Argentina and the PracticalDad Price Index
It's irritating that so many don't seem to realize how much of the greater world truly does impact their everyday lives, seeming to think that the world exists beyond their own cocooned existence. We live in a world that is almost - in some ways - a Kevin Bacon game as what does happen elsewhere truly impacts us in ways that we don't expect. These links go beyond the pedestrian there's yet another near-war in the Middle East so oil prices are going to potentially rise and stretch farther than we realize; things occur elsewhere that gain little notice here but can have a considerable bearing on our lives. Such is the case when I noted an article from ABCNews.com, in which the Argentine government is criminally charging economists who challenge their reported inflation data. My larger mental self says okay, that's eight thousand miles away and twelve miles down the rabbit hole but my smaller, more provocative mental self is far more cautionary of the news.
Let's step back a ways first, however. Argentina is the favored poster child for images of sovereign defaults, a nation with significant resources that should be far wealthier than it is; it's a nation which has undergone revolution and a bloody military junta that kidnapped and tortured thousands of its own civilians - many of whom were young adults - in an effort to eradicate domestic terrorism, but wound up attacking legitimate and peaceful opposition groups. After coming through that period several decades ago, the existant government simply confiscated the savings of the public; the Argentine middle class was literally wiped out overnight as their bank accounts simply went poof at the stroke of a governmental pen and the click of a keyboard. Since then, the government has forced Argentines with dollars to convert them into Argentine Pesos and/or Peso denominated bonds, flooded their monetary supply with pesos in a loose accomodative policy, asked for foreign investors to participate in energy exploration while simultaneously demanding that they submit to quarterly governmental audits and most ominously - like the accumulated debris of the previous actions wasn't enough - been accused by multiple parties - both domestic and the IMF - of openly falsifying their inflation data. The government has felt threatened enough that it's now pursuing criminal actions against a small group of economists who publicly post their own estimates as the real rate of inflation in the Argentine economy.
So what does that have to do with me? Plenty, since I've run a cozy, low-tech monthly price index to keep tabs on the level of grocery prices for almost three years.
There's been a growing distrust of our own government over the past decade, one that's moved out of the right wing blogosphere and directly into the middle of the American mainstream. Part and parcel of that has been a sense amongst financial bloggers and commenters that the numbers aren't exactly as they appear; this is especially the case with the employment numbers coming out of the Bureau of Labor Statistics and their purely statistical birth/death adjustment model. There have been more than a few months where the only improvement in the employment rate has been solely due to the application of this statistical model, followed several months by a readjustment that retroactively increases the number of unemployed Americans. This growing skepticism has carried over to the inflation data since many can't conceive of how the Federal Reserve and US Government can respectively keep interest rates at zero bounds and still spend like a Beverly Hills housewife on a meth-driven shopping bender. Others - such as John Williams Shadowstats and MIT's Billion Prices Project - have been created to keep tabs on prices, either via separate analysis of existing data or the mass accretion of global prices from online retailers.
This PracticalDad has neither advanced degrees in Economics or Mathematics nor access to significant computing power. What I do have is the experience of having participated in a cost-of-living index early in my professional life and the knowledge that comes from having shopped and cooked for a family for far more than a decade. I could watch the fireworks and blog bullshit at the situation or actually utilize the skills and create my own index; this I did with the PracticalDad Price Index, which debuted in November 2010. It's an admittedly kitchen table affair that trades breadth of data for a grocery marketbasket of 47 separate items that is immediately understandable for the typical parent. Other bloggers have commented that while it's interesting, it isn't national in scopeand they're right. However, it simply provides a consistent monthly glimpse of grocery price activity in one locality. While there are certainly price differences from one region to another, the fact is that the index monitors the change in prices from a baseline and not the prices themselves. In the aggregate, prices rising due to factors in one region will most likely rise at a similar pace in another region.
The Argentine government's action is cautionary in demonstrating the extent to which those in power will go to assure their continuance in power. Our college graduates have been told that a higher education is necessary because our economy has become a knowledge-based economy; the implication is that knowledge is crucial and henceforth, knowledge is power. When true public knowledge is monopolistically controlled, those controlling it have the power. The Argentine economists are a direct threat to those in power within the Argentine government. Will such a governmental challenge to information occur here? Could someone like John Williams and an institution like MIT be threatened? Could that actually happen to me and if so, what would I do? While I frankly doubt that it could happen here, it's sobering to consider it should it actually occur and I don't know what my response would be. It's one thing to put out a datapoint, but what do you do when those in power try to erase it? This is truly what I find so admirable about these few in the Argentine Wonderland, that they're willing to undergo the risks of speaking truth to power; a courageous act.
Of course, I never thought that I'd be able to purchase depleted uranium shotgun loads for drones, either.
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