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Inflation Is Too Low? Are You Kidding Us Bernanke?

Tyler Durden's picture


Submitted by Michael Snyder via The Economic Collapse blog,

Federal Reserve Chairman Ben Bernanke said this week that inflation in the United States needs to be higher.  Yes, he actually came right out and said that.  It almost seems as if Bernanke is trying to purposely hurt the middle class.  On Wednesday, Bernanke told the press that "both sides of our mandate are saying we need to be more accommodative". 

Of course he was referring to the Fed's dual mandate to keep unemployment and inflation low, but Bernanke has a very unique interpretation of that mandate.  According to Bernanke, inflation in the U.S. is now "too low".  The official inflation rate is currently sitting at about 1 percent, and Bernanke insists that such a low rate of inflation is not good for the economyHe would prefer that the rate of inflation be up around 2 percent, and he is hoping that more "monetary accommodation" will help push inflation up and the unemployment rate down.

But what Bernanke will never admit is that the official inflation rate is a total sham.  The way that inflation is calculated has changed more than 20 times since 1978, and each time it has been changed the goal has been to make it appear to be lower than it actually is.

If the rate of inflation was still calculated the way that it was back in 1980, it would be about 8 percent right now and everyone would be screaming about the fact that inflation is way too high.

But instead, Bernanke can get away with claiming that inflation is "too low" because the official government numbers back him up.

Of course many of us already know that inflation is out of control without even looking at any numbers.  We are spending a lot more on the things that we buy on a regular basis than we used to.

For example, when Barack Obama first entered the White House, the average price of a gallon of gasoline was $1.84.  Today, the average price of a gallon of gasoline has nearly doubled.  It is currently sitting at $3.49, but when I filled up my vehicle yesterday I paid nearly $4.00 a gallon.

And of course the price of gasoline influences the price of almost every product in the entire country, since almost everything that we buy has to be transported in some manner.

But that is just one example.

Our monthly bills also seem to keep growing at a very brisk pace.

Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row, and according to USA Today water bills have actually tripled over the past 12 years in some areas of the country.

No inflation there, eh?

Well, what about health insurance?

Yup, that has been going up rapidly as well.  Since 2010, employee health insurance premiums have been rising an average of between 8 and 9 percent a year.

So where is this low inflation that everyone has been talking about?

It certainly cannot be found in college tuition costs.  Since 1986, the cost of college tuition in the United States has risen by 498 percent.

What about at the supermarket?

We all have to buy food.  It sure would be nice if inflation was low there.

Unfortunately, anyone that shops for groceries on a regular basis knows exactly how painful food prices are becoming.

And over time, those increases really add up.  An article by Benny Johnson details how the prices of many of the things that we buy on a regular basis absolutely soared between 2002 and 2012.  Just check out these price increases...

  • Eggs: 73%
  • Coffee: 90%
  • Peanut Butter: 40%
  • Milk: 26%
  • A Loaf Of White Bread: 39%
  • Spaghetti And Macaroni: 44%
  • Orange Juice: 46%
  • Red Delicious Apples: 43%
  • Beer: 25%
  • Wine: 60%
  • Electricity: 42%
  • Margarine: 143%
  • Tomatoes: 22%
  • Turkey: 56%
  • Ground Beef: 61%
  • Chocolate Chip Cookies: 39%

So how in the world can Bernanke possibly come to the conclusion that inflation is too low?

Is he insane?

If you want to see a really good example of the impact that inflation has had on our economy in recent years, just check out this amazing chart which shows what Bernanke's reckless policies have done to the prices of commodities during his tenure.

Meanwhile, paychecks are not rising at the same pace that inflation is.  In fact, median household income in the United States has fallen for four years in a row.  Overall, it has declined by over $4000 during that time span.

So the cost of living just keeps rising, but the middle class is making less money than before.

That certainly is not good news.

Of course a big reason for this is because the quality of jobs in America continues to steadily decline.  Only 47 percent of adults have a full-time job at this point, and 53 percent of all American workers make less than $30,000 a year.

Most families are just barely scraping by from month to month, and Bernanke has the gall to say that he needs to try to get prices to rise even faster.

Is Bernanke also going to increase all of our paychecks in order to make up for the "inflation tax" that is being imposed on all of us?

Of course not.

And sadly, it appears that the number of Americans that are losing their jobs is starting to move upward again.  We just learned that initial claims for unemployment benefits rose to 360,000 last week.

That is getting dangerously close to the 400,000 number that I keep talking about.

The middle class in the United States is shrinking with each passing day, and Bernanke seems absolutely clueless.

His answer to every economic problem always seems to involve printing more money.  Thankfully, about 1.8 trillion dollars of that money is being stashed away at the Fed and has not gotten out into the real economy yet.

But someday that money will be unleashed on the real economy, and it will create crippling inflation.

Unfortunately, Bernanke doesn't seem to really be too concerned about the mountains of cash that the big banks have parked at the Fed.  He is just happy that his reckless money printing has pumped up the stock market to new all-time highs.

He should enjoy this little period of euphoria while he can, because this bubble will burst like all false financial bubbles eventually do.

And when this bubble bursts, the foolishness of Bernanke and the Federal Reserve will be glaringly apparent to everyone.


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Fri, 07/12/2013 - 20:08 | 3747014 diogeneslaertius
diogeneslaertius's picture

Bernanke is not clueless imo - he is executing directives perfectly during the planned dismantling of the west in the lead up to a new world order


one simply cannot have wealthy, armed, logistically free humans stomping around on the north american continent AND a new world order - the real danger here is the hologram and a perpetual bubble machine - frankly, i welcome the creative destruction of a correction and a return to actual markets.

Fri, 07/12/2013 - 20:19 | 3747035 Jam Akin
Jam Akin's picture

Preach it 'gene'!

Fri, 07/12/2013 - 20:26 | 3747052 CClarity
CClarity's picture

Informed in past month that waste (sewage) rates are going up 24% and water going up 15%.  Many transportation services (local buses, rapid transit, tolls) also scheduling increases.  These are not luxuries but definitely part of daily living.  24%!  

Fri, 07/12/2013 - 21:09 | 3747160 NoDebt
NoDebt's picture

Am I the only one who finds absolutely nothing shocking in under-reporting inflation?  It MUST be under-reported or our entitement mess would be twice as bad as it is.  Every damned program under the sun is tied to CPI.  Report it at half of actual (or less), print like there's no tomorrow and you will, hopefully, "inflate away" the debt.

Has it not been obvious this is the chosen path for YEARS? 

Had it been tied to wage growth....... oh, who the fuck am I kidding?  We're fucked.  Who gives a shit about fixing anything.  Let it go.

Fri, 07/12/2013 - 21:36 | 3747223 max2205
max2205's picture

Frog is boiled

Fri, 07/12/2013 - 22:54 | 3747416 francis_sawyer
francis_sawyer's picture

Gefilte fish is still fairly cheap... So, yeah, 'inflation' is under control...

