Inflation Figures… More Washington Lies

Posted by Larry Miller on February 22, 2012 under Why | Be the First to Comment

Core inflation, they tell us, is not a problem. These are the same people who tell us our economy is on the rebound and the worst is over. Mark Twain is reported to have said, “There are three kinds of lies: lies, damned lies, and statistics.” However the the worst lies of all are Washington statistics, with an agenda behind each numeric rounding and each slice of the statistical pie. Being an old computer geek who has worked with raw data for years, I’ve seen it sliced, diced, squeezed and twisted to prove just about any point the powers that be wish to make.

The core inflation proponents claim that we have no real inflation can be seen as bogus during any visit to the gas station, grocery or department store. We’ve seen gas prices spiral upward, food prices jump and even our favorite bargain store, Wal-Mart, has not been rolling back prices quite as fast lately. Yet, the ruling class has cooked the numbers to make us believe our cost of living is not increasing. The question becomes, do we believe our government and the Federal Reserve, or do we believe our own eyes and experience?

The more gullible of our neighbors choose to believe the press releases coming our of Washington as they polish the Obama stickers on their cars. It may be that many don’t pay many of their own bills and don’t really notice these things… or those that do pay their bills are not bothered because they aren’t paying with their own money.

However, families paying ever increasing tuition bills and seeing their weekly grocery bills sliding skyward, know otherwise. Put simply, prices increasing in relation to value is what most people would call inflation. But not to our betters inside the beltway would have us believe. It is something like the old computer geek joke, How many Micro$oft employees does it take to change a light bulb? The answer being, “None.” They just change the standard to darkness. Non-geeks, needn’t worry about understanding the inside baseball nature of the humor. Moving right along…

Think about it this way, we are told certain elements are not factored into core inflation calculations. These are volatile elements – elements that may tend to destabilize the published rates. These volatile elements include such categories as food and energy. These are the very areas we see the increased prices that drive up our cost of living, and they are factored out of computation!

Discussions of inflation and control of the public perception are particularly important now as the Federal Reserve has been printing more and more money – by the billions – tends of billions, even – to buy government securities and for other purposes they refuse to specify. Now Ben Bernanke denies that he is printing money, which is technically correct, as they are just making computer entries and no physical cash is exchanged. A rudimentary knowledge of economics reveals that dumping so much cash into the system without a corresponding increase in production, invariably leads to higher prices.

The same forces that destroyed the real estate market are at work in the American and international economies. It was a perfect storm of no doc loans and bloated supply of money without a significant increase in the supply of houses – in spite of the almost maniacal efforts of the home building industry to develop every field and forest in sight. The predictable result was a sellers market with more buyers than sellers… and prices not only rose, but they shot up far beyond anything common sense would have predicted. Then, when the money supply dried up and demand snapped back below what it would have been under normal circumstances, prices fell precipitously and the housing crisis spread throughout our land. Even people who are not in danger of loosing their homes have suffered from the drop in prices… many are underwater and couldn’t sell their houses if they want to.

As bad as the housing crisis as been for our country, this is small potatoes compared to the economic freight train heading our way. Unless the Federal Reserve is reined in and the Keynesian madness that has infected the current administration, along with so many in the past, comes to an end, the future of our younger generations looks mighty bleak. Taxpayers with functional gray matter know you can’t resolve debt issues by spending more money that you don’t have. Part of the fix involves facing the actual situation where the economy is not rebounding and inflation is on the rise. Is a little honesty from our government and financial institutions too much to ask? Perhaps it is.

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