Guest Post: Keeping It Real

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform blog,

“One only needs to reflect on the dramatic decline in the value of the dollar that has taken place since the Fed was established in 1913. The goods and services you could buy for $1.00 in 1913 now cost nearly $21.00. Another way to look at this is from the perspective of the purchasing power of the dollar itself. It has fallen to less than $0.05 of its 1913 value. We might say that the government and its banking cartel have together stolen $0.95 of every dollar as they have pursued a relentlessly inflationary policy.” - Ron Paul – End the Fed


The BLS reported the CPI yesterday morning. They tell me that inflation is well contained and has only risen by 1.2% in the past twelve months. Our beloved Federal Reserve chairman is worried inflation is too low. It is fascinating that the only people worried about inflation being too low are Ivy League educated economists and bankers whose wealth depends upon the middle class sinking further into poverty. As a person who lives in the real world, I can honestly say I like it when the things I need to buy cost less today than they did last year. When did inflation become a good thing for the average American? Our country was somehow able to grow from a fledgling new country to a world power in just over a century while experiencing mild deflation, except during times of war. The fallacy that inflation is beneficial to the common man has been peddled by bankers since 1971 when Nixon and his cronies closed the gold window and unleashed the inflationary boogeyman in the form of feckless politicians, captured Keynesian academics, and greedy soulless bankers.

It is no coincidence inflation accelerated the moment politicians, academics and bankers were unleashed to spend your money at will in order to obtain votes, Nobel prizes in economics, and ill-gotten obscene levels of wealth. David Stockman described Nixon’s dreadful sellout of the American people in his brilliant new book:

“Nixon’s estimable free market advisors who gathered at the Camp David weekend were to an astonishing degree clueless as to the consequences of their recommendation to close the gold window and float the dollar. In their wildest imaginations they did not foresee that this would unhinge the monetary and financial nervous system of capitalism. They had no premonition at all that it would pave the way for a forty-year storm of financialization and a debt-besotted symbiosis between central bankers possessed by delusions of grandeur and private gamblers intoxicated with visions of delirious wealth.”  -David Stockman – The Great Deformation: The Corruption of Capitalism in America

The USD has lost 83% of its purchasing power since 1971. The moment Nixon began playing politics with the USD and bullied the Federal Reserve Chairman into pumping up the money supply prior to the 1972 election, the inflation genie got out of the bottle and led to the miserable stagflation of the 1970′s. It took extreme measures by Paul Volcker to get it back under control in the early 1980′s. Since Volcker we’ve had nothing but academics and toadies who have chosen to change the definition of inflation in order to mislead the average American regarding how badly they are getting screwed. Every refinement, tweak, adjustment, or revision to the calculation of CPI has been designed to produce a lower figure. Why control inflation when you can just change the calculation to suit your purposes?

Over the proceeding decades, the BLS has sliced and diced the CPI in such a way that they can make it say whatever TPTB want it to say. They need to keep the mushrooms (you) in the dark regarding your standard of living deteriorating, while the beneficiaries of inflation (bankers, politicians) see their standard of living soaring. They have made hedonistic “adjustments”, quality “adjustments”, substitution “adjustments” and geometric weighting “adjustments”, all with the sole purpose to reduce the level reported to the American people on a monthly basis.

CPI was supposed to measure a common basket of goods and services that Americans needed to purchase in order to live their lives. If the price for this basket rose, you had inflation. If the price for this basket fell, you had deflation. The politicians, academics, bankers  and government bureaucrats decided if the price of steak went up by 10%, you would switch to chicken, therefore the price of steak did not go up by 10%. They decided if the price of a new car went up 5%, but you now had heated seats, the price didn’t really go up 5%. They now want to change to a chained CPI, which will further depress the reported figure. CPI no longer represents the increase in price of goods and services you need to live your day to day life.

Even the composition of the index doesn’t match the true cost picture for the average American. Somehow they bury the energy component within multiple categories and have the gall to argue that energy costs only comprise 9.6% of the average American expense budget. Tell that to the suburban two worker family that drives 30,000 miles per year and has to heat and cool a 2,000 square foot home. I doubt that too many families only spend 7% of their money on medical care. Housing accounts for 41% of the CPI calculation, but it is again a made up calculation called owner’s equivalent rent. Only an Ivy League economist could explain the calculation. The fact that home prices have risen by 12%, rents have risen by 4% and mortgage rates have risen from 3.25% to 4.5% in the last year somehow results in a 2.4% annual rate of inflation for housing.


