#NateSilver and #FiveThirtyEight turd-polish with 'Inflation hurts poor more'

Nate Silver, posing for a cheap knockoff of Rodin's "The Thinker."
Photo from The Guardian.

Nate Silver apologists, stop it.

It's true that Nate himself didn't write this piece, but he's the editor in chief who let this dreck slide.

My header pretty much matches the story's of "Inflation may hurt the poor more."

My counter-header should have been: "Dear Nate Silver: No shit, Sherlock?"

Or: "Reading FiveThirtyEight may hurt fanboys more."

Anyway, on to why this piece is a total teh suck.

Ben Casselman offer this early graf:

We tend to talk about inflation as a single number affecting the whole economy. But everyone experiences a slightly different rate of inflation for the simple reason that we all spend money on different things. The price of cigarettes matters primarily to smokers; the price of diapers affects mostly parents of young children; and the price of gas is a much bigger deal to someone with an 80-mile daily commute than to someone who only takes the car out for weekend excursions.

First, there's the rhetorical "we" that is a straw man for what's about to follow, namely that one of Nate's sages will set you the idiot straight of your naive thoughts.

Second?

This ain't new or even close. It's part of the old "buy hamberger instead of steak, you poor moochers."

You know? The "different inflation" is exactly why wingnuts and neolib fellow travelers argue for chained CPI and similar. You know, like neolib fellow travelers such as Obama's best buds at the Center for American Progress arguing for a chained CPI. So, it IS a policy piece of sorts, despite Casselman later claiming it isn't. 

Third, the "long term" and how this is unusual? None of the claims that this is different go back before the mid-1930s and much doesn't go back before the mid-1950s. And, plenty of economists, including Thomas Piketty as part of his massive new book, reviewed here by Silver's bete noire, Paul Krugman, say that the New Deal era up to Nixon's time was an anomaly.

Fourth? That's not all, folks. Watch me, Ben Casselman, invent quintiles!

To figure out how inflation varies by income, I divided the population into five groups by earnings, then calculated how much different income groups spend on each of more than 150 goods and services.

What would we ever do without such brilliance?

Thanks, Nate Silver; how did anybody not named Matt Ygelsias write such incredible insight? Well ... the rhetorical "we" and other stuff reminds me of Josh Marshall of Talking Points Memo. It reads like a pedantic high school teacher from the city in his first small-town classroom.

Meanwhile, among other headers on that page? "Jeb Bush has as Good of a Shot as Anybody." Wow!

I never would have fucking known that without the help of Nate Silver and his gang. 

Bottom line? Per the likes of Michael Wolff, this exemplifies everything wrong with "branded" journalism. 

This is also a bright line. I'm putting a "no-follow" on every link to Silver from now on, too.  For more on how the place is pretty much all wet, go here. Speaking of that link, I wonder if Nate has asked Ben to send Paul Krugman a link to that piece. Because, you know, Krugman is so jealous of Silver he probably never realized that inflation hurts poor people more.

More of what's wrong with "core inflation"

Core inflation, as opposed to overall inflation, eliminates energy and food prices from calculations because they're too "volatile."

Well, this is the real world. We eat every day, we heat and cool our residences and workplaces every day, most of us drive some place every day, and so forth. It's ridiculous to exclude these things.

But, tobacco products and pickups ARE part of core inflation. That's when just 25 percent of adults use tobacco products and even less own a pickup (not counting SUVs).

This is just another way in which the "economy" of ivory towers and DC Villagers is disconnected from the real, actual economy.

America is worth … 498 billion barrels of oil

According to Scott Burns, the United States’ entire net worth is equivalent to that much oil, at $120/bbl.

That’s a smidgeon more than the proven reserves of only three Middle Eastern countries, Saudi Arabia (260 billion barrels), Iraq (115 billion barrels) and Iran (105 billion barrels).

At about 36 times its 1970 price, oil has outstripped the value created by a full working generation of Americans in a period of dramatic technological change and innovation. During the same time, the value of American business shares, as measured by the S&P 500 index, has risen to only 15 times its 1970 level.

A chart at Burns’ website shows much our economy has shrunk, vis-à-vis oil, since 1970, before the first oil embargo:

The Value of America, in Barrels
This table takes the net worth of American households and nonprofit organizations as measured by the Federal Reserve and divides by the price of oil to find how many barrels of oil it would take to buy the country.
Year	Household Net Worth (in billions)	Price of Oil	Barrels to Buy America (in billions)
1970	$3,418.5	$ 3.18	1,075.0
1975	$5,141.5	$7.67	670.3
1980	$9,468.6	$21.59	438.6
1985	$14,206.6	$24.09	589.7
1990	$20.249.9	$20.03	1,112.0
1995	$27,732.4	$14.62	1,896.9
1998	$37,369.7	$11.18	3,342.6
2004	$48,092.8	$42.00	1,145.1
2007	$57,718.0	$120.00	481.0
Sources: Federal Reserve, Bloomberg

“Either oil is too expensive or America is too cheap,” Burns concludes.

But Burns is a better financial analyst columnist than that.

He didn’t offer Option No. 3:

The stock called America, Inc. has been overpriced for years, and now investors are driving it down.

Maybe George Soros will even make a run on the dollar, like on Asian currencies in 1998.

And here’s why talking about “core inflation” is so stupid

In making many of its inflationary statements, the Commerce Department talks about “core inflation,” which includes the stereotypically-phrased “often volatile” food and energy costs. Folks like the Fed follow along The reason behind November’s 3.2 percent jump in wholesale prices put the kibosh on that:

Wholesale prices shot up 3.2 percent, the biggest jump in 34 years, propelled by a record rise in gasoline prices.

Given our just-in-time retail delivery system and the amount of retail goods we import, it’s ludicrous to exclude energy prices from inflation talk.