Guest Post: Don't Worry – The Government Says That The Inflation You See Is Just Your Imagination

Tyler Durden's picture




 

Submitted by Michael Snyder of The Economic Collapse blog,

If you believe that there is high inflation in the United States, you are just imagining things.  That is the message that the U.S. government and the Federal Reserve would have us to believe.  You might have noticed that the government announced on Wednesday that the cost of living increase for Social Security beneficiaries will only be 1.5 percent next year.  This is one of the smallest cost of living increases that we have ever seen.  The federal government is able to get away with this because the official numbers say that there is hardly any inflation in the U.S. right now. 

Of course anyone that shops for groceries or that pays bills regularly knows what a load of nonsense the official inflation rate is.  The U.S. government has changed the way that inflation is calculated numerous times since 1978, and each time it has been changed the goal has been to make inflation appear to be even lower.  According to John Williams of shadowstats.com, if the inflation rate was still calculated the same way that it was back when Jimmy Carter was president, the official rate of inflation would be somewhere between 8 and 10 percent todayBut if the mainstream news actually reported such a number, everyone would be screaming and yelling about getting inflation under control.  Instead, the super low number that gets put out to the public makes it look like the Federal Reserve has plenty of room to do even more reckless money printing.  It is a giant scam, but most Americans are falling for it.

Meanwhile, the prices of the things that most Americans buy on a regular basis just keep going up.  The following are just a few examples of price inflation that we have seen lately...

-McDonald's has killed the dollar menu because it is becoming impossible to "make any money selling burgers for $1".

But don't worry - the government says that the inflation you see is just your imagination.

-Amazon.com has raised the minimum order size required for free shipping from $25 to $35.

But don't worry - you can afford to order more stuff thanks to the great new job that you got during this "economic recovery".

-It is being projected that those using natural gas to heat their homes will see their heating costs rise by 13 percent this winter.

But don't worry - "global warming" should kick in to high gear any day now.

-The price of chocolate has gone up by 45 percent since 2007, and it is being projected that it will now be increasing at an even faster pace.

But don't worry - eating chocolate is bad for you anyway.

-Thanks to Obamacare, the health insurance premiums of many American families are absolutely skyrocketing.  As I wrote about the other day, one family down in Texas just got a letter informing them that their health insurance premiums are going up by 539 percent.

But don't worry - this is just "health care reform" in action.

Meanwhile, things just continue to get tougher for middle class American families.  Household incomes have actually been declining for five years in a row and total consumer credit has risen by a whopping 22 percent over the past three years.

The quality of our jobs continues to go down and our paychecks are not keeping up with inflation.  In fact, 40 percent of all U.S. workers are now making less than what a full-time minimum wage worker made back in 1968 after you account for inflation.

So what do the "authorities" say that the solution to our problems is?

They want even more inflation of course.  According to CNBC, many Federal Reserve officials (including Janet Yellen) believe that what the U.S. economy really needs is a lot more inflation...

Inflation is widely reviled as a kind of tax on modern life, but as Federal Reserve policy makers prepare to meet this week, there is growing concern inside and outside the Fed that inflation is not rising fast enough.

 

Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment.

 

The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama's nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.

The rest of that article goes on and on about how wonderful inflation is for an economy and about how the U.S. economy desperately needs some more of it.

Well, if that was actually true, then the Weimar Republic should have had one of the best economies in the history of mankind.

But this inevitably happens when a nation starts producing fiat currency that is backed by absolutely nothing.  There is always a temptation to just print a little bit more.

In the end, we are going to be destroyed by our own foolishness.  We have the de facto reserve currency of the planet, and the rest of the world has trusted it for decades.  But now we are systematically destroying our currency, and the rest of the globe is looking on in horror.

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

Ultimately, the U.S. dollar will be destroyed, and we will have done it to ourselves.

Many people are attempting to protect themselves against this inevitability by putting a lot of their money into hard assets such as gold and silver, but before you do that you might want to make sure that you don't have a vengeful spouse that will toss it all into a dumpster someday.  The following is from a recent New York Post article...

A Colorado man was so angry at his ex-wife for divorcing him that he had the couple’s life savings of $500,000 converted to gold — then tossed it in a dumpster so she couldn’t have any of it, the Colorado Springs Gazette reports.

