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The 1 weird thing you need to know about Janet Yellen

I think the defenestration of the odious Larry Summers is super, and I hope Larry's hitherto impermeable ego took a deep puncture wound from the shards and splinters, though I doubt very much that it did. And Janet Yellen, both as a glass ceiling-shattering woman and a consensus builder, is clearly a superior choice* to a corrupt, chauvanist gasbag who cashed in at DE Shaw and blew a squillionaire-sized hole in Harvard's endowment, after which he fired the (black (female)) whistleblower who called him on it, Iris Mack, Ph.D.

Nevertheless, schadenfreude is a poor basis for determining policy, as is -- and one would think after campaign 2008, we'd understand this -- hagiography. Dr. Lynn Parramore provides a fine example of Yellen hagiography here. First, I'll summarize the article's talking points; then, I'll do a closer reading and point out one issue, pertaining to women, that one would have thought a focused editorial process would have protected Parramore from failing to raise. Happily, however, this same issue provides a litmus test both for the seriousness of Yellen's advocates on politics, and the seriousness of Yellen herself on policy. 6 Things You Need to Know About the Woman Who May Soon Be the Most Powerful Economist on Earth:**

1. Yellen has an impressive resume.
2. She has an independent streak.
3. Her forecasting ability is renowned.
4. She cares about unemployment.
5. She has the right management skills.
6. Yellen is the most qualified.

OK, let's color code those talking points. I'll use blue for careerist talking points (credentials, resume, job performance, and so forth), yellow for personality talking points (example: "In addition to the progressive values I believe Obama holds in his heart, I also believe he is an honest, decent person who wants to do the right thing"), and green for policy talking points (example: "[I]t'd be nice if someone in the Fed at least acknowledged that 'giving people free money' is what needs to happen."):

1. Yellen has an impressive resume .
2. She has an independent streak .
3. Her forecasting ability is renowned .
4. She cares about unemployment .
5. She has the right management skills .
6. Yellen is the most qualified .

See any policy there?

Didn't think so. In other words, if all you know is the "6 things you need to know," Parramore's conclusion isn't warranted by her evidence:

Yellen may not be a perfect candidate, but she is a person of enormous ability and boasts the best qualifications of any serious contender. She takes us from the foregone conclusions of a Rubinite world to the possibilities of a future than can be shaped with more of an emphasis on fairness and the needs of working people.

But the Rubinite world is a policy world. Absent concrete, public commitments on policy, we're left with the hope that replacing one faction of elite policymakers with another faction will yield the concrete material benefits "fairness" and "caring" would dictate. I'm all for a world that's shaped by the needs of working people, but to reason from Yellen's career and personal characteristics to policy outcomes is a leap of faith on the order of "hope and change" in 2008. Experience has taught us the necessity for auxiliary precautions.

Here it may be objected that "Lambert, it's deeply unfair that you focused on Parramore's actual '6 Things You Need to Know,' because the serious analysis is hidden away beneath the superficies of bolded and numbered talking points to which the headline so forcefully draws attention!" So let's look at one of those talking points. Let's look at Chained CPI. I'll give the entire talking point, which is a little lengthy (brackets mine):

2. She has an independent streak.

Yellen’s stint in the Clinton administration has recently come under scrutiny, and that’s as it should be. Huffington Post’s Zach Carter revisited her 1997 Senate confirmation hearings and noted that at the time, she supported the repeal of [1] Glass-Steagall, NAFTA and chained-CPI, an adjustment to the calculation of Social Security payments*** that amounts to a cut. It is true that Yellen supported [2] the positions of the Clinton administrations at the time, and many of these positions are understandably unsettling to progressives. However, one has to look at the context and compare Yellen’s [3] relatively tepid endorsement of deregulation to the relentless cheerleading of someone like Summers. In an email to me, Dean Baker explained:

“Summers was very vociferous in pushing deregulation. He put down people who raised questions about deregulation as financial luddites. This was a big project for him. Yellen went along with the deregulation because that was the fashion in economics at the time. There is no evidence that she had a principled commitment to deregulation. This doesn't mean that we can count on Yellen to be an aggressive regulator but the odds are certainly better than when you put someone there who was a leading proponent of deregulation.”

