Guest Post: Inflation Is So Much Worse Than We're Told

Tyler Durden's picture

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Henry Chinaski's picture

I don't see how this can end well. 

Quixotic_Not's picture

I don't see how this can end well.

Oh, this will end very well for those lucky enough to be connected to the Golden Hoard on Fraud St.:


Washington, D.C., Jan. 25, 2011 – The Securities and Exchange Commission today charged Merrill Lynch, Pierce, Fenner & Smith Incorporated with securities fraud for misusing customer order information to place proprietary trades for the firm and for charging customers undisclosed trading fees.

To settle the SEC’s charges, Merrill has agreed to pay a $10 million penalty and consent to a cease-and-desist order.

Without admitting or denying the SEC’s findings {i.e. guilt}, Merrill consented to the entry of a Commission order that censures Merrill, requires it to cease-and-desist from committing or causing any violations and any future violations of Sections 15(c)(1)(A), 15(g), and 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3(a)(6) thereunder {Merrill's gonna have to invent a new scam!}, and orders it to pay a penalty of $10 million.

Just gotta love a country where the kleptomaniacs can rob the citizenry and count on the .GOV sweep their shit under the carpet, all without admitting a god damn fucking thing and only paying a trifle in tribute!

What a joke!

Carry on with your indignant anger and disgust ZHers...I'm sure the pigmen are shaking in their boots!  ROFL

Captain Kink's picture

And the govt. keeps the fine!  just getting their vig.

papaswamp's picture

This is a fucking brilliant article! Thanks Chris (and Tyler).

CrashisOptimistic's picture

No.  It isn't.

Why didn't he examine rent?  Rent is the largest single component of the monthly budget.  Why would he not examine it?

dark pools of soros's picture

he's living in his mom's basement and doesn't care

umop episdn's picture

I'd like to know why he only used BLS stats thru-out. The sooner we ignore the BLS, the sooner they go away...I hope.

Captain Willard's picture


This is a shitty article that accidently reaches the right conclusion. Any article on the CPI that doesn't discuss Rent and Hedonic Adjustments is technically flawed and cannot be taken very seriously.

goldsaver's picture

Because, if he were to address all the ways the BLS BS's the numbers it would require several more pages. It is easier using a single more obvious to everyone portion of the BS.

I personally love substitution:
Prime Rib=>Hamburger=>SPAM=>Dog food. To the rocket scientists at the BLS its all the same.

ZeeGerman's picture

To maintain cliche, "suck it up bitchez!"

erik's picture

BLS should be required to provide a more comprehensive inflation guide including each component reported separately.  I know that is a huge amount of work but the CPI and PPI are useless.

You're better off using futures charts for soft and hard commodities to get a feel for inflation's effects.  In the end, we all know it is money creation that is the driving force of inflation.

The Fed is essentially choosing to delay the eventual US default (by printing money) over the stability of half of the world's food supply.  At some point, the rest of the world will realize it and ditch the US dollar and US entirely.

CrashisOptimistic's picture

BLS provides extensive detailed description of each constituent part of their measurements on their website.  They survey to determine weighting and then to determine the change of each item.

Why do these hand waving articles never examine rent?

erik's picture

Crash, thanks, I am aware that they provide that information right now, what I am after is a comprehensive and "practical" set of indicators.  The CPI and PPI just don't cut it.  John Williams shadow stats is a start.

Look, Case-Shiller has arguably usurped the power from the FHFA in terms of home price indicators.  We need the equivalent to occur for CPI and PPI. 

GoinFawr's picture

That Titanic has already hit its iceberg, yet the band plays on; for now. I'd wager that the tune will continue getting shriller and louder until the GS alumni infesting high positions at various nations' CB's start gettin' their walking papers, or rope neckties, depending on the country righteously asserting its sovereignty.

iota's picture

2011/12 is just gonna be ugly globally.

KTV Escort's picture

A few of my friends in China have their savings parked in bonds, and when they mature a good portion of it will go into PMs. Grains, veggies, fruit, eggs... all up quite a bit this past year, from WalMart to the informal street markets (first pic on link below)

johnnymustardseed's picture

My insurance is going up 25% this year after 35% for the last two years..... I guess I must me a statistical anomaly.

TruthInSunshine's picture

Our health insurance has skyrocketed, and the co-pays, deductibles and other rules of the plan have been changed dramatically.

And we're profitable for the insurers...

ZeeGerman's picture

Indeed... And that others saw their premiums reduced by 25% for the same conditions!! Fail

Don Birnam's picture

Another anomaly here. Rx drug deductible increased 75%. Aetna, I'm sorry I met 'ya.

uno's picture

friend had her health insurance (coventry) increase from 168/month to 272/month, no health issues at all

israhole's picture

"An octogenarian living in Seattle on a meager pension and taking lots of prescription medications will have a totally different inflation experience than an 18 year old living in their parent's basement eating Ramen noodles."

How about a 40 yr old living in his parent's basement, like we're seeing more of every day?

Oh regional Indian's picture

Hedonics... wow, did not know that "Do ast thou will' was a mantra at the BLS too.

Bag of Lying Shits.