Fri, 07/12/2013 - 23:48 | 3747518 HardlyZero
Sat, 07/13/2013 - 06:31 | 3747830 negative rates
negative rates's picture

Those A students need to be switched, and their money clawed back.

Sat, 07/13/2013 - 09:46 | 3747987 DaveyJones
DaveyJones's picture

the rising cost of lies have hit me the hardest

Sat, 07/13/2013 - 15:10 | 3748781 Boris Alatovkrap
Boris Alatovkrap's picture

What is inflation of bacon? Boiled frog is not complain.

Sat, 07/13/2013 - 16:28 | 3748999 shovelhead
shovelhead's picture

Matt Damon can sing?

Sat, 07/13/2013 - 10:30 | 3748047 Cortez the Killer
Cortez the Killer's picture

So is your mother, but she lowers her prices on the weekends

Sat, 07/13/2013 - 01:21 | 3747630 Element
Element's picture



"... water going up 15%. ..."


Dear Client,

Unfortunately this is due the economics of rainfall, and is thus out of our hands. As you may have observed, clouds inflate as they form, so they keep getting more expensive. Clouds are not free, user-pays principle must apply. Apologies, ... etc ect etc ...

However, if you elected to pay your bill within a minimum of 21-days prior to falling due we automatically include a 4.25% bonus hurricane-credit* within your next billing cycle to help ameliorate any excess moisture issues involved.


* Named hurricane eye landfalls must pass within 10 nautical miles of metered domicile within the course of the next billing cycle to access this once only offer. Happy drinkies!

Sat, 07/13/2013 - 10:45 | 3748062 DaddyO
DaddyO's picture

Fail....ameliorate is not a word a public servant would use!


edit: Still gave you a greenie though for the idea, it has much truth!!

Sat, 07/13/2013 - 14:31 | 3748604 Silveramada
Silveramada's picture

Ben & Co. "Inflation is too low! The sheeples already work for our companies and when we give em some time off they have to buy the shit that we produce( mostly toxic junk) and give us back all the money they think they make... So, yes we need to sell them shit more expensive: MOAR INFLATION PLEASE!   WTF?

Fri, 07/12/2013 - 20:38 | 3747079 resurger
resurger's picture

"i welcome the creative destruction of a correction and a return to actual markets."

/reported: NSA


Fri, 07/12/2013 - 23:27 | 3747480 ersatzteil
ersatzteil's picture

Ha! Reported!? You'll go straight to the gas chamber for that, buddy.

Sat, 07/13/2013 - 04:50 | 3747773 Wile-E-Coyote
Wile-E-Coyote's picture

Please report to your local FEMA camp for re-education.

Failure to comply will result in your entire family being vaporised by a Hellfire missile.


Sun, 07/14/2013 - 10:44 | 3751129 RaceToTheBottom
RaceToTheBottom's picture

I would like to replace focused destruction (of WS) instead of creative destruction.

Fri, 07/12/2013 - 20:38 | 3747081 jerry_theking_lawler
jerry_theking_lawler's picture

since they are using hedonics in the calcs.....eventually we will reach reality, right?

when they lower the quality of food and fuel down to its base level....air.



Fri, 07/12/2013 - 22:51 | 3747409 Kprime
Kprime's picture

actually the base level is dirt, you have heard of "dirt cheap", right.

Fri, 07/12/2013 - 21:39 | 3747227 tao400
tao400's picture

you may be right

Sat, 07/13/2013 - 12:42 | 3748286 Dingleberry
Dingleberry's picture

PhD'c  can be insane. But he's not stupid. He knows what he is dong. 

Repeat the lie often enough, esp. with the assistance of the "finanical media", and the people believe it.


Goebbels doesn't have shit on these guys.

Fri, 07/12/2013 - 20:09 | 3747017 Freewheelin Franklin
Freewheelin Franklin's picture

Meanwhile, paychecks are not rising at the same pace that inflation is.  In fact, median household income in the United States has fallen for four years in a row.  Overall, it has declined by over $4000 during that time span.


Wage deflation is the same as price inflation, in my book.

Fri, 07/12/2013 - 21:11 | 3747162 NoDebt
NoDebt's picture

No, it isn't.  Because debts don't shrink just because wages do.

Fri, 07/12/2013 - 21:25 | 3747190 disabledvet
disabledvet's picture

hmmm. where does the banker put his money now? hmmm. everything has been blown up. ironic that the regional banks have been rock stars betting on recovery. we got a "cookie cutter" problem again?

Fri, 07/12/2013 - 21:34 | 3747213 NoDebt
NoDebt's picture

Not sure why you say "everything has been blown up".  Bankers would not agree with you (although I might).

Sat, 07/13/2013 - 09:05 | 3747937 disabledvet
disabledvet's picture

currently the only money "flowing" is energy. regional banks are lending but not the money center one's. the money center banks only want to mess around with the appears that has now failed. there are no small business loans...that's dried up now. no more lending to Hospitals. no more lending to other banks. maybe lending to buy a car. maybe. certainly not for education or schooling. the war effort has been halted so that lending is now done by the Federal Government itself. no lending to State and local Governments. that leaves real estate and Morgan Stanley. things are setting up well for deal estate. the Taper Tantrum is definitely someone losing "it" at the highest of levels. the current imbalance strikes me as so extreme it certainly gives the appearance of not being sustainable. hard to tell because everything is being run by a computer these days and computers don't "sustain" anything...least of all themselves.

Sat, 07/13/2013 - 05:00 | 3747784 Wile-E-Coyote
Wile-E-Coyote's picture

I don't think you get what this guy is saying. He is right, if your wages get cut it is the same as prices going up by a similar amount. It is to do with spending power.

Sat, 07/13/2013 - 09:22 | 3747961 disabledvet
disabledvet's picture

the problem is you have good money in North Dakota. if "all" money was bad money then you could sustain the boondoggle. but because there's a million barrels a day in fresh new dollars coming out of this tiny state "everything else gets sold off as a consequence." these debt markets are obviously in a very precarious state. the State itself will not allow for it's own annihilation so "monetize and pray" it is. it might take a hundred years or so to "make it right again" but hey...what we were looking at is "wrong now" just a week ago. that problem (Ms Duke) has now been taken care of. move along.

Sat, 07/13/2013 - 17:43 | 3749183 Freewheelin Franklin
Freewheelin Franklin's picture

Businesses can keep up with the devaluation of the currency in two ways.

A: They can raise their prices

B: They can cut wages (reduce costs).

Price inflation and wage deflation are both symptoms of monetary inflation.

Fri, 07/12/2013 - 20:10 | 3747018 ShrNfr
ShrNfr's picture

"Spaghetti And Macaroni: 44%" I don't know about you, but the standard price for house brand spaghetti at the Stop and Shop 10 years ago was 33 cents a pound. Now it is a buck a pound. From where I come from that is 300%, not 44%.

