Back in the 1960s, I read a book titled How to Lie with Statistics. I just thought of the book again after reading some stock market babble such as "the market was mixed". It made me think about how, as long as we base how things are going on a variable, particularly one that can be manipulated by governments or anyone with money, we are just playing a big game.

Take housing values. We are told that houses are worth more today than 10 years ago. Or less. Or the same, it doesn't matter. Why? Because we get told that, at least in the US, in terms of US$. It's far to assume that in first world countries, you will get told the same babble but in whatever the local currency is. While we are told "a house is an investment", we get the justification in some variable unit.

The reality is that a house is a place to live. It is one of those mandatory expenses right along with food and, in many places, medical care. If you need a three-bedroom house and that is what you have, great. Except if it's value in local currency goes up that means so do the taxes on it. And if you don't have one and need one, or you need to upgrade, a higher price is not really a good thing.

It's like owning stock. If you own stock in Toyota and the stock goes up, you are supposed to be pleased. But, goes up in terms of what? If it's value goes up faster than the cost of necessities, that might be a good thing. But, a number that represents some quantity of IOUs is not a very exciting position.

If you lived in rural Nicaragua, you would probably be a bit closer to understanding this. Why? Because it is just easier to see. You probably own your house/farm and you probably settle for the free health care. Thus, what matters is the cost of food. Some of it you probably grow, others you probably barter for with your neighbors. As long as the relative prices (in some arbitrary unit) of beans, rice, corn, eggs, milk and maybe chicken remain constant, it makes no difference what that number is. You probably will be buying cooking oil, sugar, salt and a few other things from an outside source. If their prices go up more than the value of beans and such, that's a bad thing.

That's what it boils down to. Sure, it might be nice to be able to afford a vacation, some new clothing, a new roof for your house and such but unless you can measure those costs in some unit less arbitrary than IOUs, you are probably not understanding reality.

I have been told that before the Spanish came here, the unit of currency was the cacao bean. Somehow having your wealth based on the amount of chocolate you have seems a lot saner than those IOUs these days.