The question to be asked is "how do we measure inflation?" I attended a speech by an economist who recommended the C-CPI-U fix for Social Security because "the current CPI overcompensates for inflation". I asked the audience who were mostly retirees in their 80's if anyone thought that they could buy more with their Social Security check today than 20 years ago. No one answered.
While we are on the lookout for hyperinflation, the CPI is being underreported and stealing the purchasing power of the workers over the decades. An underreporting of the CPI by 1% over 40 years would reduce the purchasing power of a worker, whose wages tracked the CPI, by one third.
Why would the CPI be understated?
Where there is a motive, there's a way.
Here are the motives:
1. Make the economy look stronger than it really is so you can get reelected. With proper reporting, recessions would last longer and occur more frequently.
2. Reduce the interest on federal, state, commercial and private debt.
3. Dampen the anticipatory feedback loop for inflation
4. Reduce governmental payment increases based on CPI
5. Reduce corporate labor costs
6. Provide a hidden annual tax increase as the brackets are not raised enough to compensate for inflation.
I give a room full of retirees life experience more credibility than the calculations of a quasi-govermental agency.
Les også: statistikk som lyver.
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