Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The Status Quo is desperate to mask the declining fortunes of those who earn income from work, and the Misery Index 2.0 strips away the phony facade of bogus unemployment and inflation numbers.
The classic Misery Index is the sum of unemployment and inflation, though later variations have added interest rates and the relative shortfall or surplus of GDP growth.
Since the Status Quo figured out how to game unemployment and inflation to the point that these metrics are meaningless except as a meta-measure of centralized perception management, the Misery Index has lost its meaning as well.
I propose a Misery Index 2.0 of four less easily manipulated (and therefore more meaningful) metrics:
1. The participation rate: the percentage of the working-age population with a job
2. Real (adjusted for inflation) median household income: an imperfect but still useful measure of purchasing power
3. Labor share of the non-farm economy: how much of the national income is going to wage-earners
4. Money velocity: a basic measure of economic vitality
The foundation of Misery Index 2.0 is jobs, earned income and the purchasing power of earnings.Inflation is easily gamed by underweighting big-ticket expenses and offsetting increasing costs with hedonic adjustments, and unemployment is easily gamed by shifting people from the work-force to not in the workforce. This category of zombies–not counted in measures of unemployment–has skyrocketed:
The participation rate is the more telling metric: if fewer people of working age have jobs, the claim that the Main Street economy is “doing better” rings false.
Even though the rate of inflation is heavily gamed, real median household income is the best available gauge of purchasing power. Purchasing power simply means how many goods and services will your income buy?
For example: if your daily salary buys 20 gallons of gasoline, and a year from now you get a raise but your daily pay only buys 15 gallons of gasoline, the purchasing power of your earnings fell despite the higher nominal salary.
Real median household income has declined, meaning the purchasing power of earnings fell.
This chart also shows labor’s share of the non-farm economy: that broad measure of earned income (as opposed to corporate profits, unearned income and rentier income) relfects a steady decline in labor’s share of the national income.
Once again, claims that the Main Street economy is “doing better” make no sense if labor’s share of the national income is declining.
An economy in rude good health has a high velocity of money. An economy bedeviled with high taxes, rentier skims, cartels, politically untouchable fiefdoms, quasi-monopolies and free money for financiers provided by the central bank has a declining velocity of money.
You can fake unemployment and inflation, but it’s harder to paper over the weakness reflected in money velocity:
Central-planning always leads to ginned-up phony statistics, because centrally planned economies always stagnate due to corruption, malinvestments, and some are more equal than others skims and scams by insiders, cronies, cadres and apparatchiks.
The Status Quo is desperate to mask the declining fortunes of those who earn income from work, and the Misery Index 2.0 strips away the phony facade of bogus unemployment and inflation numbers.
My own Personnal Misery Index … especially because of our friend AWD … has reached new lows.
Or, so I thought. Anybody watching The Great Religious Farce ….aka Michael Brown’s funeral? It’s a farce because they (they = lots of people; from the parents, to the “preachers”, to the race baiters, to the media, etc.) are making a massive public spectacle of what should be a private matter. All that fucking preening and prancing for the cameras …. makes me want to puke in my mouth.
Stucky
Turn it off and go bake a pie.
Gayle
LOL …. I can’t. It’s like seeing a terrible accident … you wanna turn away, but can’t. Those people are very very different than white folk. If my dad died and I carried on like that at his funeral — whooping and hollering and shaking my booty —- he would rise from his coffin and bitch slap me to death.
Oops. BTW … I WILL be making salty lime pie this afternoon.