 

In June, Earl Ray Jones, 52, of Divide, Colorado, was ordered by a judge to pay $3,000 a month to the woman he’d been married to for 25 years, so he pillaged the couple’s retirement account and had it converted into 22 pounds worth of gold and silver bars,  the paper reports.

 

Jones claims he then tossed the modern-day treasure into a dumpster behind a motel, where he had been living temporarily, later telling the judge he had no money to give his ex-wife, according to the paper.

Did that story make you smile?  It sure did the trick for me.

But that story is also a picture of what the Federal Reserve is doing with our dollar.

Our currency has been used for decades by almost everyone else around the planet.  In fact, more U.S. dollars are used outside of our country than inside of it.

But now the Federal Reserve is systematically trashing the dollar and the rest of the globe is starting to lose faith in it.

Instead of realizing their mistakes, Fed officials say that we need to create even more inflation and they just keep on wildly printing more money.

In the end, we will all pay a great price for their foolishness.

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Thu, 10/31/2013 - 21:34 | 4110425 km4
km4's picture
The Temptations - Just My Imagination

http://www.youtube.com/watch?v=S13ZLMNQBjc

There's Barry on the far right in opening ;-)

Thu, 10/31/2013 - 22:40 | 4110612 nope-1004
nope-1004's picture

Definition of inflation has changed throughout the years only because governments are habitually reckless and self-serving.  The biggest joke going is that some elected idiot sitting in a mansion can "create jerbs".  What a load of shit.

Inflation, through easing lending standards, has been the only way the Fed has created jobs - by making HUGE asset bubbles appear.  Ya... home builders were busy for a time.... but it wasn't a real economy.  Asset bubbles are a byproduct of the inept leaders trying to create jerbs.

And this country is full of overweight, lazy slobs that will just sit there a wait for Obama to "make me a jerb", thereby guaranteeing that this rollcoaster of debt binging keeps going.

 

Fri, 11/01/2013 - 00:57 | 4110954 TwoShortPlanks
Fri, 11/01/2013 - 02:59 | 4111034 zhandax
zhandax's picture

TSP,  I have one primary objection to the $134k price projection; it includes "much of the derivative market" in the liabilities which need to be covered by the new gold 'price'.  I would contend that at least most of the derivatives will be defaulted during the event that forces revaluation against gold.  In fact, that may be the event.  Cascading margin calls when everyone is spooked on the dollar is all it will take.

Fri, 11/01/2013 - 05:31 | 4111131 The Alarmist
The Alarmist's picture

All I know is that the can of Spam that I used to get a few years ago (2006) for $1.85 is now pushing $3 something (It's over $4 in Manhattan).  I'd switch to dog food, but in Omeriku, good dog food is even more expensive than Spam. 

Fri, 11/01/2013 - 02:06 | 4111007 Nothing but the...
Nothing but the truth.'s picture

I would imagine that they would also have us believe that high unemployment, lack of economic growth and asset bubbles are also just in our imagination - this US adminisrtation becomes more laughable by the day.

Thu, 10/31/2013 - 21:31 | 4110426 LetThemEatRand
LetThemEatRand's picture

If the price of gas goes up by $3 in the fly over states, does a banker care?

Thu, 10/31/2013 - 21:35 | 4110440 Groundhog Day
Groundhog Day's picture

2001 : .99 per gallon for regular

2013: 3.20 per gallon for gallon or a +300% rise

yea their is no inflation Bernanke

Thu, 10/31/2013 - 22:10 | 4110534 Bad Attitude
Bad Attitude's picture

In the not too distant future, we will look back longingly on this October of 2013, when inflation was still more-or-less manageable and predictable. Back when a gallon of gasoline was a little over three dollars. When a loaf of bread was only two or three bucks. When Ramen Noodles were less than a quarter a package. When 9mm ammo was less than thirty-cents a round.

We are so screwed.

Forward (over the cliff)!

Fri, 11/01/2013 - 04:05 | 4111086 starfcker
starfcker's picture

i don't believe for a second that the rise in prices is inflation. let me define inflation as too much money chasing too few goods. naaaa... that ain't what's happening. this is just basic sheep shearing, by every means possible. eliminate competition, cut the product, short the product, gouge the unwary. there is a tacit agreement between our government and industry. cooperate with globalization and we will turn a blind eye to even the most agregious behavior. don't wanna play? good luck with that. let's see.... become a man without a concience and reap rewards impossible to imagine twenty years ago, or be a dumb fucking patriot and get ground under the stasi boot. hmmm........