Even during the Clinton days Yellen showed signs of prescience and an independent streak. In 1998, she testified in a hearing before the Senate Judiciary Committee on the wave of corporate mega-mergers and acquisitions that were sweeping over the economy like wildfire, giving rise to Franken-companies that crushed competition and produced monopoly conditions. (I have written about how this has played out in the banking industry and it isn’t pretty.) A laissez-faire economist like Greenspan would have insisted that the government had no business getting involved. And that’s just what the then-Fed chair did at this particular meeting: “Bigness per se,” said Greenspan, “does not appear to be an issue of national economic policy.” Simply trust the markets to straighten everything out, Greenspan suggested: “Adam Smith’s invisible hand does apparently work.”

Yellen, in contrast to Greenspan, sounded [4] a more cautionary note, casting doubt on claims that mergers result in efficiency, as executives claimed: “An increase in shareholder value,” said Yellen, “can arise for reasons other than greater efficiency, such as increased power and the resulting ability to increase profits by raising prices.” At that time, when “Maestro” Greenspan’s views about market efficiency were gospel, this was politely expressed heresy. Yellen further noted that many mergers actually decrease efficiency and warned that mergers undertaken to increase market power and concentration would hurt consumers, squelch innovation, and decrease future competition.

At the height of free market fever, Yellen was on record as [5] not buying the “anything goes” mentality touted by Greenspan. This point has not been sufficiently understood.

More recently, Yellen was not part of the bank-centric Summers/Geithner boys’ club which made calls in Washington when the economy went into freefall in 2008. In sharp contrast to Fed Chair Bernanke’s recurrent happy talk about “green shoots,” she warned steadily that we were not out of the woods, stating in a 2009 speech that "the pace of the recovery will be frustratingly slow." It must also be said that Yellen has not been lining her pockets, like Larry Summers, with lucrative Wall Street consulting gigs, making her free of the conflicts of interest that plagued her rival.

So, at [1], the article specifically mentions repeal of Glass-Steagall, NAFTA, and chained-CPI as policy positions that Yellen has taken. Subsequent sentences elide policy specificity into [2] "supporting the positions of the Clinton administration," [3] "tepid endorsement of deregulation," until we reach the virtually meaningless (in policy terms) [4] "a more cautionary note," and the vacuous [5] "not buying the 'anything goes' mentality." But in policy terms what does "go"? In particular, does "Chained CPI" "go"? Weirdly, we don't know. There's nothing from Yellen, and Parramore does not speculate.

Why is Chained CPI so important, and why is it so important now?

First, Chained CPI disproportionately affects elderly women. From the National Women's Law Center:

As part of deficit-reduction negotiations, some policy makers have proposed switching to the chained consumer price index (CPI) to calculate the cost-of-living adjustment (COLA) for Social Security and other programs. The chained CPI would lower the annual COLA, reducing the value of Social Security benefits more and more over time. It is not a more accurate measure of inflation for the elderly – and it would be especially harmful to women, because on average they live longer than men, rely more on income from Social Security, and are already more likely to be poor.

(The piece goes on to discuss the Rube Goldberg-ian "bump up," which is supposed to mitigate Chained CPI's effects. It doesn't.) How much would benefits be cut? Maine Senior Guide:

The chained CPI would cut the yearly cost-of-living adjustment for Social Security, now indexed to inflation, by $127 billion over 10 years. The current inflation index already underestimates inflation for older women because it doesn’t account for their higher health care spending, which is rising faster than overall inflation. Single women 65 and older receive a median Social Security benefit of just $13,000 per year – roughly $4,000 less than men. With the chained CPI, by the time they reached the age of 80, their benefits would be reduced by nearly $700 annually. That is a sizeable loss when one is living on just over $1,000 a month with everyday costs continually on the rise.

So, Chained CPI advocates like Yellen -- and if Yellen has changed her views, I would have expected Parramore to have mentioned that, or a fact checking editorial process to have remedied the omission -- want to beat $700 bucks a year out of old ladies living large on $13K. I think that's appalling and disgusting as policy, and I think it's every bit as appalling and disgusting, on a policy basis, as Larry Summers's chauvanism and corruption is, on a personal basis. So I think it's weird that Yellen's advocates could be seen to airbrush Yellen's views on this point away. The National Women's Law Center puts the effect of Chained CPI in terms of concrete material benefits:

The average weekly cost of food for a single elderly person is about $56. Thus, a benefit cut of $56 per month is equivalent to the loss of one week’s worth of food each month by age 80. By age 95, the loss would be equivalent to almost 13 days’ worth of food each month.

