Irwin is going to get in big trouble now. He won’t be invited to the Hamptons or any fancy dinner parties in Manhattan. A strongly worded memo will be issued by the Fed to Irwin’s oligarch employer – Rupert Murdoch, about telling the truth to the sheep. That is unacceptable behavior on the part of a MSM financial journalist.
Irwin confirms everything I’ve written about the CPI and inflation figures spewed by our government and regurgitated by the MSM. It’s a Big Lie. The true inflation rate for the things you need to live your everyday life is between 5% and 10%. You just need to open your eyes.
To see inflation, you have to open your eyes
Getty ImagesPORT WASHINGTON, N.Y. (MarketWatch) — At this week’s confab, Federal Reserve officials will train their sights on the state of the labor market as they prepare to pare back their unprecedented stimulus program. In view of their recent public pronouncements, my guess is that they will give inflation short shrift.
Not that they will ignore inflation all together. As this week’s data will likely show, inflation, as measured by the government’s producer price index and consumer price index, is all but nonexistent — and this bothers the money mavens. It might even be enough to forestall tapering.
That said, this concern over insufficient inflation is nothing short of amazing. Time was when inflation was all the Fed worried about, and to suggest that it not do so was tantamount to heresy. As for the reason behind this focus, I give you the U.S. in the 1980s and 1970s, not to mention Germany in the early 1920s.
It may be true that the price indexes show little or no inflation. However, it is also a fact that the cost of living out there in the real world is soaring.
If you don’t believe me, ask anyone who lives on a fixed income. They’ll tell you that it’s becoming tougher and tougher to make ends meet. They are full of examples to prove their point.
Food prices are soaring — especially for milk and other dairy products. Health care is soaring; insurance premiums and co-pays are up as well. Utility bills are on the upswing, as are sales and property taxes. And you can add to this the cost of a college education, mass transit, as well as most other items that the average household buys regularly.
Prices of new cars are rising too, although you wouldn’t know it from the price indexes. This is because they are adjusted for quality improvements, for example, back-up cameras, automatic headlight dimmers, warnings for straying out of traffic lanes, or driving at too steady a rate of speed.
In other words, you pay more but you get more, and the indexes show little or no change.
There are other instances where the government’s statisticians fail to pick up real-world trends. The first that comes to mind is shrinkage. This is where you pay the same but get less. Companies shrink package sizes to disguise a price increase.
Another gambit is product dilution. In the case of soaps and detergents, companies will add water, thereby decreasing the product’s effectiveness when it comes to cleaning. Chickens are pumped up with water to increase their weight, while ice cream can be watered down to the point where manufacturers can no longer use the word “cream” in its name.
Finally, the surveyors don’t always pick up changes in buying patterns, either long-term or as a result of price increases. The classic example is people buying more chicken when the price of beef goes up.
In view of the weakness in the labor market and the Fed’s belief that inflation is too low, don’t be surprised if the Federal Open Market Committee votes to maintain a steady-as-you-go policy.
After all, if the Fed truly believes what it says, this is the only logical policy course to take.