Thu, 10/31/2013 - 22:36 | 4110604 SandiaMan
SandiaMan's picture

2001: .223 7cents

2013: .223 60 cents

(price varies in locations)

Almost +900 rise.

Thu, 10/31/2013 - 22:45 | 4110638 Uber Vandal
Uber Vandal's picture

Disneyland ticket 2003: $47

Disneyland ticket 2013: $92

https://en.wikipedia.org/wiki/Disneyland#Tickets

 

Superbowl ticket 2003: $400 - $500

Superbowl ticket 2013: $800 - 1200

http://www.krem.com/sports/football/Historical-Super-Bowl-ticket-prices-...

 

 

Thu, 10/31/2013 - 23:00 | 4110680 0b1knob
0b1knob's picture

I can remember when it was $2 to get into Disneyland.   Tickets for the rides cost more but were sold in booklets.   In the off season I would sometimes go there to see the free concerts.   I remember seeing Rosemary Cloney and a big band concert.   It was cheaper than a movie.   Its easy to be dismissive of Disneyland as a glorified carnival but at night its really a beautiful and spooky place.   And the main street electrical parade!

Thu, 10/31/2013 - 23:10 | 4110704 bunzbunzbunz
bunzbunzbunz's picture

Hmm..great examples. You picked two things that have a limited, stable supply and by design (and marketing) have an ever-growing demand. So obviously a reasonable person would expect the price for such items to increase at a slow-steady pace as indicated by the inflation rate.

OOOOH  - use Bitcoin as your next example of how inflation is higher than the government tells us!

Thu, 10/31/2013 - 21:41 | 4110463 Croesus
Croesus's picture

Earl Ray Jones told the judge he "threw the gold out in a dumpster"...is that a new euphemism for "lost it in a tragic boating accident"? 

Thu, 10/31/2013 - 21:52 | 4110493 JohnG
JohnG's picture

Yes.  :)

Thu, 10/31/2013 - 22:05 | 4110520 NoDebt
NoDebt's picture

Hey, that dumpster is what I call home, pal.  Stop looking down your nose at me and keep throwing your gold in it.  I'm the richest fucking redneck hobo you ever met in your life.

Thu, 10/31/2013 - 22:24 | 4110566 max2205
max2205's picture

We lost it...it's gone, no chance of getting the US back....give up and obey

Fri, 11/01/2013 - 06:49 | 4111173 RabbitChow
RabbitChow's picture

It's not just the bankers.  It's the elite, the powers that be, andn the elected minions.  Most don't remember during the campaigns for the 2008 election, nearly all the candidates were asked if they knew what the local price of a gallon of gas was.  NONE of them knew.

Thu, 10/31/2013 - 21:31 | 4110429 Stuck on Zero
Stuck on Zero's picture

The moral of the story is: the government is worse than your ex wife.

 

Thu, 10/31/2013 - 21:45 | 4110479 Skateboarder
Skateboarder's picture

The moral goes further: if you see a guy throwing out 22 pounds of Au/Ag into a dumpster, pick that shit up and run, son.

Thu, 10/31/2013 - 22:08 | 4110527 NoDebt
NoDebt's picture

I did and I did.  I love Colorado Motel 6s.

Fri, 11/01/2013 - 05:17 | 4111126 Australian Economist
Australian Economist's picture

Don't you mean Motel 6,000,000,000,000?

Thu, 10/31/2013 - 21:31 | 4110430 SmittyinLA
SmittyinLA's picture

pretty soon they'll be debasing pink slime 

Thu, 10/31/2013 - 21:37 | 4110446 Platinum
Platinum's picture

They're probably already cutting it like black tar heroin.

Thu, 10/31/2013 - 21:44 | 4110471 Groundhog Day
Groundhog Day's picture

I made this massive mistake last night.  I came home from work late, really late.  I typically always have a home cooked meal for dinner however I was just not feeling up to cooking and didn't want to wake the wife to have her make something either.  i went out and the only thing i found open was a drive thru Taco Bell.  Five bites in (after the initial hunger subsided) I started to taste the crap.  The beans were substanard, the oil they fried it in probably wasn't changed for a week, the cheese didn't taste like cheese.

whats my point? Their are many ways to count inflation

Fri, 11/01/2013 - 03:18 | 4111049 zhandax
zhandax's picture

I grew up at taco bell before pepsico bought it.  I just make my own now.  Really simple stuff.  Hard to believe a multination could find a way to fuck that up (well, maybe not).