Fri, 07/12/2013 - 20:17 | 3747032 aphlaque_duck
aphlaque_duck's picture


Fri, 07/12/2013 - 20:27 | 3747040 Jam Akin
Jam Akin's picture

Actually it is 203%.  Surprised the package size is the same.  When is the last time anyone saw a half gallon of ice cream at the store?

Sat, 07/13/2013 - 09:50 | 3747991 DaveyJones
DaveyJones's picture

much of the pasta is now in 12 - 14 oz boxes instead of a pound, same for canned veg. that's the thing about my garden carrot. No label.

Sat, 07/13/2013 - 05:20 | 3747793 Wile-E-Coyote
Wile-E-Coyote's picture

By the way taxes are not included in the CPI either.

Sat, 07/13/2013 - 09:29 | 3747972 disabledvet
disabledvet's picture

and this is critical to understanding "the End of Days." there is no disposable income at present. people will/are resorting to barter. this is HIGHLY inefficient. the bulk of job creation (once you include transfer payments) are Government jobs. these are very expensive jobs and cannot be...ARE not being...supported by the barter economy created here. obviously where you have economic "activity" you have things like county fairs and lemonade stands and the like. everything else is just total b.s.

Sat, 07/13/2013 - 11:14 | 3748113 John Law Lives
John Law Lives's picture

Good point.  Property taxes (for example) in many places have surged higher over the years.

Fri, 07/12/2013 - 20:23 | 3747045 McMolotov
McMolotov's picture

Maff be hard. The government's bullshit has gone exponential over the past ten years.

Fri, 07/12/2013 - 20:10 | 3747020 Say What Again
Say What Again's picture

the bernanke is evil. Does anyone remember what it was like to "save" money in the bank?  At this rate, there will be an entire generation that will know nothing about "saving" money.  That, bernanke, will be your legacy -- you ass hole!!!

Bernanke needs to be removed!!!

Fri, 07/12/2013 - 20:13 | 3747028 fonzannoon
fonzannoon's picture

Even if they offered a 6% CD tomorrow, I don't know that I would ever save money in a bank again.

Fri, 07/12/2013 - 20:26 | 3747051 slotmouth
slotmouth's picture

CDS maybe, CDs no.

Fri, 07/12/2013 - 20:29 | 3747059 ceilidh_trail
ceilidh_trail's picture

Totally agree. Especially with the precedent now set for bail-ins. Why take the risk?

Fri, 07/12/2013 - 21:15 | 3747174 NoDebt
NoDebt's picture

You have nothing to worry about.  As interest rates rise you will NOT see an increase in the rate on your savings account.  If we had 4% yields on the 10-year by the end of the summer your savings account would still pay .0000001% for the next decade or so.  I'm not just being salty about this- there are real reasons for it.  Starting with banks don't WANT deposits right now.

Sat, 07/13/2013 - 11:27 | 3748143 lotsoffun
lotsoffun's picture


Sat, 07/13/2013 - 12:44 | 3748293 Dingleberry
Dingleberry's picture

Yup. They don't want to pay interest on your money plus what the feds loans them.


Fri, 07/12/2013 - 20:52 | 3747119 gwar5
gwar5's picture

So right. Some are trying to save but they are going to get creamed by bail-ins... as if 8% inflation over 5 years isn't already a wipe out.



Fri, 07/12/2013 - 21:36 | 3747224 yogibear
yogibear's picture

Hey, your talking about Satin's boy. He's surronded by his demons on the Federal Reserve's to help him do his deeds. 

Sat, 07/13/2013 - 03:20 | 3747727 RideTheWalrus
RideTheWalrus's picture

Damn you Satin!!! Damn your silkiness to hell!




Sat, 07/13/2013 - 10:04 | 3748011 WmMcK
WmMcK's picture

In surrond sound.

Fri, 07/12/2013 - 22:07 | 3747303 LoneCapitalist
LoneCapitalist's picture

Youre worried about the next generation knowing about saving money, and rightly so. I would submit that the current generations dont even know what real money is. They think colorful paper rolling off a printing press IS money.

Fri, 07/12/2013 - 23:56 | 3747529 venturen
venturen's picture

There won't be any banks just TBTF Bond trading houses....I assume all stocks will disappear once the markets have been fully taken over.

Sat, 07/13/2013 - 08:28 | 3747904 Debt-Is-Not-Money
Debt-Is-Not-Money's picture

"Bernanke needs to be removed!!!"

And replaced with Janet 'Zimbabwe' Yellen???

Fucked we are

Fri, 07/12/2013 - 20:11 | 3747023 Seasmoke
Seasmoke's picture

hang the motherfucker from the highest building, so he will never forget what high inflation really is

Fri, 07/12/2013 - 20:22 | 3747033 GS-DickinDaMuppets
GS-DickinDaMuppets's picture

Inflation? WTF......isn't Gasoline still a $1.58 a gallon?  Cant you still by a new loaded Chevy Silverado for $16 500?  Milk, you say you can't by a gallon of milk for  $0.98 cents?  Where the hell are you living son?  You need to move back home and let mom and dad handle the finances - you just stay in the basement and don't cause your mom too much trouble - yeah - that's right, just be a good boy.  Leave the money handling to BENNIE (the Bernack) & The JETS (FOMC). 

Doin' God's work, - GS-DickinDaMuppets

Fri, 07/12/2013 - 20:20 | 3747037 Arrowflinger
Arrowflinger's picture

Inflate and lie - the Bernanke Principle.

Fri, 07/12/2013 - 20:33 | 3747064 tom a taxpayer
tom a taxpayer's picture

The biggest inflation is in the number and scope of Fed Reserve operations to reward Wall Street criminals, to fuel out-of-control spending by Congress/Federal government, and to screw taxpayers every which way but loose.


Fri, 07/12/2013 - 20:22 | 3747042 orangegeek
orangegeek's picture

Team "CTRL-P" is fighting like hell to prevent deflation.


As more liquity is force fed into the markets, prices should continue to go higher.  As soon as the printing stops, prices will collapse.


The Fed used to buy about 20% of bonds - now they buy over 30% - within the next few years, they will be buying 100% - this can't go on forever.


So in conclusion, FUCK YOU BERNANKE!!!

Fri, 07/12/2013 - 20:40 | 3747087 resurger
resurger's picture

 your house and mine will end on the Fed's balance sheet one day not in the far future.

Fri, 07/12/2013 - 20:53 | 3747123 NotApplicable
NotApplicable's picture

Yer gonna get POMOed.

Fri, 07/12/2013 - 20:25 | 3747048 PiratePawpaw
PiratePawpaw's picture

This is why I am inclined to disagree with the deflationists. If there is anything close to DEflation, Bernanke will open the flood gates and INflate away.

I am not too confident in his ability to put that genie back into the bottle.

Fri, 07/12/2013 - 20:57 | 3747136 Marco
Marco's picture

The Fed will run out of government bonds sooner or later even at the current level of deficits ... to keep printing eventually government will have to join in and increase deficits even more/faster or the Fed will have to start buying corporate bonds.

