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Thoughts from the Frontline

GDP: A Brief But Affectionate History

July 20, 2014

“Measurement theory shows that strong assumptions are required for certain statistics to provide meaningful information about reality. Measurement theory encourages people to think about the meaning of their data. It encourages critical assessment of the assumptions behind the analysis.

“In ‘pure’ science, we can form a better, more coherent, and objective picture of the world, based on the information measurement provides. The information allows us to create models of (parts of) the world and formulate laws and theorems. We must then determine (again) by measuring whether these models, hypotheses, theorems, and laws are a valid representation of the world.”

Gauri Shankar Shrestha

“In science, the term…

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utterd@earthlink.net

July 21, 9:57 a.m.

John,

What happens when the Fed starts selling bonds?

Dan

eric.lannert@gmail.com

July 20, 5:22 p.m.

John, great letter as always. You are on to something here with calling for change in our measurement system. A few years ago I asked an executive with the Chicago Fed if there were any plans to implement a realtime economic data system. My thought was (is) that with the increasing automation of business accounting systems we could inexpensively capture sales data for nearly the entire economy. No politics. No revisions. Minimal cost. And drill down capabilities that would greatly serve investors and policymakers. He said no, but someday the political will would exist to do so. Maybe that day is here?

Craig Cheatum

July 20, 3:03 p.m.

I’m surprised that new debt is not part of the equation.

Craig Cheatum