I knew it was going to be "one of those days" when, on the very first fairway,
this new guy Bob says that he thought my tee shot had landed over there behind
those trees, and how he is surprised to see that my golf ball is now sitting on
the fairway, and another 20 yards further towards the hole, too.
Of course, I knew where he was headed with this, and I took charge of the
situation by patiently explaining how he was just a stupid layman, while I was
the hotshot economist who knows how price increases are "hedonically adjusted"
to make things look better, a skill that I apply to my tee shot by adding back
the yardage lost to the slice by rectifying the original curved trajectory,
thus adding 20 yards to my distance off the tee, and
then averaging my distance off-line with the exponentially-weighted average of
previous shots on the first tee, a lot of which were on the other side of the
fairway, thus placing me, statistically, here, on the fairway, just right of
center. Moron.
Well, there was a heated discussion, ending with me yelling, "Alright, then,
Mister Moron, then how in the hell do you reconcile the latest government
report, which admits to using hedonic adjustments of all kinds to disguise
inflation in prices, showing a mere 1.1% year-over-year inflation in consumer
prices, with the fact that The Economist magazine has 'All Items' inflation at
a terrifying 13.1%, with 'Food' being up the least of all categories - and by a
long shot! - at an even more terrifying 5.4%?!?"
Apparently, the use of the interrobang as punctuation, to indicate my complete
exasperation and befuddlement, really set ol' Bob off, and he was, from then
on, perfectly agreeable that I was within my rights to apply such logical
reasoning to golf, even going so far as to provide myself with a "free lift"
out of pesky greenside sand traps by merely "adjusting the market basket" of
golf hazards, modeled on another splendid hedonic adjustment that the Federal
Reserve applies to reduce actual price inflation.
I admit that I was already a bit testy, as the day before I had received the
bill with my new, higher health insurance premium. If you want to see real
inflation, my health insurance premium is (gulp!) up 13%, and is now $14,280
per year!
But it gets worse! To get that $14,280 a year, I have to first pay 15.3% in
self-employment taxes, and then I have to pay income taxes on half of my
self-employment income taxes, all of which boils down to me making $17,091 a
year just to pay self-employment taxes on the money, income taxes on half the
self-employment taxes I already paid, and then pay the insurance premium with
what’s left. Wow! You want to talk about inflation?
The average family income is $53,000, and add a couple of kids to the
insurance, and you are talking about health insurance consuming 38% of their
gross, before-tax, income!
And if you dare use any healthcare services, the first $2,000 of expenses are
all yours, too, which will cost $2,394 before taxes, and then another 20% of
claims all up to the out-of-pocket maximum. Wow!
Anyway, the point is that the rules of golf are, like monetary policy conducted
by the modern Federal Reserve, flexible when you want them to be, and thus when
the Fed and the government lie about inflation in prices with statistical
hocus-pocus and get away with it, then statistical hocus-pocus it shall be,
here as it is in Washington, DC, which rhymes so you know it's true.
Trying to be helpful, I interrupted Bob during his delicate, five-foot,
downhill, left-to-right putt to save par to tell him, "And let's not forget
that John Williams at shadowstats.com calculates price inflation the
old-fashioned, honest-to-goodness way, and the last time I looked, he showed
that inflation was running north of 6%, which is, besides seemingly correct, a
terrifying, horrifying rate of inflation in prices! Gaaahhh!"
I could tell by the way he immediately overreacted and started screaming at me
that he did not want to hear any more about inflation in prices, or monetary
policy, and in fact he rudely ignored me for the rest of the round.
So you can see why I never got a chance to tell him to buy gold, silver and oil
to protect himself from the inflation in prices that will result from the
government deficit-spending 10% of GDP and the Federal Reserve creating the
money to accomplish the fact.
But since he has such keen, powerful eyes that he can tell precisely where my
stupid golf ball went versus where it ended up, and yet cannot understand
hedonic adjustments or how we are all screwed by inflation in prices as a
result of the Federal Reserve creating so much money, then I trust he will see
it for himself.
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2010, The Daily Reckoning.)
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