Sat, 07/13/2013 - 12:24 | 3748253 PiratePawpaw
PiratePawpaw's picture

I think treasury issues the bonds. Is that not why they are called "treasuries"? They wont run out as long as they have paper and ink. 

They may run out of buyers, but since the Fed will buy them using imaginary digital 1's and 0's which they can create at will; they wont stop as long as they have electricity.

Fri, 07/12/2013 - 21:30 | 3747203 NoDebt
NoDebt's picture

You're confusing inadequate inflation with deflation.  Starting with the premise that inflation is higher than reported (not much of a stretch to believe that)- let's say it's actually 6%, but reported at 2%.  There is a level of inflation that is NECESSARY to continue to inflate away the debt at a rate sufficient to stay ahead of spending.  If we drop below that level of inflation, the plumbing backs up and we start REALLY losing control of the debt.  And that level is NOT a true 0% inflation rate.  Say it's more like 5% actual (about the same as the federal government's yearly deficit as a % of GDP).  So you have to stay ahead of that- say, 5-6% inflation actual.  You're good.  Just report 6% actual inflation as 2% and tell everyone who calls you a liar to fuck off. 

The only people getting really hurt by this are the poor and working poor who are hit with full int he face with the 6% actual inflation rate.  The upper classes see NOTHING like a 6% inflation rate since they spend such a small part of their income on the things that are the primary drivers of inflation (stuff you need to buy to simply exist on the planet like food, gas, rent, etc.).  They live in a world driven primarily by ASSET prices, so inflation means little to them as long as their portfolio can support their modest physical needs.

Fri, 07/12/2013 - 22:26 | 3747361 Totentänzerlied
Totentänzerlied's picture

"Just report 6% actual inflation as 2% and tell everyone who calls you a liar to fuck off. "

Take a bow, sir.

Sat, 07/13/2013 - 10:44 | 3748070 donsluck
donsluck's picture

"If we drop below that level of inflation, the plumbing backs up and we start REALLY losing control of the debt" Ha ha ha ha, try and keep up son, control was lost back in '08!

Sat, 07/13/2013 - 12:29 | 3748262 PiratePawpaw
PiratePawpaw's picture

Correct me if I am wrong, but by definition wouldnt the fed consider DEflation to be very severely inadequate inflation? And since their response to "inadequate inflation" is to reinflate; wouldnt their response then be to REINflate very severely?

Fri, 07/12/2013 - 20:25 | 3747049 FreeMktFisherMN
FreeMktFisherMN's picture

Remember, too, that in addition to prices really rising a hell of a lot more than .gov would have us believe, also one should consider viewing prices in reference to what might have been. i.e., say something 'only' went up 4% in price, but if, in a free market with sound money, it'd have fallen by 5%; accounting-wise, it 'only' went up 4%, but factoring in the opportunity cost, it really rose by 9%. This is people not reaping the benefits of productivity gains as instead the leeches (primary dealers) with access to the fresh fiat first siphon that off. 

Fri, 07/12/2013 - 20:52 | 3747075 Marco
Marco's picture

Would I still have a job in a free market with sound money? Would I be able to pay for open heart surgery and a hospital stay? I'm not particularly talented or motivated nor blessed with dynastic capital ... a useless eater as some would say (although I personally think someone who can survive on rent seeking from inherited wealth can be a useless eater as well, just one which can survive in a free market society ... but most of the Rothbardians here probably disagree).

I'm all for alternatives, but I would like the job and high level of medical care ... if a free market with sound money can't supply it, well then ... kick the can Bernanke, kick it as hard and long as you can.

Fri, 07/12/2013 - 20:59 | 3747139 NotApplicable
NotApplicable's picture

Sounds like you weren't around in the Sixties, when there was still a bit of soundness left in the dollar as well as affordable healthcare.

You seriously need to read Rothbard, and you'll soon understand the value that unsound money steals from you.

Fri, 07/12/2013 - 21:16 | 3747171 Marco
Marco's picture

Pre or post medicaid/medicare Sixties? Given your Rothbardian bent probably pre ... in which case I think you're being silly. Non monopoly inflated prices in healthcare would be nice ... but if I can't afford them without government subsidy, like tens of millions couldn't in the early 60s, then I don't give a damn ... keep kicking that can Bernanke.

Give me a better alternative ...

Fri, 07/12/2013 - 23:04 | 3747430 Things that go bump
Things that go bump's picture

As a child, my younger sister spent a month in Children's Hospital in the early 60s with Sydingham's chorea, like rheumatic fever a sequelae from a strep infection. When they checked her out my parents paid the cashier $25.00 for her food. Blue Cross picked up the rest of the tab. My father was a laborer and his place of employ was not noted for their sterling benefits. $25.00 was probably 1/3 of a week's take home pay at that time. My own daughter had orthopedic surgery at Children's Hospital in the 80s, was in there nearly a week and it cost me nothing as my place of employ was self-insured and covered everything. I will never forget how upset I was the first time I got a co-pay.

Sat, 07/13/2013 - 06:26 | 3747826 Marco
Marco's picture

Because I saw the charity argument coming I threw in open heart surgery ... a hospital bed which sees a nurse a couple times a day and a doctor for a few minutes every day or so has costs on a whole different level as protracted surgery with a large team and intensive care. Nevermind paying off the costs for all the fancy million dollar machines we have nowadays. Regardless of corruption and monopoly healthcare costs are going to be many times higher than they were in the 60s.

Will the charities pay for all that? Even in the times of cyclical economic depression?

Sat, 07/13/2013 - 08:29 | 3747905 U4 eee aaa
U4 eee aaa's picture

In a free market you probably wouldn't be eating the food that causes you to need open heart surgery or you would be working hard enough to work it off ;)

Sat, 07/13/2013 - 13:21 | 3748383 Things that go bump
Things that go bump's picture

Having a colonoscopy as a routine screening check is ridiculous and risky. I used to get a couple of reports a week of previously perfectly healthy people being admitted with a life-threatening perforated colon after this procedure, and I was just 1 transcriptionist at 1 hospital. I leave it to you to infer the reason this highly expensive surgical procedure is now part of your health maintenance routine after you turn 50. There is a simple, noninvasive test that used to be done in the office to check for H. pylori (bacterial infection of the stomach that causes ulcers). I believe they no longer offer that test and want to do an EGD (endoscopy of the stomach and duodenum) and take a biopsy to confirm that diagnosis. This procedure is also not without risk, is considered a surgery and is quite expensive. These just happen to be the most egregious examples I know of regarding a healthcare system that is simply out of control. It is true that MRIs and PET scan equipment are quite an expensive investment, but once a hospital has recouped its investment the thing runs for years of profit.  

Fri, 07/12/2013 - 21:02 | 3747143 NotApplicable
NotApplicable's picture


Fri, 07/12/2013 - 20:28 | 3747056 resurger
resurger's picture

everything goes up in value except for human beings, they are worthless.

