Despite 'Cooked' Government Statistics, Stealth Inflation Looms

MoneyNews.com email (Newsmax) | January 23, 2007 | John Browne

[Bittersweetmd]

I checked with my spouse. She says whoever says there is little inflation does not grocery shop. For those of you who don't shop for groceries, perhaps you have noted the increased prices on the restaurant menus you have seen.

Your wife has that right! Anything that is real food items like meat, veg., dairy etc. is very expensive. One or two 1/2 full plastic bags with real food can cost a small fortune. Whereas, junk food items like chips, boxed food, TV dinners, frozen pizzas can always be found on sale. And since I buy little of that kind of food my grocery bills have gone up a lot in the last 3 or 4 years.

Also restaurant food is considerably more expensive and poorer quality.

[dirtboy]

Sadly, the one result of a false government inflation figure is that our interest rates are set unrealistically low.

There is another critical result, and IMO this is why inflation is underreported.

Any sane person knows the Social Security Trust Fund is a farce, and the day of reckoning for SS is around 2017, not 2042 or whenever the financial alchemists (turning debt into gold) at the SS Administration say it will run out.

So what is a way to deal with a thirty-percent projected shortfall that does not involved tar and feathers for politicians? Why, under-report inflation by a percent or so year after year so that COLAs don't keep up with the actual rate of inflation.

That has the additional benefit of negative compunding - each percent underreported builds upon previous years of underreporting. So that after 20-25 years, the shortfall is cured by boiling the frog slowly.

Don't believe me? Check out the concept of substitution. The government says if steak gets too expensive and you buy hamburger instead, well, that's not inflation, because you're still buying beef.

Of course, that "logic" can claim it's not inflationary if all you can afford to buy is beef Alpo.

[libill]

I don't know what the truth is, and pointing out that Lou Dobbs is not an economist, but the same can't be said about Paul Volcker, Alan Greenspan or Gerald Corrigan. Further enhancing an air of conspiracy was the move to stop reporting the m3 money supply. According to Walter Williams inflation is a result of the money supply and the M3 report used to report that.

I am afraid my son and the other children in the family will be sent the bill for today's consumption.

[Toddsterpatriot]

Further enhancing an air of conspiracy was the move to stop reporting the m3 money supply. According to Walter Williams inflation is a result of the money supply and the M3 report used to report that.

They still report M2. Use that instead.

[SaxxonWoods]

"Productivity gains in manufacturing mean the unit cost of the product drops. If the company doesn't lower its price, and they won't, what you get is a de facto price increase, which is inflationary."

Just a few examples:

Laptop computers have dropped 60% in price in the last 4 years, and plasma TVs are down 75% in 3 years.

Computer chips carry much more information today than ever, and at a lower price than ever.

Cell phones do more, and cost less than ever.


Your claim that companies "won't" lower prices when unit costs decline is obviously wrong.

[dalight]

This is awesome. The government is lying. Its been lying since 1960 under Kennedy. This lie has been part of everyone's Economics text books with the clear reasoning why some prices are excluded from CPI, but this is just cynical manipulation by the government for the last 50 years.

But, this isn't enough data for financial experts and economists to discount any distortion this might create. Given that all of these facts and calculations are a matter of public record. And have been for decades.

The point of this article is that the Economy couldn't possibly be booming like it is, its just a lie and its ALL BUSH's FAULT!

And, its cold outside and perhaps the Government is lying about the Temperature so that people are less concerned about Global warming.