Real inflation much higher than official figures

[porkrind]

No surprises here, just depressing to see some actual numbers. The government is printing money (increasing M3) to pay for its spending habit. This makes the wage you work for and each dollar you have saved worth less. They soon will hide the crime by discontinuing publishing the M3 numbers.

March 07, 2006
Is the Inflation Camp on the Bubble?
by Kevin Duffy
http://www.safehaven.com/showarticle.cfm?id=4729

<snip>
...
This brings us back to our original inflation-deflation debate. After throwing the inflation switch on full throttle, the Fed has backed off somewhat with 14 "measured" rate increases over the past 20 months. Why? Perhaps they no longer believe their own sales literature. As the table below shows, the official inflation measures are grossly understated. Over the last five years, prices for practically everything have exceeded the CPI, driven by rapid growth in money and credit. (The lone exceptions: grains and large-cap equities, which were held back by the deflating 2000 technology balloon.) Notice that the inflation aggregates still experienced strong growth in 2005 despite higher rates.

Inflation in the United States, 2000-2005 (all figures annualized)

Category , Source/Index , Last 5 Years (2000-2005) , Last Year (2005)

Housing , OFHEO Index , 9.10%, 11.60%
Large-cap Equities , S&P 500 Index , -1.10%, 3.00%
Small-cap Equities , Russell 2000 Index , 6.80%, 3.30%
Credit-related Equities , Bearing Credit Bubble Index , 8.00%, -4.50%
Commodities , CRB Index , 7.80%, 16.90%
Oil , West Texas Intermediate , 15.60%, 30.20%
Grains , Dow Jones-AIG Grains Index, -6.40%, -4.70%
Gold , London PM Fix , 13.50%, 17.80%
Luxuries , Forbes CLEWI , 4.60%, 4.00%
Fed Holdings of U.S. Gov't Securities , Federal Reserve , 7.60%, 3.70%
Money Supply , M3 , 7.20%, 7.30%
Mortgage Credit , Flow of Funds , 11.70%, 12.90%
Official Inflation , Consumer Price Index , 2.40%, 2.90%

[Why Syzygy]

1. All I know is

I cannot believe the grocery gets $3.29 for a little container of potato salad.
And then there's the gas prices. You better hold on to your heart as you drive by, and goddess help you when you have to pump some. It has DOUBLED! Look at your table! Geezeez. We are in the hands of a madman. We can't last another 3 years like this. Can we call our reps and tell them that we just don't want this path? WHO is going to take care of this?

[napi21]

4. Yes, everyone's grocery bill has ballooned!!!!

I make almost everything from scratch now. Most mixes are too expensive, and I NEVER buy prepared food! There's onoly 2 of us here, and I can't believe how our grocery bill has gone wild, and I spend a lot of time making a list, and no impulse buying.

The inflation rate numbers are the same as the unemployment figures....ALL BS!

[Why Syzygy]

5. They have had their five years

of raping American taxpayers and the oil people. It has to stop. I want Bill Clinton. I know he wasn't perfect but we had money and jobs. This sh*t has to got to stop. I know Carter put us in a world of hurt. We can overcome. But we need to start NOW! No more 3 more years. We cannot afford it. Remember, Bush bankrupted everything he ever got his hands on. And I will never get over being pissed at the people who put him in charge of our futures. Never. Somebody better stop this crazy person. NOW!

[The_Casual_Observer]

2. Gasoline doubles in price and "inflation" stays at .1%

Bogus you say?

[Trillo]

3. The government's allegedly been lying for a long time.

I read an economists(private) report recently that Social Security recipients(retirees) would be earning 70% more than their current checks if it wasn't for various 'adjustments' made over the years, including statistical, for political reasons.

Reportedly, there's plenty of documentation about precisely what they've done, so, the question is, if they've disclosed this in various footnotes, etc., then are they really lying?