If you have the feeling your standard of living has been falling  for the last few decades even though your owners tell you the economy is expanding, inflation is contained, unemployment is falling, the stock market is rising, and consumer spending is growing, then you might be smarter than a 5th grader. The financial elite ruling class are counting on the dreadful public education system, along with their mainstream corporate media propaganda arms, to keep the techno-distracted math challenged masses from understanding how the financialization of the country has resulted in their demise.

Being a skeptical sort, I decided to verify the accuracy of the CPI propaganda issued by the Bureau of Lies and Scams. The combination of the internet and memories from my youth provide a powerful and accurate assessment about the truthfulness of our government. I decided to create a chart of goods and services that average Americans have spent their hard earned wages on for decades. In a matter of minutes I was able to obtain prices from 1971 for various items common to most people. I was eight years old in 1971, being raised in a middle class one earner household on the salary of a truck driver. The chart below provides the proof the government CPI data is a bad joke and the American people are the butt of that joke.

Category 1971 2013 % Change  
Average Price of New Car $3,470 $31,252 800.6%  
Average Price of New Home $26,000 $245,800 845.4%  
Gallon of Gasoline $0.36 $3.50 872.2%  
Natural Gas $0.35 $4.00 1042.9%  
Loaf of Bread $0.20 $2.20 1000.0%  
Sirloin Steak per pound $1.19 $7.00 488.2%  
Dozen Eggs $0.25 $1.90 660.0%  
Box of cereal 12 oz $0.36 $3.50 872.2%  
Pack of Cigarettes $0.32 $6.00 1775.0%  
College Tuition – Private  $1,832 $30,094 1542.7%  
Monthly Rent $150 $1,073 615.3%  
Baseball ticket – Phila $2 $23 1050.0%  
Movie ticket $1.50 $9.00 500.0%  
Maximum Social Security Tax $406 $8,950 2104.4%  
Median Household Income $9,028 $51,017 465.1%  
Median wage per worker $6,497 $27,519 323.6%  
Average Hourly Earnings  $3.60 $20.31 464.2%  
CPI 40.5 232.0 472.8%  
Consumer Credit Outstanding (tril.) $0.14 $3.07 2092.9%  
Mortgage Debt Outstanding (tril.) $0.51 $13.18 2484.3%  

The BLS tells me the CPI has risen by 473% since 1971. The very same agency also tells me average hourly earnings have risen by 464% since 1971. This means the average worker is earning less than they did in 1971 in real terms. The median wage per worker has lagged CPI dramatically, as the averages have been skewed by those making outrageous compensation in the financial world. Median household income has barely kept pace with inflation even though households were forced to send both parents into the workforce, with the expected consequences of higher divorce rates and children left to fend for themselves or be raised by strangers.

By the government’s own measures, the average American’s standard of living has fallen since 1971. But, we also know the government has been manipulating the CPI figure lower since the mid-1980′s. After examining the true cost increases for housing, transportation, energy, food, education and entertainment, you would have to be brain dead or an Ivy League economist to believe inflation since 1971 has only been 473%. If home prices and car prices are 800% higher, while the energy needed to power and heat them are 900% to 1,000% higher, and the cost of food is 500% to 1,000% higher, how could the CPI only be 473% higher?

There are far more people going to college today than in 1971. With college tuition 1,500% higher, how can this not be reflected in the CPI? It certainly isn’t because the education is better. Statistics show the uneducated poor are more likely to smoke. Lucky for them, cigarette prices have risen at a rate of 4 times CPI due to the government taxing the crap out of them to fund their various taxpayer boondoggles. Inflation always hurts the poor and enriches the peddlers of debt.

My dad would take me to the brand new Veterans Stadium (built for $50 million in 1971) to see the Phillies in the early 1970′s. He paid $2.00 for a general admission seat and kids got in for 50 cents. We would buy a bag of soft pretzels outside the stadium and bring them into the park. We’d get a hot dog and soda for another $1. The entire outing to see a baseball game was about $5. Today, if I wanted to bring my family of five to a Phillies game at Citizen Bank Park (built for $458 million and paid for by the taxpayer) the lowest cost for the outing would be about $200. In 1971, you could spend a vacation week at the Jersey shore for $200. Now it gets you 3 hours of watching spoiled millionaires playing a child’s game while sitting with a bunch of foul mouthed drunks.

I also found it fascinating that the most regressive tax on earth, the Social Security tax, which hammers the poor and middle class while leaving the rich virtually unscathed has gone up by 2,100% since 1971. The rate in 1971 was 5.2% and the maximum salary level was $7,800. Today, the rate is 7.65% and the maximum level is $113,700. This increased cost for every middle class American is not factored into the inflation figures. Why would the government need to increase the maximum taxable wages by 1,500% when wages have gone up by less than 500%? The hard working truck driver bears the full impact, while Jamie Dimon not so much.