Now, I'm sure that Yellen, Yellen's advocates, and Parramore don't really wish to pilfer a week's worth of food from the scanty larders of 80-year-old ladies -- Parramore's mother is, after all, 80 -- but that is the concrete material effect of the policies that Yellen, Yellen's advocates, and Parramore support, if they support Yellen's views on Chained CPI.****

Second, Chained CPI is an essential moving part of the Grand Bargain Obama's seeking, at least according to the Beltway insiders who have made their thinking available to us. Letsgetitdone writes:

Then later on MSNBC's “NOW with Alex Wagner” during a panel discussion also, including Alex Wagner, David Corn, and Ezra Klein again. After Ezra once again repeated his apocalypse now framing of the debt limit crisis, Sam Stein emphasized that Obama and the Administration continue to emphasize a willingness to negotiate over the budget.

Sam Stein: . . . you can see the contours of a deal that would upset both parties but palatable. something like in exchange for changes to social security payments, cpi, chained cpi. you could get a reprieve from sequestration. something like that along the lines where both parties are like, well, we don't really want to do it, but for the sake of making sure we pay our bills -- that's why the republicans keep going there. they know obama care defunding isn't going to happen, but there are other hostages.

Alex: why does president obama come to the table at all?

Ezra: i think that's the kind of deal they would come to the table on. they would consider that a deal over sequestration. i'm not sure if they would do that exact deal, but the two deals they won't do are the ones the republicans want. they don't want that sequestration deal. they want an obama care deal or a debt ceiling deal. they won't come to the table on those. . .

So, Sam Stein thinks the zombie “chained CPI” lives again, and Ezra agrees, but also thinks that the Republicans will not agree to that unless they get the deals they want.

Right now would be an excellent time -- maybe even the best possible time -- for a "caring" person with an "independent streak" who values "fairness" and "the needs of working people" to deanimate the Chained CPI zombie before it starts chewing through the catfood reserves of millions of old ladies. Shouldn't Yellen take this opportunity to take Chained CPI "off the table," as incompatible with the values of the Democratic Party, which (I am told) has a preferential option for common human decency?

So, concluding, here's the one weird thing you need to know about Janet Yellen -- and the thing that's really weird is that we don't already know it. What we need to know comes in the form of a question:

1. Vice Chairwoman Yellen: Do you believe the Chained CPI is an idea whose time has come -- and gone?

If only we had a Senator on the Senate Finance Committee who had a knack for asking pointed questions!

Litmus test for the policies: Do "progressives" really support Chained CPI? Will they trade, say, Chained CPI for ObamaCare in the upcoming debt ceiling kayfabe, because Obama?

Litmust test for the poltitics: Can "progressives" be brought to understand that the only to get anything out of Obama is to threaten him? That's what the gay bundlers and the Hispanics did before campaign 2012, that's what the strange bedfellows working against Obama's act of war in Syria did, and that's what Yellen's supporters did before Summers withdrew. But the Summers defenestration is so last week. What has Obama done for us lately? With Yellen the presumptive nominee, now is not the time for hagiography; now is the time to ratchet the presure up again! And in a very good cause -- the defense of elder women -- one might add.

NOTE * Especially for those who see "regulation" of the banksters, rather then their breakup, as the superior policy option, and who view consensus among mainstream economists as some sort of improvement, as opposed to the replacement of mainstream economists (and hence, economics) by something like MMT or points left. It's the mainstream that's the problem!

NOTE ** For connoisseurs, Parramore's "N things" headline is a well-known hitbuilder from the SEO world:

Include a number. You clicked on this headline, right? More seriously, though, some sites take this trick to incredible levels. If you’ve ever visited, you’ll know exactly what I mean. (And if you haven’t, don’t do it while you’re working). “The 14 Most Unintentionally Terrifying Statues in the World.” “The Six Creepiest Things Hiding in Your DNA.” “The Six Weirdest Dangers of Space Travel.” Yep, those are all headlines. They’ve increased the impact by adding intensifiers: most, creepiest, weirdest, etc. Heck, these headlines are so compelling I may go back and read the articles after I finish writing this one.

