It's So Much Worse Than They're Telling You

Doom pornography surrounding inflation is very tempting. I work in the field as an entrepreneur, and so the subject is very personal.

Without lapsing into despair and encouraging going off the grid altogether, it's still important to understand how this round of increasing prices caused by politicians could be longer-lasting and bit different than we've ever experienced.

You Can't Handle the Truth

The first fundamental piece of understanding government financial data maybe is best expressed through the grizzled Marine Colonel Jessup, played by Jack Nicholson?in the early 90s legal drama, A Few Good Men.

In what has become a memed-to-no-end scene between the Nicholson character being cross-examined by a young JAG prosecutor in Tom Cruise, the truth is demanded of a government employee.

In fact, Cruise shouts he is entitled to answers.

"You can't handle the truth!" Jessup spits back before launching into a Rorschach test of a monologue on accountability. Many analysts have commented about how the public doesn't really want to know about its government's doings, ongoings. We're too fragile. Our minders are there to protect us from cold, cruel reality.

I've written before about 20th century assumptions and the managerial state. A lingering, vestigial structure is this notion vital information, especially of the negative variety, should be hidden or obscured, lessened.

But that makes the above situation almost benevolent, quaint even. Our overlords are simply looking out for our mental well-being. Can't fault them for that. Sure, they're misguided, but their hearts are in the right place. Um, no.

Incentives Matter

Official US inflation numbers are released by the Bureau of Labor Statistics, which has been around in various incarnations since the late 1800s. It finally settled within the US Department of Labor, which itself is part of the Executive Branch, and contains more than two dozen other assorted boards and bureaus and committees.

Numbers we're periodically treated to were first published around World War I as a Consumer Price Index (CPI). Unprecedented government economic intervention at the time carried with it certain distortions, and so the smart set wanted a way to keep track of the consequences.

For more than a century, the CPI has functioned as the go-to metric, though its basket formula has changed. And though the tendency is for market analysts to assume officials downplay inflation, in some cases, when the argument better suited a given ruling party, the CPI was said to over-estimate inflation.

Not to get too into the weeds on inflation theory as it relates to macroeconomics, but there are several camps who benefit from inflation growing. The point isn't to make or discredit an argument, but only to show that such world-moving data shouldn't be in political hands.

I think that's clear enough.

The reason has almost everything to do with incentives, however. Bureaucrats, boards, committees under the thumb of a political regime cannot help but want to offer as pleasing a picture as is expected of them.

Government positions of power are never based on merit. They're for the heavily connected, the go-along types, those willing to compromise in order to keep themselves within the circle.

No Cabals

This means we don't need cabals or conspiracies to disparage CPI formulas. We already know whatever information they're delivering is weighted with political concerns, and not eyes toward truth.

This doesn't imply those compiling the CPI are evil. Nope. They could very well be rather wonderful folks. Or, they could be smug, self-righteous Jessups, believing it is their unique task to keep bad news at bay.

It doesn't matter.

The nature of incentives at that level are such that we don't have to bother we gossip, innuendo, or ad hominin attacks.

All that is required is the intellectual esteem enough to know we deserve the truth, and that government gatekeepers will never be in a position to give it to us.

We then proceed to open, transparent, cryptographic proof. We work to pry-open officialdom through voluntary, cooperative market incentives. Free people will often work together without ever meeting in person or knowing one another ... in order to achieve common goals.

That's the beauty of our age, our time.

We know the truth is so much worse, and yet we're not giving-in to cynicism. Instead, we're building tools to replace Jessups of the world. We're constructing liberating information that can operate independent of central power.

We're doing this right now. Keep an eye on this space.