So now that I’ve proved beyond a shadow of a doubt the prices of everything we need to live have far outpaced our wages and the patently false drivel published by the BLS and parroted by the MSM, what are the implications? Well that is an easy one and is summed up by the last two entries in the chart. The average American has been lured into $16 trillion of debt over the last forty years in a pathetic attempt to keep up with the Joneses. Consumer credit (credit cards, auto loans, student loans) has gone up by 2,100% and mortgage debt has gone up by 2,500%. The American people have been sold a false lifestyle dream built on easy credit by evil bankers and Madison Avenue PR maggots.

There are those who would blame the people who have chosen to live far beyond their means. They have a point. The American people certainly haven’t shown a penchant for delayed gratification, saving for the future, or consuming less than they produce. But it takes two to tango and the lead in this dance of debt has been and continues to be the Federal Reserve and their Wall Street bank owners. It’s always reasonable to ask – Who benefits? – when trying to figure out why something has happened over time. Did the American people benefit by increasing the debt owed to Wall Street banks from $650 billion in 1971 to $16.25 trillion today? I don’t think so, based upon the visible deterioration I am witnessing in my suburban paradise.

The financialization of America; where Wall Street con artists,shysters and swindlers rake in billions for shuffling paper and making risky casino bets; mega-corporations ship blue collar middle class jobs to Asia in an all out effort to increase quarterly profits; politicians spend future generations into the poor house in order to get re-elected; and the Federal Reserve purposefully creates monetary inflation to prop up the corrupt system; has systematically destroyed the working middle class and created generations of debt slaves. The American people have been foolish, infantile, and easily duped. But it is clear to me who the real culprits in our long downward spiral have been. Lord Acton stated the obvious, many years ago:

 “The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”  ? John Emerich Edward Dalberg-Acton

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DOGGONE's picture

Inflation adjusted stock price history (Dow)
They aim for this to be unseen!

mickeyman's picture

And the fact that rising GDP in the 70s was matched by sharp declines in consumption of copper, zinc, beef, and pork tells us that there has been a real decline in standard of living.

Of course the politicos could point to the rising GDP and tell you that if your standard of living was falling, it must have been your own problem.

q99x2's picture

Maybe we will get lucky and get hit by a brown dwarf, a solar flare and an ice age.

redux2redux's picture

The only thing that has risen slower than the CPI is income!

LetThemEatRand's picture

The only income they count is measured in seven figures, and that metric has gone parabolic.

Stuck on Zero's picture

The only thing that hs grown as fast as the CPI is government.


Anusocracy's picture

This is all without considering that technological advances have a considerable deflationary effect.

In this era, without the cold dead hand of government in control, an average person would be able to live a good life on a 20 hour or less work week.

Peconic Bay's picture

This article is the clearest example of everything that is wrong with Fed Policy and Wall Street Banks.

pods's picture

If the policy seems wrong, you are not looking at it from the right angle.

It will be a nice day when the last banker is strangled with the entrails of the last politician.


Al Huxley's picture

I don't think I'm going to bother keeping it real anymore.  I think I'm going to hop on the bankster gravy train, sell in the money puts on FB, HLF and TWTR and watch them decay into nothingness in the parabolic rally that's kicking off on the back of the taper, then head out and get me some hookers and blow, and a couple of bottles of Bollinger.

fonzannoon's picture

In all seriousness why don't you just buy some out of the money calls on some of these momo names with ridiculous strike prices? Less capital at risk and nice rewards.

Al Huxley's picture

I know, it looks like the way to go, but the way to make money like a bankster is to capitalize on the time decay and the volatility decay.  I've been watching the Facebook $60 January calls, 3 days ago the stock was at around 53 and the calls peaked at around 1.00 (in fairness, if you bought the dip you could have got them for around .70).  Today the stocks' at 55 and the calls are - around 1.00.  On the other hand, the $60 January puts peaked today at 6.85, last I checked end of day, they were at 5.40.


These guys know what they're doing - the option market's free money if you're selling, and its donations to the writer if you're buying.

Peter Pan's picture

I don't have any particular regard for banks but people need to understand that they must always be wary of anyone lending them money or selling them stuff.

People took and continue to take the bait no matter whether it is a bank, a retailer or the government.

The underlying problem is that stupidity is hereditary hence the repetition of history.

scraping_by's picture

For the most part, they took the lender's word for it.

There's been a lot of discussion lately about what level of trust is needed to keep a society going. Claiming there's too much means less becomes normal. Eventually, nothing happens because no one can make a move.

