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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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.

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%!  

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.

francis_sawyer's picture

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

DaveyJones's picture

the rising cost of lies have hit me the hardest

Boris Alatovkrap's picture

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

Cortez the Killer's picture

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

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!

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!!

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?

resurger's picture

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

/reported: NSA


ersatzteil's picture

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

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.


RaceToTheBottom's picture

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

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.



Kprime's picture

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

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.

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.

NoDebt's picture

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

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?

NoDebt's picture

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

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.

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.

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.

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.

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%.

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?

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.

Wile-E-Coyote's picture

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

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.

John Law Lives's picture

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

McMolotov's picture

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

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!!!

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.

ceilidh_trail's picture

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

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.

Dingleberry's picture

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


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.



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. 

RideTheWalrus's picture

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




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.