I wonder if "1 weird thing" will work the same way? I'm guessing no. Heck, maybe I blew my hit count by even mentioning it, if Google hates the meta!

NOTE *** "Chained CPI" is the idea that if you substitute offal and variety meats for beef, or dry catfood for wet catfood, your standard of living has not changed. The desired policy outcome is the immiseration of elders.

NOTE **** Since Parramore, given the opportunity to express disagreement with Yellen on Chained CPI, does not do so, but rather elides Chained CPI entirely from her discussion of Yellen's "independent streak," I can only assume Parramore supports Chained CPI along with Yellen. If she does not, she has several forums in which to clarify or mitigate her views.

NOTE I do not deny that having a female chair for the Federal Reserve would be a good thing for women everywhere, especially those, with careers, who experience the reality of "the glass ceiling" all too harshly. However, many millions of women will be badly affected -- one week's worth of food a month, at least -- by a vicious and inhumane policy option that Yellen supports. I want both Yellen's confirmation and protection for those millions. Surely "progressives" can walk and chew gum at the same time? Because if Yellen and the "progressives" who support her can't protect millions of elderly women from taking the hit in Obama's latest Grand Bargain ploy, what good is she, and what good are they?

Average: 5 (1 vote)


jo6pac's picture
Submitted by jo6pac on

to know the new boss is the same as the old boss. Just another so-called 0 progressive and in reading this story yesterday it was slap my head and say WTF. I didn't get all warm in fuzzy, I opened a bottle of wine a drank it just shaking my head. Then again why would I expect anything else under the hopism and changey guy.

Good take on what you read.

Rainbow Girl's picture
Submitted by Rainbow Girl on

Thank you.

And for this piece of concrete information:

"The National Women's Law Center puts the effect of Chained CPI in terms of concrete material benefits:

The average weekly cost of food for a single elderly person is about $56. Thus, a benefit cut of $56 per month is equivalent to the loss of one week’s worth of food each month by age 80. By age 95, the loss would be equivalent to almost 13 days’ worth of food each month."

I know what I'm going to say when I hear my mother or over-educated multi-degree-credentialed "progressive" peers squeal "Yellen Great Because Woman and Cares."

"Yellen is the woman who is on board to cut one week of food out of the budget of the elderly in the next 15 years, and 2 weeks of food in 35 years." (Readers: if you have alternative formulations I am all ears!)

I was pretty appalled when I read and posted Parramore's inexcusable Yellen agit-prop that there was not one mention of chained CPI in there.

danps's picture
Submitted by danps on

"Yellen favors cutting a week's worth of groceries from seniors' monthly budgets."

Alexa's picture
Submitted by Alexa on

Whether it is inadvertent or intentional--I don't presume to know.

During the Clinton Administration, a "geometric means adjustment" was enacted which went into effect in January of 1999.

Parrymore's "wording" makes it appear that NO CUTS TO THE CPI were implemented during the Clinton Presidency--and this is false.

It sounds as though she believes that Yellin tried, but failed to get the CPI formula changed in the 1990's. (The same is true of the Zach Carter piece in HuffPo.)

This new "formula"--which is the one presently used to calculate Social Security COLA--resulted in the price index going up by 41%, instead of 50%.

As a result, our CPI for purposes of our Social Security COLA were "cut," or as economists like to say, "the growth was slowed," by 0.2 percent per year.

On the basis of BLS research, it is expected that the use of the new formula will reduce the annual rate of increase in the CPI by approximately 0.2 percentage point per year.

See brief below.

Recent Controversies over CPI Methodology

1. Substitution

In January 1999, the BLS adopted a geometric mean formula in the calculation of most CPI basic indices.

The purpose was to reflect the demonstrated ability of consumers to shift away from products whose prices had increased relative to other products in the same basic CPI component--for eXample, away from apples whose prices had increased more than, or decreased less than, other apples in Chicago. (2)

jo6pac's picture
Submitted by jo6pac on

I brought this up away back, and I'm lucky in that this will hurt but like it has been pointed out the Rosy Riveters are just F$$$$$$ thrown under the bus. I've said this more than once but this is the hurry and die club running Amerika at this time. The corp. Amerikas riches were built on the backs of Main Street and the pay back is F$$$ You.