Fri, 07/12/2013 - 22:20 | 3747349 CPL
CPL's picture

Supply currently stands at 370,000 per day production for earth.

Fri, 07/12/2013 - 22:28 | 3747368 Totentänzerlied
Totentänzerlied's picture

Not. For. Long.

Fri, 07/12/2013 - 20:29 | 3747058 eddiebe
eddiebe's picture

God, this is so exhausting.

Fri, 07/12/2013 - 20:33 | 3747067 Monedas
Monedas's picture

Even Pink Slime is rising !  Do they sell it by the kilo or by the quart ?

Sat, 07/13/2013 - 09:57 | 3748001 WmMcK
WmMcK's picture

Cheaper by the 55 gallon drum.

Fri, 07/12/2013 - 20:36 | 3747071 Getting Old Sucks
Getting Old Sucks's picture

The only way to fight this is to starve the beast.  Stop spending on everything that you don't need to survive.  Ask yourself every time you're about to spend, "do I really need that?".  Supply and demand will prevail if demand gains control.

Fri, 07/12/2013 - 20:36 | 3747073 fijisailor
fijisailor's picture

Is he insane?

No.  He's slowly heating up the pot of frogs (aka muppets) to boiling.  He knows exactly what he's doing.

Fri, 07/12/2013 - 20:38 | 3747077 eddiebe
eddiebe's picture

The magnitude of Bens lies are only exceeded by the stupidity of the people that believe them.

Fri, 07/12/2013 - 20:40 | 3747078 Yen Cross
Yen Cross's picture

    You know you've jumped the ( shark-Rubicon) when a "home cooked" dinner for four is equivalent in price to two gallons of gasoline. <excluding the monthly utility costs>

   Take out food lives and dies by the sword of 'dependable petroleum'...

Fri, 07/12/2013 - 20:45 | 3747101 FleaMarketPete
FleaMarketPete's picture

In sharknado, shark jumps you?

Fri, 07/12/2013 - 20:38 | 3747080 FleaMarketPete
FleaMarketPete's picture

Bernanke/economists need to give up on the idea that easy credit translate eventually into higher wages.  As shown, easy credit becomes a wage replacement and the inflation that it creates actually suppress wages.



Fri, 07/12/2013 - 21:55 | 3747271 yogibear
yogibear's picture

Bernanke, Evans, Dudley, Yellen and Fisher are well aware of the labor arbitrage. Their playing dumb.

They figure if they can devalue the US dollar enough it will make the US more competitive. 

What better way than to QE to infinity? Make the US competitive with China. The US has a way to drop in order to be competitive with China.  

So expect a lot more inflation in the future.

Sat, 07/13/2013 - 01:38 | 3747642 Cosmicserpent
Cosmicserpent's picture

Cool! Then US workers can compete with Chinese workers to see which nationality can throw themselves off the roofs of Ipad factories faster!

Bernanke and the central bankers are the most EVIL MOTHERFUCKERS the planet has ever seen. Destroying the planet and the lives of BILLIONS! just for a few extra shekels.

At least under feudalism, interest on loans was not allowed to be charged, gold was money, and the nobles felt some sort of responsiblity towards the well being of the serfs, just like livestock.

This neo-fuedalism sucks ass. Although, maybe the bankers do treat us all like factory farmed hogs.

Fri, 07/12/2013 - 20:40 | 3747086 mjk0259
mjk0259's picture

Health insurance +100% or more

College +100% or more

Car insurance +100%

Property tax +100%


In NJ with state college.



Sat, 07/13/2013 - 02:36 | 3747694 10mm
10mm's picture

NJ,nuff said.

Fri, 07/12/2013 - 20:41 | 3747088 docmac324
docmac324's picture

If not for the sarcasm found only here, I'd be insane.


Fri, 07/12/2013 - 20:44 | 3747096 world_debt_slave
world_debt_slave's picture

No one is this stupid, just evil.

Fri, 07/12/2013 - 20:45 | 3747100 gwar5
gwar5's picture

Inflation is a lie and all the other numbers are a lie, too. Shadowstats has been expertly exposing the huge lies.


We are already in a Depression (Rickards, others, now agree) and it's only going to get much worse. GDP has bee negative each year since 2006 in real terms. The great damage all this does is that not enough alarm bells are going off to sufficiently motivate people to change the status quo (2012 election, cough, Ron Paul) or even to prepare themselves for the looming disaster.  

"You may assume there is a conspiracy behind the slow death of your society when half of the seemingly random occurrences do not favor society."  -- Conspirator

Fri, 07/12/2013 - 20:46 | 3747105 Agent 440
Agent 440's picture

Economists measure inflation via wage increases. Got a raise? That's what I thought.

Fri, 07/12/2013 - 20:54 | 3747126 FleaMarketPete
FleaMarketPete's picture

My health insurance increased by 12% in preparation from OidiotCare which is now postponed.  Does that count?

Fri, 07/12/2013 - 22:28 | 3747365 john39
john39's picture

only the employer mandate got pushed back...  individual mandate is still on.  go figure, corporations get a pass, you don't.

Sat, 07/13/2013 - 06:39 | 3747832 NidStyles
NidStyles's picture

No I don't. I measure it as an increase in the available money supply.

Sat, 07/13/2013 - 09:16 | 3747953 YC2
YC2's picture

I work for a fortune 50 where we all just found out our raise for May 2013 that was delayed will now be cancelled and there is no possibility of getting one until October 2014. Also, promotions, hires, and thus position changes internally have been and will continue to be frozen.

However, we did increase the dividend AGAIN last quarter.

Sat, 07/13/2013 - 11:19 | 3748123 lotsoffun
lotsoffun's picture

yc2 - learn to love  (and teach to replace you) your new h1b colleagues .

Sat, 07/13/2013 - 18:02 | 3749216 YC2
YC2's picture

Ironically my only potential big payoff for staying at this firm longer term would be positioning myself to get an expat package.

Fri, 07/12/2013 - 20:55 | 3747131 Freedumb
Freedumb's picture

Completely agree with this article's thesis, but just want to note that gas was WAY higher pre-Obama until gas prices were temporarily depressed a good margin after Lehman/Bear toppled late 2008 driving oil prices way down for a few months, so, just with respect to the gas price quoted, it's a little misleading to pick that particular data point to illustrate inflation -- that is, the gas price on the day of Obama's inauguration. I think the point is better illustrated by referencing just about any pre-2008 gas price rather than the gas price when our markets were at their wonkiest. Just constructive criticism for the author since you know Keynesians will harp on minor points like this in trying to discredit it.