Blaming the mark is a con artist's final defense.

starfcker's picture

i love jim quinn. i hope he sticks to it. america badly needs more truth tellers

Jack Burton's picture

Banks have grown their power over the last few decades in America to surpass the power of other corporations in industry, services and retail, their power now surpasses congress and the president, as the 2008 bailout proves beyond argument. Once their black mail worked in 2008, they have gone on to expand their power even more and to use the Federal Reserve as an agent of wealth Transfer.

I have to live with seeing a close friend of my daughters, a high school and college pal, enter UBS Bank right out of Grad School, after two years there he moved on to Royal Bank of Scotland and rode their collapse, bailout and Government take over. Now he is secure at RBS as a Project Manager, whatever that means. He just hit the 30 year old mark. As on today he is more than a millionaire, I don't know his salary and bonus structure, but his life style betrays his obvious wealth.

Vacations are a monthy occurance. He owns two farms, one near work and one near his home town. Both are for his collection off Horses, dressage horses for the most part. These easlily run 20-75 K depending on quality. He owns a condo near work and a vaction home upstate New York. Other RE investments are being added. No need to mention the cars, the private plane trips, the weekend parties, etc, etc.

He works for a functionally bankrupt bank. RBS is a ward of the British tax payers and has received numerous infusions of tax payer money. It is said another 40 billion is needed in future. But this has not slowed down compensation at his bank.

We take the piss on poor people as parasites if they draw a benefit of say 150 dollars of food stamp net handout. Yet this banker friend is making enough money to provide for two or three families of 4-5 to live a solid middle class life, and his pay comes only because of taxpayer handouts.

This is all acceptable. The Bankers have the power, everybody else has jack shit.

Clowns on Acid's picture

Hey Jack - The absolute most a Project Manager makes at any Inv Bank would be 250k. Just tellin' ya 'cause I knows. 

Jack Burton's picture

Makes sense then. 6-7 years at a bank = a millionaire. No? I did the math, 4 years is how long he has been project manager at RBS. so that added to his UBS years and bonus upon leaving UBS. He can well be a millionaire. Isn't that so?

Jack Burton's picture

Also, a Bankrupt Bank paying out 250K a year to a man whose bank just needed a 50 billion pound bailout. Justify that?

scraping_by's picture

Your pointing out the 'better quality' scam in the inflation calculations echoed another official reply to another widespread objection.

When it became apparent that the cheapest health insurance Americans will be forced to buy under ACA cost far more than the current least expensive health insurance, the reply from Barry on down to the phone drones was, 'But it's better insurance.'

The fact that's a blunt lie is another question. Notice here the technique, the evasion of reality with sales pitch. Consumer fraud, in most other contexts.

Just like Shrub's Medicare prescription scam, higher profits through government assistance.

WTFUD's picture

You'll never break me! Ok i did it.
The average small businessman knows full well he's being shafted nine ways to sunday but unfortunately for some perverse reason can't shake free from the shackles of his slave mentality.
The most useless of creatures would choose to live a miserable long life than rock the boat or challenge the status quo.
No it is left to a small band of us who are only being shafted two ways to sunday to run the gauntlet enduring the intimidations along the way ( some will not make it ) for the greater good.

' a bowl of dripping and gruel kind sir ' doff your cap making no eye contact.

moneybots's picture

"The goods and services you could buy for $1.00 in 1913 now cost nearly $21.00."

"...the dollar itself. It has fallen to less than $0.05 of its 1913 value."

"Our beloved Federal Reserve chairman is worried inflation is too low."


We need a lot of deflation to get the dollar back to its full value.



Manipuflation's picture

Rural real estate seems to be working for the deflation side.

moneybots's picture

Average price of new car  $31,252


Less than half of workers make that in a year.

RKDS's picture

Puzzle pieces I can't seem to put together:


1.  Wages overall have lost ground over time.  Minimum wage alone should be over $10 if adjusted for inflation.

2.  The economy is terrible and has slowed over time.  Prices are up and employment is down.

3.  More companies are on the dole receiving certainty by the truckload and bailouts when they fail anyway.

Yet, somehow, many people are out there screaming that wages should go even lower because that will fix everything everywhere forever like magic.  Why?  If the economy had improved as wages fell, they might have a point.  But price and unemployement went UP in spite of falling wages.  Looks to me like further cuts in wages would just send prices and unemployment even higher.  Why the hell would we want that?  It's such a one-dimensional line of thought.  And it's an outright stupid proposal when espoused by people who can't even pretend to have benefitted from it.  But if this country has anything, it's an overwhelming abundance of greed and stupidity.

kchrisc's picture

Good article, but a lot of the comments show that many still don't get it yet: "Printing" is theft. From me, from you, from us. And the criminals of the US government are in on the scheme and are dependent on it, hence the BLS' complicity.

