July 17, 2014
COMIC GOLD STANDARD:
The intellectual cesspool of the inflation truthers (Matt O'Brien July 17, 2014, Washington Post)
The Shadow Stats numbers would mean we've been in a depression since 1988. The total size of the economy--real GDP plus inflation--has been growing about 4 percent a year recently. So if Shadow Stats is right, and inflation is really 10 percent, that means real GDP must be falling by 6 percent.And that's impossible. You can see just how much in the chart below. It plots the change in GDP against the change in unemployment for the past 30 years. There's usually a strong relationship between the two, so much so that economists have dubbed it Okun's Law. Now take another look at how far away the inflation truther's world is from our own. There's just no basis in reality for the economy to be contracting--let alone by 6 percent--when it's adding as many jobs as it is now.Even worse, Shadow Stat's numbers show so much inflation the past 25 years that, as Jim Pethokoukis points out, it implies the economy hasn't grown at all during that time. So which seems likelier: that we're no better off than we were a quarter century ago, or that Shadow Stats is total bunk?Okay, that's an easy question. Though the best evidence that we shouldn't take Shadow Stats' numbers seriously is that it doesn't either. Cullen Roche cleverly notices that, despite repeatedly predicting imminent hyperinflation, Shadow Stats hasn't increased its subscription price--a bargain at just 175 worthless fiat dollars!--in eight years.
Posted by Orrin Judd at July 17, 2014 3:57 PM
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