Fri, 07/12/2013 - 20:55 | 3747132 slavador
slavador's picture

I remember a laser printer I once owned but had to replace that was in the Canadian inflation calculation. One model which I was replacing was discontinued and replaced in the market with a more expensive one with less metal, more plastic (which started to break in a year)  with lower power consumption and an LCD rether than LEDs. Because of this they said I was getting more value.  The Canadian government used this item to add a little price deflation to the calculation. I wonder how often the trick of replacing goods with more expensive ones that are of inferior quality but have extra crap menus in their LCD displays is what is used to keep the CPI low. A very nice loaf of bread I used to get for $0.97 in 1995 now is still of the same composition but is sold for $3.50 in the same store.



Fri, 07/12/2013 - 21:26 | 3747193 Serenity Now
Serenity Now's picture

It is very manipulated.  Steak gets replaced with hamburger meat, TV sets that used to last for 20 years got replaced with ones that break in a few years.  Same with computers, phones, clothes, food, etc.

Fri, 07/12/2013 - 21:08 | 3747148 Monedas
Monedas's picture

When the hard work and ingenuity of the private sector .... drives the price of a DVD player from $100 down to $20 .... the government takes the credit .... and says .... see no inflation .... that's the stuff that shouldn't be in the CPI .... but they exclude food and energy ?  An "inflation" index should reflect stuff that is affected my monetary "inflation" .... not hard won efficiencies by the over taxed and over regulated producers ! 

Fri, 07/12/2013 - 21:06 | 3747150 suteibu
suteibu's picture

LOL.  Bernanke is taking a page from Abe.  It ain't inflation until the government says its inflation.

Fri, 07/12/2013 - 21:28 | 3747197 Yen Cross
Yen Cross's picture

  suteibu at first I wanted to disagree. Then I realized, "being left handed", that the right side of my brain works.

  Japan, is the quintessential source of tactical>inflationary, deflationary destruction...

Fri, 07/12/2013 - 21:56 | 3747276 suteibu
suteibu's picture

There is much more to the Japan/US relationship than it seems.  The Plaza Accord set the stage for Japan's lost decade(s) and the US took an advisory role since the collapse.  The lessons available from Japan's experience are being applied in the US since 2009...with the same predictable results.  So, were those lessons ingored by the US or does common sense overlook what they are really trying to achieve?

Fri, 07/12/2013 - 22:34 | 3747367 Yen Cross
Yen Cross's picture

 Have you missed the minutes of the last group of "monthly changing>g-7-8-9-20", group of industrialized economies suteibu?

  Do you know the meaning of  " Past Participles" , suteibu ?

Fri, 07/12/2013 - 21:59 | 3747284 yogibear
yogibear's picture

When your paying $10/gal for gas they might admit to inflation. Other wise it's adjusted its cooked and ajusted to less than 3% for the CPI to look better and reduce Social Security as well as food adjustments.

Fri, 07/12/2013 - 23:15 | 3747457 Freedumb
Freedumb's picture

They'd probably intervene to suppress gas prices because gas is one of the few things people really pay attention to the prices of, with an easily comparable cost/standardized units of sale, and shift costs elsewhere using any one of their favorite strategies (print moar, change the composition of the CPI, raise taxes, your pick)... we need the whole house of cards to collapse and a total economic reset at this point. By the time they admit to inflation it'll be obvious even to the dumbest muppet on Sesame St. and we'll all be fucked and living off rice and beans (it's probably too late already, I'm not sure we can recover from this mess)

Sat, 07/13/2013 - 02:30 | 3747691 Bohm Squad
Bohm Squad's picture

Maybe the "Ministry of Weights and Measures" should just make the gallon smaller...  

Fri, 07/12/2013 - 21:07 | 3747154 TrustWho
TrustWho's picture

The Fed does not know what it is doing. Our great Fed members are executing a Zimbabwean central Bank policy that they preach is new economic science. These idiots did not predict the 2007/08 financial mess, and in fact goosed the problem with low interest rate policy, much less execute regulatory policies that could have avoided this financial mess. These fed members shot a guy though the heart and want us to trust them because they can heal a dead man. They print money, give the money to banks and tell the suffering masses everything will be ok if we just trust them as their balance sheet expands THREE (3) TRILLION DOLLARS. Where did this money go? 

Fri, 07/12/2013 - 23:10 | 3747446 Jam Akin
Jam Akin's picture

As you said, to the TBTF banks.  Forget where I heard the analogy but it was likened to "putting newspaper over a gaping hole in the floorboards".

Sat, 07/13/2013 - 01:46 | 3747649 Cosmicserpent
Cosmicserpent's picture

They could have bought EVERY family a house. But then they'd all have to get jobs because they wouldn't be able to suck the blood out of babies and their parents through mortgages. EVIL.

Sat, 07/13/2013 - 16:40 | 3749024 TrustWho
TrustWho's picture

 Just to be clear, a significant percent bought US treasuries, so granny could have medicare, the poor medicaid and food stamps, Homeland Security and global policeman. Borrow money for immediate consumption versus building interstate highway system. 

This is why I hate,... sorry disappointed with the Fed, because they are the enabler. Any country will soon collapse when it borrows money to pay for today's consumption year after year after year. One can accept borrowing for investment projects for future growth or to help the country through one year crop failure, but we are dying boys and the Fed is draining the blood so the rich can continue feeding!

Fri, 07/12/2013 - 21:08 | 3747155 22winmag
22winmag's picture

Millions of modern day muskets to the rescue!

Fri, 07/12/2013 - 21:09 | 3747159 MeelionDollerBogus
MeelionDollerBogus's picture

Is this nefarious enough for Bart Chilton?

We all know at zerohedge:

gold is a barbarous relic,

inflation is lower than 2% and far too low,

global temperatures are cooling because global warming is a hoax,

Treasury notes are risk-free,

and red is the new green.

Fri, 07/12/2013 - 21:27 | 3747181 Monedas
Monedas's picture

My three "dollar menu" McDonald cheeseburger freeway ready lunch .... went from $3.24 last week .... to $3.27 this week .... the burgers were 99 cents .... now they're a buck !  The cost of delivering a gallon of gas to Kabul .... probably went from $400 to $450 .... not included in CPI ! God bless McDonalds .... and all the people who make that world class business swing !  Fuck Obama and Barney Frank !

Fri, 07/12/2013 - 21:22 | 3747182 q99x2
q99x2's picture

The man is a financial terrorist that works for a group that is attempting to control the world. Unfortunately for hm the world is not going for it and instead will hunt him down for the criminal he is.


It has happened in the past that the evil ones were brought to justice. And with tech and medical breakthroughs views change on what constitutes crime. In Bernanke's case there are literally billions of victems.

Ya I think he be hebe he shall be held accountable by the world eventually.

Fri, 07/12/2013 - 21:26 | 3747195 cynicalskeptic
cynicalskeptic's picture

Blank VHS tapes are WAY cheaper as are 5.25" floppy discs.....

Fri, 07/12/2013 - 22:19 | 3747310 Die Weiße Rose
Die Weiße Rose's picture

as an American below 50 you don't give a shit.

you just don't give a fuck as long as you are a.o.k.

you are too busy consuming the fruits of third-world slave labour.