Thu, 10/31/2013 - 21:34 | 4110439 Platinum
Platinum's picture

I've become quite the fan of dehydrated food. Buy in bulk - and save!

Hunting is also great. Pay a butcher to process the carcass, and you have meat for months.

Thu, 10/31/2013 - 22:27 | 4110579 RichardP
RichardP's picture

Yes.  Let's all 300 million of us use hunting as our main source for food.  That'll show them.

Thu, 10/31/2013 - 23:25 | 4110728 Platinum
Platinum's picture

A great majority of those 300 million will die off fairly rapidly as their bodies go through the shock of too much food (empty nutritionally as it may be), to none. Many others will die in the mayhem of the panic, once they realize that it is everyone for themselves.

Sure there will be a lot more hunters in the coming years, which is why I'm stockpiling dehydrated food. That's what i'll be eating when everyone else is out hunting and game is scarce. In the meantime though, I'm enjoying nature's bounty.

Fri, 11/01/2013 - 03:23 | 4111053 zhandax
zhandax's picture

Half of those 300mm are afraid of guns.  2/3 of the 150mm left couldn't hit the broad side of a barn.  I like the odds.

Fri, 11/01/2013 - 07:16 | 4111195 RabbitChow
RabbitChow's picture

Even among the crowd that routinely hunts, it's been my experience that 80% of the ones who around guns all the time can't hit the broad side of a barn.  The joke is they don't ever want to practice or sight in because when they go home empty-handed at the end of the season, they can always blame the gun.

Fri, 11/01/2013 - 07:31 | 4111216 I need Another Beer
I need Another Beer's picture

U got it Plat, I consume 4-5 deer a year. I pay a local abbatoir less than a buck to grind,package and freeze my kills for me. Like U I am loaded with dehydrated stuff that is left stashed. I nailed an 8 pointer trailing a doe last week as the rut approaches.

Yea I know the country is going to hell and there is absolutely nothing to be done about, but before it goes completely I will hunt and fish as much as I can and burn that gasoline.

On another note, the company I work for is telling us that the future is rosy as can be for us. It is so good that they are increasing compensation across the board.[cellular communication]. I get the feeling that cell phones will be the last thing people will do with out. By that I mean they will starve , go homeless and do without cars before giving up that cell phone.

Thu, 10/31/2013 - 23:30 | 4110749 WOAR
WOAR's picture

With the combined plagues of wild boar and white-tailed deer in Texas, they can do that.

Seeing as how those wild boar are still spreading despite "shoot to kill" orders by Conservation departments (meaning, all season is open season)...pretty soon anyone could do it.

You'd be surprised how many animals exist as nuisance animals without providing anything in return. Get rid of all these damn dogs and cats, and you could have millions of egg laying chickens! Free food from your pets! Could you imagine such a topsy turvy world?

Fri, 11/01/2013 - 17:46 | 4113526 Blankenstein
Blankenstein's picture

 

"You'd be surprised how many animals exist as nuisance animals without providing anything in return. "

You mean like man?  Yes, such a good idea to keep breeding exponentially and wipe anything out that doesn't fit with the upright apes's current obsession. 

Fri, 11/01/2013 - 07:46 | 4111235 epoxe
epoxe's picture

Meh. Less than 1% are aware whats happening. 1% can happily sustain on hunting unless you're one of those morons living in a big city, if so, have fun with that.

Thu, 10/31/2013 - 21:38 | 4110450 0b1knob
0b1knob's picture

< This is not the inflation you are looking for....

< These are not the droids you are looking for....

Fri, 11/01/2013 - 07:18 | 4111198 RabbitChow
RabbitChow's picture

You forgot the Jeddai hand wave. 

Thu, 10/31/2013 - 21:41 | 4110466 ZeroPoint
ZeroPoint's picture

Once gas goes over 10 dollars a gallon, the remaining economy will go down in flames.

Thu, 10/31/2013 - 21:53 | 4110494 A Lunatic
A Lunatic's picture

The true cost of gas for the American consumer is not far from that mark once the real expenditures such as foreign occupations, wars, taxes, subsidies, etc are considered, but since the pump says it's only $3.84/gallon we remain blissfully ignorant. If I had T.V. I suspect I could turn it on at nearly any hour and hear how rosy everything is, how we're turning the corner, Bernanke & Co. saved us from certain zombie apocalypse, gas is cheap and there is no inflation. Since I don't have T.V. I have to rely on upon my own senses which are constantly being assaulted by $3 cans of soup $8/gallon milk and $65 Levis......

