IMO, the underground cash economy goes far beyond illegal immigrants. It is a problem so rampant that once again, just as with illegal immigration over the last 40 years, politicians are loath to acknowledge it.
How do we know inflation is not a problem? .... because Washington tells us so.
My wife does the shopping and she does not agree.
Do you think this issue will be raised in either party’s ‘debates’? Nah, it would kill their fund raising to take a position. Positions taken in debates are only for fund raising.
As a general rule, for instance, food and fuel prices are not included in the inflation rate. To do so would require increasing interest rates as oil and gasoline prices increase.
BLS hompepage, accurate stuff:
BLS reporting on controversial CPI "adjustments":
A standard version of "the CPI (amongst other government indexes) are fiction."
And, yeah, illegal immigrants keep inflation down. Why do you think "everybody" works in an office?
Food and fuel are not included in the Fed inflation stats because if they did that inflation would be 10-30% a year and general panic would hit the streets. In the interest of not stimulating inflation even farther, food and fuel are ignored.
bookmark
There’s another kind of hidden inflation the marketeers call “packaging to price”.
In the old days, Hershey bars used to get bigger or smaller, depending upon the price of cocoa while the price stayed the same.
Nowadays, it is incrementalism. A can of tuna at 6 1/2 oz cost, say 50c. Soon the contents are down to 6 1/8 oz for the same price. The other day I checked and a 6 oz can was on “sale” at 50c.
You keep getting less and less for the same amount of money so the govt can say “prices are steady”.
The real blockbuster news is that those lines were written by Bonnie Erbe, a longtime hardcore media leftist. There really has been an opinion shift on illegal immigration, and the actual public discussion of the issue is a political earthquake.
Fierce international competition and low labor costs due to open markets are fueling this effect. Additionally, due to increased efficiency, companies are becoming more efficient and creating more for less.
True, some prices such as fuel are rising due to short supply, but this is balanced by other areas where prices are remaining unusually low (take the price of a DVD player, for example).
There must be a way to calculate the number of black market workers based upon the official number of jobs, the population or working age citizens, the official unemployment rate, the increase or lack of increase in wage rates and the GDP. I believe the illegal immigrant population must be more like 30-40 million.
We saw a similar wage stagnation effect in the 60’s and 70’s when the economy had to absorb the large numbers of women moving into the workforce who had been freed up by the birth control pill. It took more than a decade to absorb that worker influx and begin wage increases again. Figure a 1960’s-1970’s population of about 200 million. Half female, 100,000,000. Maybe half too old or too young to work, 50,000,000. Maybe half of those enter the workforce who would not have 20 years earlier, leave us with additional worker population of maybe 25 million. (I have to admit, I pulled all these numbers out of my hat)
We see a similar lack of wage growth today which leads me to believe the illegal worker population is more than 30 million.
Commodity prices (oil, metals, food, lumber) are up. The stock market is up. Real estate values are up. Foreign Currencies are up. The Federal Reserve has stopped publishing some of it’s money supply growth numbers. I believe the dollar is being devalued.
If interest rates were held steady this should cause inflation. Well interest rates are being held steady and yet we don’t have inflation. How can this be? Because there’s been a massive deflation of manufactured goods prices.
You can buy manufactured products at a fraction of their price of a couple of decades ago. There are a couple of reasons for this:
1. increased productivity due to computer technology. It took many years for computers to fulfill their promise of lowing the cost of work. Now they do.
2. Third world manufacturing. China, Indonesia, India are all competing for our manufacturing jobs with much lower labor costs. First our jobs moved from the Rust Belt to the Southeast U.S. Then our jobs moved to Mexico. Then our jobs moved China.
This deflation of manufactured goods combined with the inflation of raw materials aggregate to give us the steady inflation numbers we see today.
A smart man would have moved his investments out of dollars and into another currency a couple of years ago. (Kind of like Warren Buffett suggested a couple of years ago. Douh!)
It isn’t just the illegal alien problem contributing to this misreporting of inflation. What isn’t often mentioned is that the powers that be continually change what is measured on the price side. When the price of something goes up dramatically, they take it out of the equation or add something on the negative side to balance it. Those inflation numbers are a complete misrepresentation. (I have an MBA in Economics from an excellent school.)
1.) Average working people, working a substantial amount under the table to avoid being kicked into a higher tax bracket. Also, I know of several men that, on top of their regular jobs, work a significant amount under the table to avoid having the courts increase their child support payments.
2.) People that are on welfare, Social Security Disability, Workman's Comp, etc. that are working under the table so they don't lose their benefits.
3.) People that just don't want to deal with the increasing burdens imposed by the state and federal government. I've posted here before about someone I knew who ran a large scrap metal outfit for over ten years with no business license, permits, never payed any tax including state and federal income, and payed all of their employees in cash under the table.
The housing costs in the CPI are based on rent, not home prices.
In the Seattle area, home prices have gone through the roof the last seven years, yet rent has actually stayed flat or even gone down.
So, a massive increase in the most expensive monthly payment of most homeowners is not even factored into the inflation rate. That makes the figures useless.