative from place to place, with $10,000 a year you could live extremely well in China, but you'd be on food stamps in America. Why? The standards of living are much different (for now :P). This is why the definition of poverty is based on income, not whether you can afford a crappy microwave. If you save nothing you might be able get a sat TV, but then again you are only screwing yourself by having to live in a terrible neighborhood.
those niceties didn't even exist and at some time slightly more recently, they were so expensive only the rich could afford them.
Which is a nice DEflationary effect, which is included in the inflation calculations, even the old way. The problem is that costs for many other things like housing and healthcare have been more than enough to offset this.
EDIT: And here's another nice link that delves into the Labor Departments fuzzy numbers:
http://seekingalpha.com/article/71493-creative-math-from-bls-jobs-report