Once you hit 50, your wife has left, because you lost your job

and your kids have put you in the looney-bin or retirement home

or some mental institution.

Suddenly you have a flash of enlightenment -

- your whole life was based on bullshit -

by now the Vultures have come home to roost -

to pull the last lumps of rotten flesh from your miserable carcass.

there won't be tears - there will be no grave-stone, no name

and nobody will remember the waste of time,

your life has been.

R.I.P. and keep counting sheep.


Fri, 07/12/2013 - 22:58 | 3747421 kareninca
kareninca's picture

That is much less likely to happen if you were a devoted husband and father.

I know plenty of women whose husbands lost their jobs, who do not leave their husbands, but in fact economically support them.  It is hard, and not all wives do it, but many do.  It helps if the husband keeps looking for a job, and is willing to take a badly paid one if necessary.

I know plenty of grown kids who love their dads, because their dads paid attention to them when they were little.  I even know women who are good to the fathers who deserted the family when they were little (I think that is a mistake, personally, but they are very good Christians).

And hey, if you do end up like you describe, take a bath and shave and brush your teeth and find a girlfriend who is your age, and don't bitch about her figure since yours isn't any better.  Go polka dancing together, or the boomer equivalent.  Drink beer on the back steps.  Lots of ZHers rage against middle aged women, but it is middle-aged women who notice and care and help when middle aged guys get sick and maybe die.



Sat, 07/13/2013 - 10:33 | 3748048 Bam_Man
Bam_Man's picture


Nice comeback there.

Rather than sitting around feeling miserable & worthless, why not do some volunteer work?

Sat, 07/13/2013 - 16:56 | 3749077 Imminent Crucible
Imminent Crucible's picture

"take a bath and shave and brush your teeth and find a girlfriend who is your age, and don't bitch about her figure since yours isn't any better."

Yeah, BABY! I'm in love. Talk nasty to me some more, I can't get enough of it.

I suppose you're already married. Go ahead, break my heart.

Sat, 07/13/2013 - 18:36 | 3749292 kareninca
kareninca's picture

Hahaha, funny.  Yes, married.

When my widowed grandmother (then age 55) married my widowed stepgrandfather (a very, very nice man), they hit upon a premarital bargain.  It did not involve money since neither had any, although he did have a shack-like house.  It was that she would quit smoking, and he would get false teeth since he had none.  They both kept the bargain, and had 25 very, very happy years together.

Fri, 07/12/2013 - 22:12 | 3747328 EmmittFitzhume
EmmittFitzhume's picture

Because he needs hyperinflation to escape from this.  The only way to neutralize this massive debt

Fri, 07/12/2013 - 22:47 | 3747404 ToNYC
ToNYC's picture

The rape continues until morale improves.

Fri, 07/12/2013 - 23:06 | 3747435 kareninca
kareninca's picture

Inflation?  Utilities are the worst.  Here in CA, they go up and up and up.

I have a neighbor who is 88.  Yes, she grew up in the Depression and is frugal.  And she is not totally destitute, and does have good kids.  So it is sort of optional that she never uses the heat (this is CA, but it gets COLD), but sleeps in a sleeping bag at night in her bed.  And that she reads by the window to save lighting costs.  It's true that she won't freeze or go totally without.  But  -  her damn utility bills would be *cheap* if it weren't for waste and regulations and corruption and pensions and other crap.  This is POINTLESS going without.  Fuck you California.  Oh, did I mention that she earns nothing on the money she saved from decades and decades of labor.  Fuck you Bernanke.

Fri, 07/12/2013 - 23:30 | 3747486 yogibear
yogibear's picture

California and Illinois are hopeless. They have become refuges for the the Free stuff Army and the public unions.

Anyone left in the states will be pay for the public pension shortfalls and benefits. 

These states will just keep on raising taxes and fees. If you have any money left they will take it.

Fri, 07/12/2013 - 23:14 | 3747454 Paracelsus
Paracelsus's picture

The FED has had 100 years and it has been an acknowledged disaster in most respects.Time for a change.The countries which matter are stacking bullion,and this isn't some arty-farty rainy day scenario,but as a survival mode when the reserve currency system collapses (not if,but when). Our Gov't could outlaw the private ownership of gold,but they cannot force the Chinese and other nations to stop stacking.When they realize the T-Bills won't be paid then it is game up time.A man should be good for his debts or he shouldn't be allowed to sit at the poker table."Backed by the full faith and credit of the US Gov't" will be a good intro for stand up comics in a few years.

Fri, 07/12/2013 - 23:16 | 3747459 Mareka
Mareka's picture

How different would your net worth be today if the Federal Reserve was not "managing" the money supply?

If there was not a flood of money sloshing around so someone might be inclined pay you a decent interest rate on your savings?

If the value of your dollars was not constantly shrinking?

I figure that over the last 7 years it is half of what it could have been. 

At least 3% per year lost in the purchasing power of the money.  This number is probably low.

At least 4 % per year in what could have been made after taxes in safe interest bearing accounts.

7% compounded over 7 years = 50% down & counting........ and no end to "Accomodative Policy", ZIRP as far as the eye can see !

The FED transfer pump is running full bore, funneling your wealth to JP Morgan Chase, Bank of America & Goldman Sachs, et al.

Fri, 07/12/2013 - 23:47 | 3747513 Yen Cross
Yen Cross's picture

 The rule of 6 seems comical? ... (I'm getting started}

  health insurance mandates explained<>

  Welcome to Africa BITCHEZ    I want what I pay for Bitchez. FREE MARKETS!

Fri, 07/12/2013 - 23:24 | 3747474 NoWayJose
NoWayJose's picture

It is foolish to invest in the stock market bubble, as that is both expensive and will eventually crash. I am putting extra cash into toilet paper, paper towels, toothbrushes, razors, and other staples of living - whenever I see them on sale. Given the figures cited by other posters, I have a lot of confidence that these things will go up in price a lot more than stock prices. I am also on the lookout for small appliances (generally made in China) as the yuan will likely appreciate significantly against the dollar. These are getting harder to find on sale and the ones I bought are up at least 15% since last fall. I cannot do much about food, energy or healthcare costs in the future, but at least these things will temper the real rate of inflation - which is actually a devaluation of the dollar.

Fri, 07/12/2013 - 23:54 | 3747526 Yen Cross
Yen Cross's picture

   I agree. It must have been difficult to realize that you're being used.  Have fun convincing your girlfriend/wife----

Fri, 07/12/2013 - 23:51 | 3747520 I Write Code
I Write Code's picture

Well, did anyone remember to mention, Bernanke has *wanted* more inflation since 2008, he's been *trying* to get inflation going even before he locked nominal interest rates at zero because it monetizes existing mortgages.

Bernanke has *failed* for five years to get the inflation he wanted.  Apparently his models HAVE NOT WORKED - at least that aspect of the models have not worked, other parts of his model have not worked in his favor, if you ask me - which you might as well, cuz Bernanke himself, he ain't talking.