Whether it is inadvertent or intentional--I don't presume to know---Alexa

Alexa everything is on schedule, please move along there's nothing to see :)

Submitted by LucyLulu on

Is the Zach Carter article in Huff Post incorrect? It says that the geometric CPI was never applied to social security. It was used, according to the paper on methodology, implemented to calculate CPI-U and CPI-W. Perhaps CPI-E is being used for SS COLA?

Also, if you read the geometric chained CPI methodology explanation (one of links), healthcare, rent/mortgage, and housing utilities are excluded from the CPI calculations as consumers have no significant ability to vary their shopping habits to accommodate inflation on these purchases. Still, IMO, there should be NO reductions in SS COLA, I'm only clarifying some points for accuracy. Expenses increase over time for the elderly. (Though medical expenses typically increase less than one might intuitively think. Most spending comes during final year of life, be it at 67 or 97, with relative good health prior. As with any age, there are exceptions.)

Finally, perhaps I'm missing something, but making chained CPI and SS policies fall under the jurisdiction of Congress and the president. How would Yellin be implicated in this, aside from possibly being one of many voices chiming in with an opinion?

Yellin seems to have been pro-deregulation in the 1990's and shifted in the run-up to the crisis towards a stance that was more pro-regulatory. Like many, in hindsight, her perspective changed. Is she strong enough in her convictions to take on the multitude of voices of anti-regulatory sentiments surrounding her more than around the edges! Probably not. Do I think the Senate would confirm a Bill Black or somebody who vowed to break up the banks? Hell, no! They didn't all become millionaires on their congressional pay, ya know......

Alexa's picture
Submitted by Alexa on

the "geometric means" adjustment in the formula.

He and Parramore repeatedly (I thought) made reference to the "Chained CPI," which is the "adjustment" under discussion today.

If you would, then I can better explain what I referring to. ;-)

Oh, and I don't know that Yellin had much to do with the change, anyway. A Commission recommended it.

I was simply trying to make the point that that the cut was made--since my reading was that Parramore and Carter thought that she only ATTEMPTED to see that a cut to the CPI was implemented in the1990's.

I'll explain, if you don't mind first clarifying where Carter or Parramore made any reference to the "geometric means" adjustment. I guess that I could have missed it.

[The panelist who said this was Stephen Goss of the Social Security Administration.]


Alexa's picture
Submitted by Alexa on

the I don't have my older laptop with the gazillion "bookmarks"--including Mr. Goss' CPI lecture.

But what Goss says is that the 1990's geometric means "adjustment" affected (i.e., cut the growth of) the "CPI-W" which is used for Social Security COLA's.

You mention that:

"It says that the geometric CPI was never applied to social security. It was used, according to the paper on methodology, implemented to calculate CPI-U and CPI-W."

According to the Social Security Administration's website:

Who determines the CPI-W?

The CPI-W is determined by the Bureau of Labor Statistics in the Department of Labor.

By law, it is the official measure used by the Social Security Administration to calculate COLAs.

This statement is consistent with Mr. Stephen Goss' lecture.

Submitted by LucyLulu on

Yes, it was helpful and thanks for the clarification. Either I'm terminally confused (possibility) or Zach Carter WAS mistaken. Here is the relevant paragraph where he states the new metric was never applied to social security.

At the time, this new metric, known as chained CPI, was being aggressively pursued by House Speaker Newt Gingrich (R-Ga.), following then-Fed Chair Alan Greenspan's criticism of the existing cost-of-living calculations. Greenspan and other economists had argued that the consumer price index overstated cost-of-living changes by failing to calculate the way that households substitute different goods for each other when prices rise. While BLS developed the statistic, it has not been applied to Social Security. Some economists argue that a more appropriate inflation measure for Social Security would look at price changes for elderly people, and the BLS does track an experimental metric addressing inflation for older Americans. Such a metric is not useful for politicians looking to cut Social Security spending, however, as it shows that living expenses tend to go up more for older people, driven in part by health care spending.