Bureau Of Lying Statistics

Bogus Lowballing Slackers

Hedonism, I'll think of you so differently now.


The Mighty Monarch's picture

"this means that the BLS assumes that the average family contributes just $239 dollars per year towards their healthcare insurance premiums. Yes, I wrote per year, not per month. That's not a typo."

Sounds like the basis for a SNL bit. I spend three times that amount per month for just myself and the wife, and this doesn't even count employer contributions. High-fucking-larious.

johnnymustardseed's picture

$2083.00 per month for me and my wife.

CrashisOptimistic's picture

No, the BLS does not say that at all.  This is a terrible analysis.  Read the BLS website yourself.  This guy is doing nothing more than churning up subscription revenue.

packman's picture

That's my take as well.  Without having read the BLS data yet - I would imagine that the .487 "health insurance" line item refers not to health insurance premium, but instead to just to overhead costs.  If it referred to premiums, then the other numbers - professional services, hospital services, etc. wouldn't be so high, because the majority of those costs are paid for by insurance, not by the end user.

The BLS does have some questionable / controversial weightings in their formulas - but there's now way in hades they'd be that far off in one of the line items.

That being said - the overall total weighting of medical care only being 6.5% of CPI, whereas percentage of GDP being 17.6%, sounds very off.   What Martenson should really do is break those down item-by-item and compare.


dwdollar's picture

$239 sounds right to me.  Many young families can't afford healthcare, therefore, they pay $0.

apberusdisvet's picture


Even more reason why current PM prices are a joke (totally irrespective of the shortages becoming more apparent by the day).

TruthInSunshine's picture

Bernanke will put up the fight for his masters, who would never want to see an alternate currency to fiat take root.

An alternate currency to fiat - one that can't be produced by keystrokes, is finite or at least not supplied in vast amounts in nanoseconds, and that can not be easily tracked - literally represents the total loss of control for central planners, the elite and the beast.

Oh regional Indian's picture

I'd missed that one is the top-horizantal article scroll loss. Thanks.

Startling but not surprising. 


topcallingtroll's picture

An excellent summary.

however i didnt get to finish my post. Since it is a cpi number not all of the costs of healthcare will be attributed to the consumer. Its a lengthy explanation and more suitable to a blog rather than a small post to do the.explanation and fed.debate over healthcare cost allocation justice

Fortunes Favor's picture

This helps explain why the Chinese are clamping down. Watch for the Chinese equity market selloff to cause trouble here. China leads US mkts.

gwar5's picture

I just use Shadow stats. I don't trust anything the US.Gov or the Fed puts out.

topcallingtroll's picture

The problems with shadowstats and the old system is that it probably overestimated inflation. Use both shadow.stats and the new numbers!

Internet Tough Guy's picture

"Moffatt said premiums for physical gold had "doubled" in the past week, but declined to provide any figures.


TruthInSunshine's picture

Just remember that dollars are fungible.

Whatever Bernanke thinks he gives with one hand, for now, is taken away, by the other hand (at least until it becomes apparent that his Keynesianism on Steroids & Methamphetamine madness crashes and burns).

Each incremental rise in  the cost of gasoline, grocery, insurance, tuition and other more 'inflexible' things is an incremental deduction in expenditures on retail, restaurants, hotels, travel, entertainment, and other more discretionary/flexible 'things.'

I'd imagine the war between commodity specs and retail is ugly behind the scenes, as commodity specs bemoan any hint of more regulation while retail screams bloody murder over bleak sales.

Hook Line and Sphincter's picture


There is NOTHING any of us can do to change the BLS-BS, so as I mentioned before, just treat inflation like a really good personal trainer. 

Soy - you shouldn't be eating this crap, it's an estrogen mimicker that will make you grow tits if your a man.

Ice cream- whaaaa, your ice cream costs more!

Coffee -  a non-necessity once you have weaned yourself.

Corn - Just what my GM craving body needs more of.

Oil - get a bike, lose some weight. Get a motorcycle and get there twice as fast. Peak is going to get you regardless of money printing.

Milk - for goodness sake, all mammals lactate. Get creative. Dogs, cats, wolverine, and that lovely lady at the super market who is lactating can produce quality nutritious milk you can drink if you ask nicely.


(Check your blood type, if you are o+ you shouldn't be eating wheat.)


uno's picture

"that lovely lady at the super market who is lactating can produce quality nutritious milk you can drink if you ask nicely."



tarsubil's picture

I distinctly remember milk being under 2 dollars last year. Same milk at same store is now $2.70+. That's +35% right? Grandma on social security is fine because her house decreased in value by 30%. That practically offset themselves. Phew, everything is going to be fine...

taraxias's picture

But, but, but......John Taylor said there's no risk of inflation !!!!

I'm so confused <sarcasm off>

Ecoman11's picture

Here is an alternative CPI index produced by Prof. Roberto Rigobon of MIT. He's created a BPP index that is tracked by millions of retail prices (online/offline) from around the world. Notice how the US BPP has been derailed from the CPI figures reported by the BLS. Quit analyzing government data cause it's useless at this point.

TruthInSunshine's picture

+100 and thank you for that link!