Cartoon explaining weighted CPI

[shaayecanaan]

Last edited Mon Apr 8, 2013, 08:03 PM - Edit history (1)

Edited for clarity, fingerprint removed.

[rsmith6621]

1. Brilliant..

[NYC_SKP]

2. K/R (nt)

[Deep13]

3. good explanation.

Had a little trouble reading some of the writing. But well explained.

[Common Sense Party]

6. Yes, I can't quite make out the 'rorting of Medicare' part...

I was thinking 'looting' but it doesn't quite look like it.

I am NOT criticizing, either. My handwriting would be COMPLETELY illegible. With this whole comic, there's only one word I had trouble with.

[shaayecanaan]

8. Sorry

I was getting a bit ragged towards the end. Can't believe how cramped you get printing in small straight rows. Would never do this for my day job.

[JDPriestly]

9. It's great! You explain chained CPI so that everyone can understand it.

My husband and I think that the powers that be are using the term "chained CPI" to cover up for the fact that they want to and are cutting Social Security and all kinds of other programs plus increasing taxes on the poor and lower middle class.

Nobody likes to admit they don't understand things. "Chained CPI" is based on a mathematical formula that is had to understand. By speaking of "chained CPI" the powers that be can intimidate people into silence, into not complaining about what is going on. That's our theory.

[Demo_Chris]

4. rec

[Common Sense Party]

5. Good job. I also like the finger smudge as a token of authenticity.

I just hope your fingerprint won't be used against you.

[shaayecanaan]

7. Yeah, I was thinking that...

If I wake up in GTMO, I'll have that dodgy fountain pen to blame

[idwiyo]

10. K&R

[cantbeserious]

11. Nice Touch With Obama Explaining Why We All Will Love The Benefits Reduction

eom

[Recursion]

12. Not quite

It's not "as people change from steak to hot dogs" it's "as food takes up less of the total expenses as compared to clothing".

Also, checks are never going to get smaller, which is why this will keep being hard to sell as a "cut" to most people.

[Jim__]

13. Yes quite.

According to the Bureau of Labor Statistics:

Traditionally, the CPI was considered an upper bound on a cost-of-living index in that the CPI did not reflect the changes in consumption patterns that consumers make in response to changes in relative prices.

Since January 1999, a geometric mean formula has been used to calculate most basic indexes within the CPI; this formula allows for a modest amount of substitution within item categories as relative price changes.

The geometric mean formula, though, does not account for consumer substitution taking place between CPI item categories. For example, pork and beef are two separate CPI item categories. If the price of pork increases while the price of beef does not, consumers might shift away from pork to beef. The C-CPI-U is designed to account for this type of consumer substitution between CPI item categories. In this example, the C-CPI-U would rise, but not by as much as an index that was based on fixed purchase patterns.

With the geometric mean formula in place to account for consumer substitution within item categories, and the C-CPI-U designed to account for consumer substitution between item categories, any remaining substitution bias would be quite small.

So, yes, just like beef is a different item category from pork, chicken is a different item category from rice and beans.

[shaayecanaan]

16. In real terms, its a decrease

because future indexing will lag behind inflation

[dembotoz]

14. i handle the shopping for my 92 year old mom

it is not getting easier
the not buying chicken panel is a little too true
slowly a bit more money keeps coming out of my pocket
she does not know this although I think she suspects as much

[winter is coming]

15. Great toon. What's the word before "of Medicare" in the last panel?

It looks like "rorting"??

[shaayecanaan]

17. Yeah its rorting

maybe I should try and clear up that word, someone else mentioned it as well.

[winter is coming]

18. Thanks; that wasn't a word I was familiar with.

http://www.thefreedictionary.com/rorting

[shaayecanaan]

19. Wow, I honestly had no idea that it was an Australian word (nt)

[winter is coming]

20. It's a great term. Given the original definition, it sort of has the connotation

of plundering for pleasure as well as profit.