Then from Incorporating a geometric mean formula into the CPI

This article describes an important improvement in the calculation of the Consumer Price Index (CPI). The Bureau of Labor Sta-tistics plans to use a new geometric mean formula for calculating most of the basic components of the Consumer Price Index for all Urban Consumers (CPI-U) and the Consumer Price In-dex for Urban Wage Earners and Clerical Work-ers (CPI-W). This change will become effective with data for January 1999.

and then later.....

The geometric mean estimator will be introduced into both the
CPI-U and the CPI-W effective with data for January 1999, in accord with the past practice of introducing methodological changes at the beginning of a calendar year.

The geometric mean is another term used for chained CPI. So, was chained CPI (geometric mean estimator) introduced into SS COLA via CPI-W? It seems Mr. Goss clears it up. Thank you, Mr. Goss.

Drive safely!

Submitted by lambert on

... authority, similar the the good heart Obama supporters believe him to have. If so, she can exercise that authority on behalf of woman elders. Yellen would also have direct authority over the research and policy arms of the Fed, and an anti chained CPI Study from them would carry great weight.

Second, her confirmation hearings would be a great way for Senators, who do have legislative authority, to bring the issue before the public in a good way.

Alexa's picture
Submitted by Alexa on

responses to Lucy LuLu, and certainly I did not intend to imply that Yellin's "part in" (as a major economic advisor to FP Clinton) the CPI "cut" was not important.

In my book it was, and it is very telling.

Personally, I hold the Presidents (both FP Clinton, and PBO--if a cut is enacted) mostly responsible, since I do not believe that these cuts would be implemented against the wishes of a sitting President.

As Truman said, "The Buck Stops Here--with the President."

Just like the CBO, IMO, the BLS serves the Administration's agenda--call them "bipartisan" all day long, LOL!

They know "who's boss."

And I totally agree with you that we do NOT need Federal Reserve Heads, or any type of economic advisor(s) to the President, etc., who support such punitive and absolutely unnecessary cuts to American seniors and/or persons with disabilities.

So thank you for the excellent post, and for pointing this out!

priceman's picture
Submitted by priceman on

NOTE * Especially for those who see "regulation" of the banksters, rather then their breakup, as the superior policy option, and who view consensus among mainstream economists as some sort of improvement, as opposed to the replacement of mainstream economists (and hence, economics) by something like MMT or points left. It's the mainstream that's the problem!

I don't know if this applies to me or not, but I clearly advocated breaking up the banks in my piece about all of this, and regulating deposits would break up the banks(which is what I meant given that Dodd Frank could be used to break up the big banks in addition to regulating derivatives which still do need to be regulated). I emphasized the role of the Fed as a regulator because even with the banks broken up, they do still need to be regulated as does the financial system. It was an embarrassingly blight when Tim Geithner said he wasn't a regulator while testifying in Congress as Bill Black and others pointed out. The Fed is the most important regulator and part of regulation(like putting a Wall between commercial and Investment banking in 1933) is to decide when institutions can't be regulated and break them up and cap their deposits while dictating what they can get involved in and what they can't.

The Fed can do this now if Dodd Frank is used as Alexis Goldstein and others at Occupy the SEC have pointed out. That's why I focused on that aspect as well as Janet Yellin's troubling past on repealing GS and her not making moves once she recognized the crisis at the SF Fed.

And yes it is troubling that she helped push through the geometric mean to change the CPI in using substitution to lowball the real raise of inflation like Chained CPI which she also supported.

Anyway, I hope that clears things up.

Rainbow Girl's picture
Submitted by Rainbow Girl on

I can't believe I twice missed the actual reference to chained-CPI in LP's "wimmin care" piece about Yellen. Or that it was a reference that should precisely have warranted LP to devote at least one carve-out sentence to properly condemn and admit that JY's support of CPI (stealing a week of groceries from old ladies) rather undercuts the "caring Janet" slogan. This is a lot worse than not mentioning JY's link to chained-CPI (stealing a week of groceries from granny). Crazy week, but little excuse all the same :)

Submitted by lambert on

Proves the airbrushing was successful.

I wonder if there's a formula for that, like headlines that garner hits because they have numbers in them?

Rainbow Girl's picture
Submitted by Rainbow Girl on

"Bury uncomfortable facts in catalogue-style sentence near mid article ["we covered it"!] then don't mention it again."


