Bill Gross Speaks–We Listen

Readers of this blog know I have a high regard for Bill Gross who runs a few hundred billion of bonds for PIMCO. This month he points out that the changes made to the calculation of the Consumer Price Index by the Bureau of Labor Statistics in the 1990’s, have led to a delusional view of inflation in the U.S. not shared by the rest of the world. Ostensibly these changes were made so that social security payments and wages that were indexed to inflation would stay as low as possible, thus saving the government and employers billions. The real result is we are living in a fools paradise, where for instance we keep quoting “core” inflation (above) as if the cost of food and gas were not crippling the average household.

For Gross, the problems in our country go much deeper and he is crying out for a Presidential Campaign where the people get told the truth. I don’t usually quote at length, but since Gross seems to agree with some of our notions about our ability to “amuse ourselves to death”,I thought this was too good not to share.

What this country needs is either a good 5¢ cigar or the reincarnation of an Illinois “rail-splitter” willing to tell the American people “what up” – “what really up.” We have for so long now been willing to be entertained rather than informed, that we more or less accept majority opinion, perpetually shaped by ratings obsessed media, at face value. After 12 months of an endless primary campaign barrage, for instance, most of us believe that a candidate’s preacher – Democrat orRepublican – should be a significant factor in how we vote. We care more about who’s going to be eliminated from this week’s American Idol than the deteriorating quality of our healthcare system. Alternative energy discussion takes a bleacher’s seat to the latest foibles of Lindsay Lohan or Britney Spears and then we wonder why gas is four bucks a gallon. We care as much as we always have – we just care about the wrong things: entertainment, as opposed to informed choices; trivia vs. hardcore ideological debate.

It’s Sunday afternoon at the Coliseum folks, and all good fun, but the hordes are crossing the Alps and headed for modern day Rome – better educated, harder working, and willing to sacrifice today for a better tomorrow. Can it be any wonder that an estimated 1% of America’s wealth migrates into foreign hands every year? We, as a people, are overweight, poorly educated, overindulged, and imbued with such a sense of self importance on a geopolitical scale, that our allies are dropping like flies. “Yes we can?” Well, if so, then the “we” is the critical element, not the leader that will be chosen in November. Let’s get off the couch and shape up – physically, intellectually, and institutionally – and begin to make some informed choices about our future. Lincoln didn’t say it, but might have agreed, that the worst part about being fooled is fooling yourself, and as a nation, we’ve been doing a pretty good job of that for a long time now.

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0 Responses to Bill Gross Speaks–We Listen

  1. Rick Turner says:

    As I’ve said here before, the real decline in the wealth and living standards of most middle class Americans has been masked by the over-extension of consumer credit. We have, but we don’t own. We consume, but we owe. That’s not how my parents lived. What they had, they owned outright. What they consumed, they paid for. We live with the illusion of great wealth around us, and we’re encouraged by media…who have become the great educators…to aspire to the lifestyles of the Britneys and Paris Hiltons.

    No thanks…

  2. Dan says:

    I read recently that the price of gas declined in April. This came as a surprise to me because gas shot up, way up, in April (at least where I live). The article went on to explain that yes, gas prices went up, but see, they expect prices to go up in April, and they factor that in, and blah blah, and blab blab, and so that’s why your gas prices actually went down in April, even though they went up.

    This kind of doubletalk has been going on for more than a quarter century now, and I suspect that it masks the fact that our economy has been hollowed out from the inside, looted, emptied, and is just waiting for a pin prick to collapse completely. It’s not just the emperor who has no clothes, we’re all stumbling around in the buff.

    Meanwhile a lot of people react angrily to any suggestion that there’s anything wrong, with the economy, with civil liberties, with foreign policy, with Guantanamo, with racial relations, with anything. They seem to sense that the tiger is behind the curtain but their only remaining hope is to pretend like it isn’t.

    Yes I’m very pessimistic these days.

  3. JR says:

    Re April gas price inflation:

    As a buddy of mine used to say, “with seasonal adjustments, the government could make it snow in August.

  4. John Kelly says:

    The info about our CPI being lies to and among ourselves is interesting. But then I’ve always railed against modern economists as a bunch of lying hacks. That field should really be called “using math to fool and frighten the mentally lazy to justify your political or marketing message”. More interesting however is that the article started me asking myself just why are Americans willing to forego critical thought to blindly swallow the entertainment shoved at us.

    Is it simply overload on a toxic marketing culture? Do we truly trust our politicians and pundits to tell us the right things to do and believe? Have we built a generation incapable of critical thought? Are the facts so hard to find? Or in so confusing a format? Or have we just lost our hunger to do more and better?

    Obviously we’ve lost our hunger for more food calories in the US. On average. But it seems as if we’ve let our success go to our heads. Or rather our spirits. We’re like the children of wealthy folks. We feel entitled by what prior generations accomplished. Based on both real and made up “economics”. Deep inside somewhere we seem to feel like we will personally always have enough so we can afford to be dilettantes. To let someone else decide. To follow.

    Unfortunately a nation of followers isn’t going to be out front on the way to any goal at all. I hope we can find a new goal exciting enough to interest more of us in a bigger way.

  5. Jon Taplin says:

    John-I think your comment was at the heart of what Bill Gross was trying to say. If the marketing culture keeps us from confronting the realities, it usually takes a kind of collapse to wake us from our slumber. I’ve been reading Joseph Tainter’s “The Collapse of Complex Societies” and there are some lessons from the late Roman empire that we should learn from. I’m going to try to write on it tomorrow.

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