[dembotoz]

22. i like it--always fun to learn new stuff here at the old du

[Buns_of_Fire]

27. Yesterday, duck genitalia; today, "rorting"...

Lord only knows what I'll learn here tomorrow to amaze my friends and confound my enemies!

Love the cartoon, by the way...

[Skinner]

21. Nicely done.

[mac56]

23. Brilliant.

Okay to share? With attribution?

[ProfessionalLeftist]

24. Perfect!

Good job. Fingerprint and all!

[DebJ]

25. Fantastic! Thanks so much.

[marions ghost]

26. Could you do one of these every week?

I'd like to see the weekly economic tortures of the American people through your eyes....

[raouldukelives]

28. Great toon! Informative and well done! nt

[MotherPetrie]

29. K&R That was great.

[GreenStormCloud]

30. Well explained, but doesn't hit the full impact.

Each year the chained-CPI cuts a little bit deeper. It is like compounded interest, except in reverse. So each year we are expected to find cheaper substitutes. But what happens when you hit rock bottom? I know - die.

FWIW - My wife and I already look for the "reduced for quick sale" label on meats and other refrigerated items. And we are still working to supplement our SS. If SS was enough to live on we would retire completely and let some young people have the jobs that we are taking up.

[DollarBillHines]

31. Until right now, I had no idea what all of this CPI business was about.

Thank you, thank you.

Great 'toon.

[Kali]

32. good job!

[rhett o rick]

33. Well done. I too like the finger print. nm

[Tierra_y_Libertad]

34. Voltaire “The comfort of the rich depends upon an abundant supply of the poor.” ― Voltaire

[dmr]

35. Roast beef to hamburger to hot dogs to dog food.

I'm at the hamburger phase: I haven't purchased a nice little roast in a long time.

Excellent toon. Thank you.

[MuseRider]

36. Nice and very easy to pass along just what this is.

Love the word rorting, it is perfect and a new word for me.

[forestpath]

37. So the poorer and sicker you get, the more PBO thinks you should suffer. Nobody with

any humanity could propose such a cruel scheme.

[99th_Monkey]

38. Before this goes viral, you may want to remove your fingerprint

One can't be too careful these daze, about blowback against those who
dare shed light on the dark doings of our DINO POTUS.

[cbrer]

39. Cribbed to FB. nt

[Nika]

40. This is an alarming formula to use for determining S.S. benefits

We can't let them get away with putting this into effect.

[yellerpup]

41. Love this!

Right on!

[BlueStreak]

42. I loved the fingerprint

I can't say why, exactly. It sort of says "Look, I'm not going to draw this again to make it pretty for you. Get your heads in the game. Pay attention to the important things."

I thought it was intentional.

[shaayecanaan]

46. The phone rang at work while I was inking it

anyway, removed now.

[limpyhobbler]

43. LOL Outstanding!This should be a regular feature here.

strangely familiar actually??

[WillyT]

44. Most Excellent Post !!!

[CrispyQ]

45. Outstanding!

Strangely familiar.

[DirkGently]

47. Well done. (nt)

[Auntie Bush]

48. Is this actually how chained CPI works?

[shaayecanaan]

49. It is an illustration...

obviously, CPI is not calculated on an individual basis. The three-hairs guy is representative of the nation, in that respect.

I had in mind Adbusters' ballad of Joe and Mary:-

Joe and Mary own a small farm. They are self-reliant, growing as much of their food as possible, and providing for most of their own needs. Their two children chip in and the family has a rich home life. Their family contributes to the health of their community and the nation … but they are not good for the nation’s business because they consume so little.

Joe and Mary can’t make ends meet, so Joe finds a job in the city. He borrows $13,000 to buy a Toyota and drives 50 miles to work every day. The $13,000 and his yearly gas bill are added to the nation’s Gross National Product (GNP).

Then Mary divorces Joe because she can’t handle his bad city moods anymore. The $11,000 lawyer’s fee for dividing up the farm and assets is added to the nation’s GNP. The people who buy the farm develop it into townhouses at $200,000 a pop. This results in a spectacular jump in the GNP.

