Where is the inflation?

So all this talk of inflation, but the CPI says inflation is at 2% right?. Many keynesian economists might point this out when talking about inflation. However, I am certain that the CPI is not a good measure of inflation. Furthermore, I believe the government is being deliberately dishonest on it’s account of inflation. The methodology is misguided, and some of the numbers they input are just plain lies!

In fact, in a recent survey conducted by Fox news before the U.S. elections., 43% of people chose rising prices as their main economic concern, out of a list which included unemployment (23%)

Think about this, why were energy and food  taken away from the CPI? Why are energy prices going up so much now?? I think we may be on to something.

Peter Schiff, an Austrian economist, renown for predicting the financial crisis made his own version of the CPI.(This is in the U.S.)

In Peter’s basket of goods for his CPI he included; rent, eggs, new cars, milk, gasoline, bread, dental services, potatoes, sugar, public transport, prescription drugs, airline tickets, butter, coffee apples, cereals, store purchased beer, tires and beef.

We the compare Peter’s CPI to the official CPI during two ten-year periods. One starting in the 1970s, a time known for high inflation, and the ten years since 2002.

IN the first case, CPI measured inflation at a whopping 112%. Peter Schiff’s CPI stands at 117%. Pretty accurate I would say.

In the 2002-2012 period, the CPI measured inflation at 27.5%, noticeably lower. Peter’s basket of goods shows an increase in prices of 44.3%. Double the official inflation.

On top of this, Peter Schiff exposes a few examples where the numbers the government uses are simply wrong.

The link for the video is http://www.youtube.com/watch?v=pwI3Nya5L9g

Suddenly talking about inflation doesn’t seem so ridiculous does it? Why would the government lie about inflation? The question is why wouldn’t they? What governor wouldn’t take the opportunity of taxing its citizens without them even knowing?.

Like I said before, these numbers are for the U.S. In the future I will try to come up with a similar analysis of the E.U. area inflation.


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