Actually I like the guy, or respect him, he's been more right than wrong, and more right than most, and more right than he had any right (sic) to be, at least he took a stand instead of running for cover or just running his mouth.  Someone had to put his foot down, and he was that foot.

Mostly, I just wanted to remind the jury by saying "monetize".

Sat, 07/13/2013 - 07:06 | 3747847 Waterfallsparkles
Waterfallsparkles's picture

In my opinion the reason inflation is so low is because the Banks will not lend the Money they are getting thru printing.

It appears like a double edge sword.  With interest rates so low most Banks do not want long duration loans on their Books.  For fear they will be left with low interest rate loans when the interest rates rise. The Banks also fear that the loans may not be paid back. That is why they have make the underwriting standards so tough and many people that would like to borrow are turned down.  It is just as efficient for the Banks to put the Money with the Fed to earn the spread.

The Fed is happy that the Banks keep all of the surplus Money with the Fed.  It helps to fund their buying.

I remember during the last Fed testimony where one of the Senators said that he wanted to lower the amount of interest that the Fed paid Banks, thru legislation.  Bernanke looked like someone just shot him in the foot.  He warned about that legislation and  said that he needed the Bank reserves on deposit at the Fed to fund his Bond buying.

Sat, 07/13/2013 - 09:32 | 3747974 GreatUncle
GreatUncle's picture

Yep, no loans and in reality no invisible QE through leverage neither.


So Bernanke has to explains why he has to create 85 billion a month when really he should be shouting the banks won't lend the f^&king money. Or is it?


This is the bit I think, what would you borrow money for now and also remember you will be expected to pay it back. Hmmm ... not borrowing thanks either I can afford it or I go without.

Sat, 07/13/2013 - 00:03 | 3747535 Diablo
Diablo's picture

"For example, when Barack Obama first entered the White House, the average price of a gallon of gasoline was $1.84.  Today, the average price of a gallon of gasoline has nearly doubled.  It is currently sitting at $3.49, but when I filled up my vehicle yesterday I paid nearly $4.00 a gallon."


I stopped reading right there. Anyone that uses that arguement is an ignorant cunt. If you dont know why, youre a moron. Stop spewing this bullshit.
Sat, 07/13/2013 - 03:30 | 3747737 The Wedge
The Wedge's picture

"Anyone that uses that argument is an ignorant cunt"

I don't know, think that may be a little overly dramatic. Yes, the crash in 2008 did cause the ppg to fall dramatically. The average price was probably in the neighborhood of $1.80-$2.05 before the run up in 2007-2008 so after the crash in 2008 it went back down but has gone back up due mainly to dollar devaluation. It was used as an illustration of inflation. Here is the real inflation. Cost per gallon of gas when the ppb was around a $100 dollars, as it is now, pre crash was a little above $2. Above pre run up and well below current prices. Of course there are some mitigating circumstances like refining cost, etc. but that is dollar devaluation!

Sat, 07/13/2013 - 09:09 | 3747942 Diablo
Diablo's picture

agreed, that was a bit harsh.

inflation adjusted price of gas is actually BELOW 2008 levels (and heading lower). source:


Sat, 07/13/2013 - 12:39 | 3748228 Bay of Pigs
Bay of Pigs's picture

Using gov't CPI numbers?



Sat, 07/13/2013 - 17:14 | 3749139 Imminent Crucible
Imminent Crucible's picture

Crude oil futures are heavily gamed and speculated on and tossed around by geopolitical rumors. You can't get an accurate read on inflation by looking at the last five years of data. There was: commodity contract dumping to meet redemptions, a collapse in retail deliveries, the Macondo well disaster, the huge increase in horizontal drilling/fracking and all kinds of exogenous shocks from the middle east/Africa, etc.

The trend is best observed by taking a longer time line and looking at the chart from across the room. If you're really old, you can remember the year I got married when gas was 33 cents a gallon. It's ten times as high now, even though the tank farms are full and there are no actual aupply issues in the U.S. at present. Nearly all of that is inflation. Even Exxon CEO Rex Tillerson recently said "Supply/demand metrics as I see them indicate an oil price between $50 and $60 a barrel. Add in speculation and geo risk, and there's still something wrong. I don't see any reason for $90 oil."

He couldn't see it because Bernanke was hiding behind the curtain.

Sat, 07/13/2013 - 18:30 | 3749282 Diablo
Diablo's picture

the chart i mentioned goes back 30+ years. so we're actually paying the same inflation adjusted price as we were in 1981. i know, i know, bad year to compare to...but the simple fact is there have been tensions in the middle east and other exogenous events in the oil markets forever...and likely will go on forever, which is why food and energy arent considered in core CPI: volatility. i agree there is no supply issues...the USA has enough oil domestically to be completely energy independent, but there hasnt been a new refinery built in this country since the 1970's.

as for 33 cents/ much money were you making back then? how much are you making now? (i hope its not the same number)


Sun, 07/14/2013 - 03:46 | 3750668 The Wedge
The Wedge's picture

I am making a real world analagy based on what the prices were.

$100 ppb pre crash- ppg was cheaper.

$100 ppb post crash (current) -ppg more expensive at the same ppb.

This illusttrates dollar devaluation.

$100 ppb in 2007=around $2.50 give or take---less

$100 ppb 2013=around $3.50 give or take----more

Sat, 07/13/2013 - 00:05 | 3747541 One World Mafia
One World Mafia's picture

I know a PhD in Economics who was taught in college a little inflation is good.  After I explained to her why it isn't good for us and that all bubbles pop, and how we export inflation to other nations like Japan and that they are willing to absorb our inflation because of politics, she says I don't know maybe you're right.

Sat, 07/13/2013 - 04:06 | 3747754 Clowns on Acid
Clowns on Acid's picture

Of course she don'tg know... she has a Phd. Without it , she would have an insightful opinion.

Sat, 07/13/2013 - 00:10 | 3747550 Mareka
Mareka's picture

What about the price of a college education?

What about the price of housing?

Oh yeah, I forgot, Inflation is supposed to be good for us if it concerns the price of something you buy to live in.

Bernanke is making my kids so much better off by creating money out of thin air to simultaneously devalue the dollars in my bank account and keep the price of houses and college education artificially high so someday my kids can go to one of the member banks that run the FED to ask to borrow dollars that the Fed printed out of thin air and the banks got for free and they can work the next 30 years of their lives to pay back but that is Ok because everybody has to go to college and the NAR tells us the there is never a bad time to buy a house so even if your kids are conned into exchanging the bulk of the precious hours of their only existence on this planet for some arbitrary numerical values created out of thin air, you have to be thankful that the FED is working hard on your behalf.

Sat, 07/13/2013 - 02:06 | 3747668 Debugas
Debugas's picture

it is not correct to calc inflation from 1980..

the policy change has happened around 2007 (when interest rates stopped falling and overindebtness started slowing growth) so calc inflation from 2007..


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