A year later Joe and Mary accidentally meet in a pub and decide to give it another go. They give up their city apartments, sell one of their cars and renovate a barn in the back of Mary’s father’s farm. They live frugally; watch their pennies and grow together as a family again. Guess what? The nation’s GNP registers a fall and the economists tell us we are worse off.

[Auntie Bush]

53. Thanks for another explanation/example.

I think I get it! Sorry to cause you all that work.

[muriel_volestrangler]

51. It's a bit simplified

The unchained way of measuring inflation means looking at how people spend their money at one moment in time, then looking at what happens to those prices over the next period, weighted according to the average amount people spent at the start of the period.

Chained CPI means you look at both how people spend their money at the start of the period, and at the end, and work out an average weighting, based on both. Now, since some prices are likely to go up more than others (and some are likely to down, such as high tech), people are likely to start buying more of the stuff that goes up slower (or goes down) in price - we look for value. So the end result is that, typically, the chained index goes up a little slower than the unchained. In the cartoon, rice and beans have gone up in price slower than chicken, so they've wisely bought more rice and beans than before - but that change in behaviour means the cost of living allowance will go up slower. It's called 'chained' because the changes in buying patterns are built into it, allowing the figures for each period to be chained together. If you take the unchained CPI figures, you have to go back and check if there were differences in buying patterns before you concatenate the figures.

I think there's a decent argument that the fact that a few things go up slower should be seen as a bit of redistribution of the benefits of advances in production and technology around society, and so there's no need to use a precise measurement that ends up meaning someone on social security never benefits from any improvement. More than that, however, is the recognised fact that the items the elderly spend money on tend to go up faster than general inflation - they buy less high tech stuff, for instance, and a lot more healthcare. So really, the fair thing to do would be to construct an inflation index for seniors, and used that.

[Auntie Bush]

54. Thanks for that great explanation of chained CPI

I never understood it before. I think I'll send that to a couple of people.

[BlueStreak]

57. And that "Senior's market basket" just doesn't have many even substitutions

I'll accept the chicken for beef argument as a theoretical example, although in practice, it is not common that one goes up at the same time the other goes down. Nonetheless, if heating oil goes up, you can't substitute suntan oil. If heart medicine goes up, you can't substitute Preparation-H. There is very little you can substitute without it actually being a downgrade in lifestyle.

And let us understand one huge flaw in ALL of the CPI calculations. The market basket has always misrepresented inflation because a significant part of the market basket is food items that are artificially SUBSIDIZED and subject to price controls.

If you want to look at real inflation, don't talk to me about milk or corn, which are price controlled / subsidized commodities -- you know, that socialism thing. Explain to me how an Arby's roast beef sandwich more than doubles in 5 years when we are supposed to have 1% inflation.

And the real elephant in the room is that all of this is opaque. You can barely find out about the traditional CPI calculations. Once chained CPI is the law of the land -- and it will be because Obama has already given that away -- this is a license to steal, and good luck every getting any transparency into those calculations.

[Curmudgeoness]

50. But what happens when the price of beans and rice go up?

Where do they take us from there? I suppose we will have to substitute that with popcorn and water.....at least it will bloat you and make you feel full.

[Billy Pilgrim]

52. That was very informative.

Thank you.

[loudsue]

55. THIS is what I've been trying to say since this problem presented itself.

We have to put pressure on ALL elected democrats, AND party leaders to let them know what Obama has just done to the democratic party for GENERATIONS to come. He has totally fucked ALL democrats over.

[BlueStreak]

56. The thing that is insidious about chained CPI is not the theory

In theory, it makes some sense that if beef is high and chicken is low (or vice versa), you can reasonably switch. But really, what other switches are realistic? If the cost of gas is high, you can't witch to rocket fuel. If the cost of diapers goes up, you can't really switch to McDonald's napkins. If the cost of cars goes up, it isn't reasonable to expect people to switch to bicycles. If the cost of apartment rent goes up, you can't go to a hotel room instead. If the cost of day care goes up, you can't drop you baby off at the dog kennel.