Thu, 10/31/2013 - 23:18 | 4110716 bunzbunzbunz
bunzbunzbunz's picture

Ah yes. After all, you are forced to buy high priced items. I must live in a magical fairy land since the last cans of soup I bought were 88 cents, gallon of milk  2.97, and jeans ~16.00.

Thu, 10/31/2013 - 23:33 | 4110762 WOAR
WOAR's picture

He buys Shatto milk and Campbells soup, obviously. A man who likes Levi's obviously has refined tastes!

Fri, 11/01/2013 - 00:02 | 4110847 bunzbunzbunz
bunzbunzbunz's picture

I like my refined Levi's too. But I'm not so much of an idiot to pay more than $30 for them. Just because people are too lazy to look up prices and only pay the fair one doesn't mean there is rampant inflation.

Fri, 11/01/2013 - 07:50 | 4111239 epoxe
epoxe's picture

You're a moron if you cant see the difference in quality of the clothing you buy for $16 now compared to a pair of pants made 15 years ago....I only buy at farm supply wholesalers and buy REAL clothing at a reasonable price. If I buy a pair of jeans at walmart they last about 10 minutes on the farm. I have some 15 year old levi's that are still great though.

Fri, 11/01/2013 - 09:24 | 4111449 bunzbunzbunz
bunzbunzbunz's picture

So, you define inflation by the inability of the average consumer to determine they are buying an inferior product. That's kind of disingenuous since a pair of Levi's at walmart and a pair at the Levi's store cost the same to manufacture - yet vary in price by 200% or more. They intentionally manufacture lower quality products to trick you into buying the higher priced items later.

You are ignoring the fact that a lot of the cost associated with the products you buy goes to marketing(far more prevalent and expensive than 15 years ago). So if a consumer is now paying more into the marketing cost, the actual inflation of products themselves is not as high as it may seem.

Also, if the average consumer demands cheap over quality, then your "high quality" jeans become a niche product. This doesn't necessarily mean inflation has occurred. It more indicates a transition in the market. Perhaps rather than purchasing overpriced, over-marketed Levis, you should explore other low cost brands. Please don't pretend you are an expert in the quality of all low cost products. Remember, brand loyalty causes increased prices - NOT inflation.

Thu, 10/31/2013 - 23:56 | 4110830 CrashisOptimistic
CrashisOptimistic's picture

FYI during the Iraq war, the US military was burning 380K barrels/day of oil.  Comparitively, the country of Greece burns about 390K bpd.

That was the largest single US entity consuming, but if you understand oil you know the US consumes about 18 million bpd. 

IOW, though it may not fit the political memes, it wasn't a big % of total US oil consumption.

Fri, 11/01/2013 - 03:48 | 4111067 spiral galaxy
spiral galaxy's picture

Also factor in that yesterdays pure 100% gasoline is now 'watered' down with ethanol ...hence lower energy value per gallon & lower gas mileage.  And along those lines, the 'half gallon' OJ containers are now 59 ounces (from 64) and bag of chips from ...???....whatever down to 6 ounces.  .......etc., etc., with other items reduced in size but priced the same, if not priced higher!!

Thu, 10/31/2013 - 21:41 | 4110468 bubblemania
bubblemania's picture

Bullish

Thu, 10/31/2013 - 21:43 | 4110470 deerhunter
deerhunter's picture

Butcher it and handle it properly yourself and save 110 dollars.  Gut a deer quickly.  Ice the body cavity with bags of ice in warmer weather.  Skin and cut and refrigerate after boning.  If you watch someone a few times who knows knifework it doesnt take long to learn the primal cuts.  With the internet now,,, learing to handle a deer is pretty practical.  You will need some hands on experience but it is quite safisfying to buther your own game.  I will be in the woods all weekend with my bow.  The bucks are starting to chase the does a wee bit.  Could be a good weekend with some cooler weather.  Night all.

Thu, 10/31/2013 - 21:53 | 4110495 Running On Bing...
Running On Bingo Fuel's picture

I hate when they get out into the road. It's like I drive a deer magnet or something. High speed swerving, tires stretching, almost rollover, and the fucker still runs into my quarter panel. "Can't play chicken with me bitchez --The Deer".

Over.

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