It was very interesting to read your report about the "list" business as being an actual technique in advertising (cough journalism). It's a trope that has been getting on my nerves a lot (with its increasing use) because it felt gimmicky and also undercut the potentially powerful use of short lists of points to explain an issue. Funny how the answer was: marketing -- the force that drives everything designed to trigger human thought/action in this late-stage kleptocracy.

Alexa's picture
Submitted by Alexa on

comment, it appears to me that Parrimore (and I'm thinking that Carter quoted her--IIRC) did not realize that there was an "adjustment" to the CPI that resulted from the Commission's recommendations in the 1990's.

But I don't know her work, so maybe I misread her.

All I know is that according to Goss (actually Dr. Goss, if I'm not mistaken), the cut was enacted in January 1999 (although it was bandied about for a couple years or more), and it did apply to the Social Security COLAs.

By the way, according to him, that "change" meant that our current CPI is called a "Modfied" Pure Price Index--FWIW.

And the "Chained" part of the "title" so-to-speak, refers to the fact that the formula calls for "substitution."

And the 1999 formula reflects a "steak versus hamburger" substitution.

According to Goss--the CPI "adjustment" that the President is proposing, would amount to substitution not so much "within" categories, as "between" categories.

Goss actually gave the example of seniors deciding (not steak versus hamburger), BUT MORE OF A FLAT SCREEN TV VERSUS AN AUTOMOBILE substitution. (Whatever that means--it sure as heck sounds ominous to me and Mr. Alexa.)

When I'm back to my other computer, I'll try to post the CPI lecture here and at NC (if I can post a video there--I don't know that system very well).

The entire topic is very confusing--I do know that.

But I must say, Mr. Goss is quite capable of "cutting through the mustard," and greatly simplifying the concepts. ;-)

Submitted by LucyLulu on

Well, if seniors already switched from steak to hamburger, that pretty much rules out any further substitutions within beef. So, it's time seniors need to transition from hamburger to squirrel. I believe squirrels are native to all backyards nationwide, thus cost would be limited to the price of shotgun pellets.

Oh dear, they aren't made of aluminum, are they?

I'll look forward to reading Dr.* Goss's lecture, Alexa. My apologies for not acknowledging his PhD status.

*Kewl, Lambert, love how the closing html tag automatically popped up. No more open tags left hanging. Can NC do that, too? And the edit function for other than NC elites. [ ;=) ] (Never hurts to ask.)

Submitted by LucyLulu on

Janet Yellen, from December 2007 FOMC meeting:

Turning to inflation, data on the core measure continues to be favorable. Wage growth remains moderate, and the recent downward revisions to hourly compensation have relieved some worries there.* Inflation expectations remain contained. As I mentioned, I expect some labor market slack to develop, and this should offset any, in my view, modest inflationary pressures from past increases in energy and import prices and help keep core PCE price inflation below 2 percent. Continued increases in energy and import prices pose some upside risk to the inflation outlook, but there are also downside risks to inflation associated with a weakening economy and rising unemployment.

Transcript of FOMC Meeting December 11, 2007

Message to Ms. Yellen:
Please define moderate wage growth.
Whose worries were you referring to?
Given a hypothetical choice between inflation > roughly 2.0% and rising unemployment, will you choose unemployment?

Rainbow Girl's picture
Submitted by Rainbow Girl on

" ... recent downward revisions to hourly compensation have relieved some worries there."

"We were very relieved to learn that wages have continued to suck and decline. Because Inflation!"

It is astonishing that Lynn Parramore made it a central point of her Yellen-Agitprop that Yellen "cares about unemployment." Yes, she does. See above. WTF!#$$@#

Alexa's picture
Submitted by Alexa on

Please see link below.

The Future Financial Status of the Social Security Program

At any rate, Stephen Goss is super informative, and I believe that he has pretty much spent his entire career at the Social Security Administration.

In the end, I'll take his word over most reporters--he is the "Chief Actuary" of the Social Security Administration.

And even better, he actually speaks "''plain English." ;-)

[BTW, I don't have a formal transcript--I made notes from the video. But I should have a 10-1/2 minute video clip of him explaining the CPI. I'll dig it out of the bookmarks on the other computer, when we get home.]