[stevebreeze]

10. I'm no economist but the SS thing doesn't make sense to me.

SS is paid out not on increases in inflation but in increases in average wages. Of perhaps median wages? At any rate SS is not increased with inflation number but in relationship to a wage figure.

[unblock]

15. the cost of living adjustment is also a factor, see link:

http://www.ssa.gov/OACT/COLA/

[regnaD kciN]

6. Be thankful the official figures are artifically low...

If they posted the higher figures, the Fed would "have no choice" but to drastically hike interest rates to "curb inflation," which would result in the large number of middle- and working-class Americans with high credit-card balances and no way to pay them off facing hundreds more per month in interest charges. Undoubtedly, many would have to file what-passes-for-bankruptcy-these-days, meaning that they'd lose everything they have and still have to make five more years of payments.

Actually, I'm surprised the Bush administration hasn't released the true figures for that very reason. It would be a wonderfully effective way to create a feudal society (since the presence of people willing to work for almost anything to make their court-mandated payments would allow employers to use them to replace even those workers who weren't in debt) almost instantly.

:scared:

[bain_sidhe]

14. Just a question of who gets hurt

If they posted the higher figures, the Fed would "have no choice" but to drastically hike interest rates to "curb inflation," which would result in the large number of middle- and working-class Americans with high credit-card balances and no way to pay them off facing hundreds more per month in interest charges.

So, we who HAVE been responsible and saved and not run up credit card debt have to suffer by seeing our hard-earned savings eaten away by inflation without a realistic interest rate to compensate for that inflation?

[dweller]

7. you should post this in tomorrow's SMW

(stock market watch thread in LBN).

rec'd
dp

[TreasonousBastard]

8. M3 isn't printed money-- it's worse...

it's some CD's but primarily "eurodollars"-- the name for just about all money we pay for imported goods that's deposited outside the US somewhere. It's also "repo agreements" which is a fancy name for a sort of bond trading. Like the bonds we sell to China and agree to buy back or refinance at a certain rate and time.

So, M3 is the true measure of just how much in hock we are to the rest of the world, and, thanks to the magic of acceleration, multipliers and other economic wizardry, can show us to be much worse off than the current account balance, trade deficits, or other more easily understood numbers.

Anyway, no matter what the details, we's in some deep shit.

[Warpy]

9. Schieffer on CBS tipped their hand a few months ago

I'd turned the box on to get the weather, and just as I switched the station Schieffer said "If you eliminate food and energy, inflation is nonexistent."

Now that is a truly stunning statement. It means that the gummint has pretty much stopped counting the necessities of life as contributing to the market basket of goods and services and is counting the consumer junk made offshore to keep that rate artificially low.

Because the inflation rate is artificially low, they've been able to claim that there is no need for wages, especially the laughably low minimum wage, to rise.

If you want to know what the true inflation rate in this country is, take a look at the things we produce here 100%, housing and health care. We are being cheated six ways from Sunday, and administratons under both parties are to blame for it.

[sendero]

11. Inflation, unemployment...

.... none of the numbers coming from the Federal government are worth the paper they are printed on.

The CPI numbers are fudged to keep inflation-adjusted entitlement payments in check, unemployment numbers to try to make all of us believe that the economy is doing great.

It's really too bad the San Andreas fault doesn't run right underneath the white house.

[teryang]

12. interest rate increases to protect dollar

These rate increases are to defend the dollars value on international exchanges as well. The steady erosion of the dollars value vis a vis other currencies is affecting foriegn purchases of US debt. This is a crisis in the making.

Some of the solutions:

Stop the wars

Reduce defense expenditures.

Increase corporate tax revenues.

Sanction US corporations who use subsidiaries to book profits overseas for products sold in the US.

Encourage capital spending on industry and manufacture in the US.

Discourage outsourcing and export of investment capital.

Return to a progressive tax structure.

[On the Road]

13. Commodities Up 16.9%

on top of a 7.8% increase last year. That says it all. No way that's sustainable.