http://bonddad.blogspot.com/2010/01/no-virginia-government-isnt.html
Tuesday, January 5, 2010
No Virginia, the Government Isn’t Manipulating Economic Statistics
Money Quote:
“If the blue line on the shadowstats graph were the correct inflation measure, bond yields would be at least 400 basis points higher. Why? If shadow stats were correct, then bond investors would have been losing money for most of the 2001-2008 period because inflation was higher than the stated interest rate on the 10-year Treasury bond. Simply put, investors would not put up with that and instead would have sent yields far higher for the last decade. Yet they did not. That tells us that Shadow stats CPI number is wrong.”
(Frankly, I think it is entirely possible that bond investors actually did lose money for most of the 2001 - 2008 period.....The human herding instinct and is strong)