Other than the chicken/beef thing, I really can't think of any realistic substitutions that aren't, in fact, big downgrades.

And therein lies the problem. We can see where this is headed. Once they get the premise of substitution into law, they will start making DOWNGRADES, because that is really all that is available in most cases. And now, here's the big question.

HOW WILL YOU KNOW?

The regular CPI process is not very transparent, and the chained CPI thing is downright secretive. All you will see is a number.

CPI is a license to steal.

[Baitball Blogger]

58. Depressing, but eye-opening.

[MrMickeysMom]

59. Clarity, man...

Like a diamond shot through your brain... (apologies to Apocalypse Now!)

We need some.

[jtuck004]

60. Friskies shredded variety pack, which has 24 5.5 oz cans of either beef, seafood,

or turkey in gravy is on Walmart's site for $19.98. (You can get chicken in the shredded form for about $18.94/case, but even people eating cat food to save money likely will get tired of opening the same variety day after day.

Hamburger at the local butcher is $2.49 /lb, whereas this catfood is only $2.42, providing an excellent example of how one might spend less on their groceries.

Friskies, of course, is a name-brand, and one might look for not quite so well-known names to spend even less. And do not forget the "Bargain-outlet" stores which typically sell cat food which is beyond it's expiration date, for even greater savings.

So, there are ways for people to save on food. Especially if they are one of those living in poverty, now at a 20 year high.

On the other side of town, in one of the many places to eat for Senators, Congresspeople, and their banker and lobbyist friends...

Lunch menu at the Dirksen South Buffet
4/08/13

$16.00 Adults (which happens to be more than 4x as much as we give any of our 47 million neighbors for an entire day on food stamps, though I don't think this is denoted on their menu)
$10.00 Children

Soup - Senate Bean
Carver - Marinated Flap Steak,Horseradish Cream
Main Course - Crispy Fried Pork Chops, Brown Gravy
Main Course - Senate Fried Chicken
Pasta - Penne Rustica
Side - Bulgur Wheat & Wheat Berry Pilaf
Side - Broccoli, Roasted Garlic
Side - Cinnamon Roasted Butternut Squash
Side - Vegetable Rice Pilaf
Salad Station - Greens: Field Greens, Romaine, Baby Spinach
Vegetables: Snow Peas, Carrots, Onions, Peppers, Br
occoli, Mushrooms ,Chic Peas, Tomatoes, Cucumbers
Proteins and Dairy: Eggs, Tuna, Bleu Cheese, Feta Cheese,
Grilled Chicken, Bacon Bits, Parmesan Cheese
Dressings: Caesar Dressing, Balsamic Vinaigrette, B
leu Cheese, Low Fat Italian
Sides: Croutons, Sun Flower Seeds, Raisins, Sundried
Cranberries
Antipasti - Seasonal Fruit Platter
Antipasti - Marinated Asparagus, Shaved Parmesan
Antipasti - Golden Quinoa, Corn, Black Bean, Cilantro
Hot Dessert - Senate Bread Pudding
Hot Dessert Special - Cranberry Rice Pudding Dirksen CaWhite House today:

bon appétit...

[AndyA]

61. Chained CPI = BULLSH!T

Obama campaigned on not burdening America's middle class and seniors, and here he is proposing that very same thing. It's disgraceful. Game or no game, he shouldn't be poking at people in this manner.

Raise the cap on SS, cut subsidies to corporations making billions in profit every year, close the loopholes that allow major corporations to pay zero taxes, close the loopholes that allow millionaires to pay lower tax rates than the middle class, cut the defense budget--the war in Iraq is over and the war in Afghanistan is winding down--it's time to reduce the budget just the same as has been done in the past when wars ended.

Obama needs to prosecute Wall Street for causing Americans to lose the value in their homes, their stocks, and their investments. The middle class, the impoverished, and seniors have already been bearing the burden of extreme sacrifice for a long time, in order to truly share, the wealthy and big corporations are next in line to pay their fair share and sacrifice a little for a change.