Some enterprising Neegrow (I assume) paints a wall in Ferguson
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ummmm, dat don’t be lookin’ like Michael Brown. It more be lookin’ like dis;
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I took pretty much the whole weekend and spent it fixing things around the house… pulled off a couple fairly good “that-will-never-fucking-work” fixes and saved us big bucks… now we ain’t gotta go buy any replacement stuff…
Didn’t take any notice of any bullshit going on elsewhere in the world… just me, my tools, some good music on the radio…
Gonna go to the hardware store today… got more work to do and I need some stuff…
The rest of the world can go hang for all I care…
Nobody I know believes the government or the mainstream media because we have to live in the real world and pay bills and buy food. If the items I generally buy have gone up 10% in price, don’t tell me inflation is only 1.5% The fact that gasoline went down in price isn’t enough to offset the rise in utilities and my property and school taxes. In fact, we had severe price inflation right after the 2008 collapse and the MSM never said a word.
Stuck
Do you think all the performing would be reduced if TV cameras weren’t there? It’s their one minute of fame.
I have an idea for your next research project: grieving traditions in cultures around the world. I suspect the Europeans are quite restrained compared to many.
I’ll be anxious to hear how you like the pie.
My financial misery index is steadily going up. Discretionary funds keep shrinking while fixed expenses rise, so I keep cutting back, cutting back. Panic hasn’t set in yet, but I feel it hanging around, ready to pounce. I assume I ‘m experiencing the norm for most these days.
You have to be a Boomer to actually recall what a joke Pravda (truth) was back in the 60s-70’s era.
We, the USA!USA! has become them.
Even Oreo now relies on the Russian press …. on those rare occasions he actually want the Truth.
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“Do you think all the performing would be reduced if TV cameras weren’t there?” —- Gayle
Yes and No.
I have been to several black funerals. Mostly when I was in the military Honor Guard. But, one less than a year ago when our handyman dies — Ms Freud knew him for a long time.
That IS pretty much how they act. Lots of shouting and Praisin’ Da Lawd.
However, Brown’s funeral is over-the-top exaggerated. They took what is already, imho, a raucous event, and clearly magnified it because of the cameras.
Slight change in the salty lime pie. Just as I was getting started, Ms Freud informed me her son will be stopping by Saturday afternoon and he also loves limes, so I gotta wait. I will definitely let you know.
Misery = (headache & weariness) X (wife not shutting the fuck up)
Stucky you’ll get a lot more “truthiness” from Al Jazerra or RT than from CNN or any of the other puke MSM.
When Chris Rock was sane!
@Iska, +100, slight change
Misery = (headache & weariness) X (hub drunk+severe disppointment)
Reality is that it is a bit worse if you take out the grossly overpaid and glorious few that skew it for the rest of us.
And depends on the generation too, the remaining silents and boomers are benefiting from a huge wealth transfer that is on the verge of imploding, and again will steal from the youth.
The not so lucky boomers are still working, what carp jobs China left us.
Cheap stuff covered up the theft, soon, that will end too, and the real misery will start.
Sucks to be US. Ha ha, auto correct capitalized us, I’m leaving it.
@TE: Your definition of “Misery” Is way undershot. Your reality is terrifically overshot. My generation (The Silents) has managed to live through Peak Prosperity and the Bloody Boomers are busily tossing coins as to whether or not they will survive Peak Prosperity before TSHTF.
My guess : Silents squeaks under the line but witness the horrors of the poorest countries fold, collapse and populations shrink sufficiently to make you weep. This is happening now and one or two mistakes on either side will turn into Armageddon for billions of crispy critters. Likely Russia, China, Europe, North America and Brazil. The Northern Hemisphere will die.
My second guess: Boomers survival depends greatly on location of where you live. Lucky, you survive, unlucky, you die.
I see no escape from the ever rolling Fourth Turning. If we are extremely luckily to to have EVERYTHING go exactly right, The Fourth Turning has the very slim chance of surviving the last Turning with sufficient resources and talent left alive to lift us slowly and painfully into a new start into a new civilization. It will not look anything like the last one.
I do not have any real optimism that this will happen until I’m dead, but since we are at the mid-point of the Fourth Turning, things are moving more rapidly now and that odds of me living long enough to see any concrete outcome are slight.
Hugs, TE.. You’re in a tougher time line than I am but there are too many variables to be sure of anything.
Lots of luck…
MA