The Government’s Inflation Rate vs. the Real Inflation Rate

11 Feb

The Government’s Inflation Rate vs. the Real Inflation Rate


… and there’s the Real Inflation Rate! Try 15 Percent!

The US government’s official inflation numbers are bad enough.  But what if they also badly understate the real rate of increasing prices?

If the books are cooked, it will have a lot of unhappy consequences.  Among them are programmed benefit increases like COLAs, cost of living adjustments.  Social Security benefits are adjusted each year, increasing payments to offset the destructive effect of inflation on recipients.  

But what if inflation is higher than the official numbers used to calculate those adjustments? 

The government inflation number has been ratcheting higher and higher each month.  But John Williams says the real inflation rate is higher than the Consumer Price Index reports.

Much higher.  Williams says the current consumer price inflation rate is not 7.5 percent.  It’s 15.63 percent.  That means prices are rising at twice the rate the government reports.  It is the higher inflation in 75 years.

Let’s review.  For the twelve months ending last in October, the CPI was reportedly up 6.2 percent.  The next month the annual CPI was 6.8 percent.  One month later, at the end of December, the government reported consumer prices had risen 7 percent.  Now, annual inflation through the end of January is reported to be 7.5 percent

Balderdash, says economist John Williams

 “The quality of government reporting has deteriorated sharply in the last couple of decades. Reporting problems have included methodological changes to economic reporting that have pushed headline economic and inflation results out of the realm of real-world or common experience….”

“In the early-1990s, political Washington moved to change the nature of the CPI.  The contention was that the CPI overstated inflation (it did not allow substitution of less-expensive hamburger for more-expensive steak).  Both sides of the aisle and the financial media touted the benefits of a “more-accurate” CPI, one that would allow the substitution of goods and services.”

Williams created a tracking service called ShadowStats (Shadow Government Statistics, here) to use the calculaton basis that prevailed before political forces began altering the research away from being a reliable measure of the cost of living and began allowing substitutions.  

It is always wise to be wary of government numbers.  It reminds me of the old line that there are “lies, damned lies, and government statistics.”

But whether the real inflation rate is 7.5 percent or 15 percent, the purchasing power of the US dollar is inarguably being debauched by the central bank.  And we can all agree that you must take steps to protect your wealth, your family, and yourself with gold and silver.  Because government policy is not going to protect you.

Speak with a Republic Monetary precious metals specialist today, and create a solid plan for wealth preservation.