Put another way, the criminals of government are stealing what you produce while the banksters are stealing what's left.

"Is it time for the guillotines yet?!"

I am American not US.

Wahooo's picture

I'm watching Barbara Walters interview Miley Cyrus. Keep It Real.

Yenbot's picture

God Barbara is long lived. I'm watching Walter Cronkite talk about how UFO's can't be real because they are radar-invisible. ROFLMAO...

Canoe Driver's picture

I met her at Santa Anita 20 years ago. She was an old bag then.

Clowns on Acid's picture

Baba Wahwa was/ is / and will be a pos.

luckylogger's picture

This guy is right on.... however watch the markets when these numbers come out.... nobody even trades them anymore, they are such bullshit that nobody with any money even believs them................. 

Give me a break..... I will buy chicken backs because rib eye went up a buk and then the actual inflation rate went down? Get fuking real.

I think the bernank and co should have to eat chicken feet and combs and gizzards and then tell us if they are substitutions for ribeye steak..................

bcecil's picture

I knew 52 years ago, when I was ten years old that banks have no real value to average people,

I could never figure out why we needed them..

Before banks were invented, people, who had acumulated some wealth,

would inidividually lend it out to younger ones, who needed a home, or to start a business. It all worked perfectly..

With the advent of and, many other crowdfunding sites, we can quickly go back to the old ways

by outlawing Banks ( because they are all corrupt law breakers, who are there, only for the uber wealthy -

let the current shareholders and bondholders all go to hell, they have made enough already ) and close them all down.

Nothing lost and VERY much gained for the whole world...


Reaper's picture

What's the difference if the FED spends a trillion US dollars or Congress spends a trillion dollars? Different recipients. Congress gave up its power to control the currency to a private Bank. Congress allows that Bank to print and spend US dollars as it chooses. The sheeple don't understand the FED is spending their dollars on its favored cronies, while their elected Congress consents. What do the sheeple get from the FED's spending? Poorer and inflation.
The masterminds at the White House have been shown to be mini-minds at best and crooks at worst. Where are those promised good jobs, Ben and Janet? The masterminds at the FED have failed at best and transferred wealth to their 0.1% cronies at worst. Lord Acton wrote, "Absolute power corrupts absolutely." Our government masterminds and banker masterminds are corrupted absolutely. Our Congress and our media are enablers of their absolute corruption.

css1971's picture

Well if Congress spends $1T then it has to get it from somewhere.

If the Fed spends $1T it simply creates it from nothing.

That is the difference.

the0ther's picture

constantly decreasing interest rates on deposits contribute to the spending binge in the US. why save when you get nearly zero return?

geewhiz's picture

The best guess at true inflaton is using the 1980 method which has inflation around 8% now. This is 1980 goverment methods so that is probably skewed too. Even though GDP is kind of a wild guess statistic Shadowstats has it at about -1·8% now and it briefly peaked at -6% in 2009. There is no doubt the working man at all levels and the modestly capitalized ones too are feeling life stesses caused by declining personal wealth and diminished earning opportunities.

At some point there will be rebellion and changes. The organanizers for change in the direction of slavery are better funded and coordinated than the organizers for freedom. One manipulates the sheeple and the other tries to enlighten them. The majority of humans being what they are, I would probably bet on the slaver organizers creating the overarching global system in their image. Anything can happen though, human nature us fluid, adaptable, and often unpredictable.

esum's picture



  cock sucking pussies and prankstas

    hittin her azz with the meat

  and now a word from THE PRESIDENT 

   send a million troops to wage a war

Cthonic's picture

Whilst the banksters must go, so should their enabling conspirators, the lawyers.  More wisdom from the same source:


'Every thing secret degenerates, even the administration of justice; nothing is safe that does not show how it can bear discussion and publicity.'

'The one pervading evil of democracy is the tyranny of the majority, or rather of that party, not always the majority, that succeeds, by force or fraud, in carrying elections.'

'The danger is not that a particular class is unfit to govern. Every class is unfit to govern. The law of liberty tends to abolish the reign of race over race, of faith over faith, of class over class.'

' Liberty alone demands for its realisation the limitation of the public authority, for liberty is the only object which benefits all alike, and provokes no sincere opposition.'


honestann's picture



To fiat (lie and fake) or not to fiat (honesty and real).

That is the question.