The Consumer Price Index and Social Security

“The hurrier you go, the behinder you get!”

If you think you are falling behind in the dollar economy, you are right.  The plain truth is that if you weren’t targeted to fall farther and farther behind, there would be no reason at all for inflation.

In a moment of irony, Washington released the “official” 12-month consumer price increase report at the same time it announced what Social Security cost of living increases will be in 2024.

Here are the numbers:

The Consumer Price Index (CPI) rose 0.4 percent in September.  For the 12 months ending September 30, the CPI rose 3.7 percent.  For the Western states including Arizona, the 12-month CPI rose 4.0 percent.

The Cost-of-Living Adjustment (COLA) for Social Security benefits will be 3.2 percent.  

The government’s CPI says that you are paying on average 3.7 percent more for goods and services today than you were last year.  So, beginning next year Social Security recipients will get a 3.2 percent increase to compensate for higher prices they have already been paying for a year.  

Never mind that the Consumer Prices figures are among the sketchiest numbers that Washington produces, widely believed to massively understate the real rate at which the cost of goods and services is climbing.  And even by the official Washington scoreboard, prices have risen in the Western states, not by 3.7 percent, but by 4.0 percent.

Too bad if you live in the West.  Too bad that your cost-of-living adjustment lags the higher prices you have already been paying.

But bear in mind that inflation has to rob somebody, and those somebodies are us.  The money that the government prints, the increase in the amount of money and credit created by the central bank, only takes on value to the extent that it deprives someone else of purchasing power.

When the government prints money – digitally or otherwise – it doesn’t increase the amount of goods and services in the economy.  It just means that the politicians and their cronies who receive the new money are competing with other people who have dollars for those goods and services.  More people with more money bid up the price of the amount of goods and services available.  

That is how inflation works.  If the government relied on some honest index to make sure that Social Security recipients and other dollar holders keep up with inflation, there would be no point in inflating.  For someone to come by purchasing power without producing anything to earn it means that someone else must lose.

Social Security recipients are among those who lose.

Future retirees must protect themselves from this flim-flam by keeping a portion of their savings in real money, in money that can’t be printed and devalued.

And that means gold!  Gold short-circuits the schemes of the money printers to enrich themselves and their cronies at your expense.  As we say so often, they can’t print gold!