Posted on 05/24/2024 9:22:44 AM PDT by SeekAndFind
We are living through the most destructive bout of inflation in 45 years, one that threatens to become worse and perhaps just as ruinous in the long run as the last one.
And yet daily and for years, we’ve been told it’s not so bad and that it’s nearly over anyway.
How can we reconcile these two realities? They cannot both be true.
An image of verified accuracy has been circulating all over social media lately: A list showing the price increases from the end of 2019 to now at major fast-food outlets. It fits with your own experience. It indicates that in four years, your fast-food prices have doubled, so that your dollar is now worth 50 cents or even 25 cents. That’s an astounding level of inflation by any standard.
The validity of this is easily verified, and it certainly fits with our experience. And not only with fast food. It’s true of all food out—and food at home, too. In my own estimation, trying my best to recall prices from late 2019, I, too, have a sense of inflation of 50 percent to 100 percent or more.
But there is a major problem.
The government says otherwise. Looking at official inflation data, what we see is something very different. It shows food-away-from-home prices going up by about 26 percent and prices in general up by 21 percent. Setting the index at 100 for January 2020, we end up with indexes of 126 and 121, respectively, today.
(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)
What does one do when official data depart so dramatically from lived experience? As Chico Marx said, who are you going to believe, me or your own eyes? It seems to me that your own eyes are a better guide.
So what in the world is wrong with government statistics on inflation? It’s a huge combination of factors. In the most rudimentary form, the inflation calculation used by the government no longer consists of a basket of goods and services carried over from one period to the next. Starting in 1996 and following, economists started pushing “hedonic” adjustments to the index. What does this word mean? It is from the Greeks meaning pleasure.
The idea is that consumers are getting more pleasure from purchases, so the price needs adjustment based on that. In the most obvious case, your television today is vastly more functional than it was 30 years ago, so it makes no sense to only compare the prices between them. The new prices need to be weighted and adjusted for such quality changes.
In the end, however, this concession unleashed the statisticians to manipulate figures in ways that are beyond all plausibility. The term hedonic ended up meaning that inflation data should be adjusted at the pleasure of government statisticians. As a result, hardly anyone can keep up with all the razzmatazz that the Bureau of Labor Statistics pumps out. All we can really know is that it is all a big fakeroo.
But it really does matter for a range of issues. For example, economists like to look at real versus nominal statistics because real numbers make little sense in inflationary times. For example, if you are looking at retail sales, you need to know the inflation number. One hundred dollars spent on hamburgers four years ago means $200 today, but you cannot then say the retail sales numbers have doubled. In fact, the dollar is merely worth half, so retail sales are flat.
An accurate number is also important for adjusting tax tables and cost-of-living adjustments. Failing to capture inflation accurately amounts to a modernized version of coin clipping that benefits the government at the expense of the people.
The website ShadowStats.com offers alternatives. It calculates inflation in the way it was done in the 1980s. It comes up with astounding results that produce inflation numbers that are generally twice the official data. This strikes me as far more accurate. You can see an explanation of this on its website.
And yet even that doesn’t exhaust all the problems.
The consumer price index (CPI) does not include interest rate costs, thus excluding all servicing of debt, including mortgages and credit cards.
The CPI does not accurately render housing or rent thanks to a crazy complicated formula called owners’ equivalent rent. It is utterly bonkers on issues of health insurance premiums. It uses the trick of adjusting downward all that you spend based on how much you consume, which means that the CPI will register a deflation even if, with your own eyes, you can see your premiums rising and rising.
The CPI also cannot accurately track shrinkflation. The bureaucrats might pretend to do so, but there is no evidence that they do so or even have the capability of doing so on every product even if they wanted to. It also does not track the millions of hidden fees that people pay today on nearly every service or product you can imagine. It’s not possible to buy tickets anymore without paying some delivery or service fee. And airlines have become infamous for crazy charges imposed at the last instant before you are ready to go through security, and the prices seem arbitrary. Suddenly you are paying $75 merely for having a small overhead bag.
This is just the beginning of the problems with official inflation data. This is also why it is a far more reliable method just to look at the same product today and five years ago and compare. And yet not even that fully works either. The hamburgers at your favorite fast-food place are actually smaller and with less meat. You have surely noticed that your restaurant is short-changing you on the pricier ingredients and piling up on the cheaper stuff.
The result of all this creates an internal sense of bitterness. Here we are living through a disastrous period in which the American standard of living is plummeting dramatically. Everyone senses it. And yet at this exact time, we are surrounded by experts who confidently assure us that all is well and that the worst is over. They have been saying this for four years.
And Wall Street is nothing if not overjoyed by this. My goodness, traders are even expecting the Federal Reserve to cut rates in the coming months and are buying more stocks at high prices in anticipation. This is addictive behavior, bumping from one fix of easy money to another. If this happens, it risks kicking off another big wave of inflation in the coming few years.
It’s one thing to observe that the experts are lying. We know that. What is frustrating is knowing that and yet being denied the truth at the same time.
get ready to pay twice a much as you are now...if “biden” is given another 4 years.
"Lie, always lie. It's easier"
-Bill Clinton
Democrats will blame greedy businesses but the answer to that is”These same businesses WEREN’T greedy under Trump?”
At this point they usually mumble something and walk away.
The are always redefining definitions in their favor. I think that it is in part that they think that we are stupid and fools. Some of are.
But we know differently.
Just a quick calculation:
A bar b que salad and drink cost $5 in 2000.
Today the same meal at the same restaurant costs $18.29.
That’s 3.65 times more. Inflation is much higher than official numbers state.
We can’t bump up interest rates to 1981 levels to crush inflation. We are too much into debt for that.
When is it time to panic?
As Mark Twain was rumored to say, “There are 3 kinds of lies: lies, damn lies, and statistics.”
The time for panic was years ago.
Them, their wives, their children, their grandchildren, their dogs, their cats, their livestock, their plants/crops. And also, their houses.
I can pull what I spent on small expenses like snacks for my employees five years ago and what I am spending now.
The number of employees has not changed. The quantity of snacks has not changed. The brand has not changed. The amount spent has gone up sixty percent.
Just made an order for aluminum.
What was a $2300 order pre Chomo Joe was just now $4700
That should be a manageable problem, I think. But it would sure make some people mad. Especially the way they're cancelling debts for people lately.
YOU PAY ATTENTION TO WHOM YOU ARE VOTING FOR
IOW, from top to bottom, our government is a lie.
I can now feed a family of 2 on what I used to feed a family of 5. Lets go brandon.
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