The Great CPI Scam--and We Lose Again

You really have to hand it to the illegal Federal Reserve. They have a great scam going when it comes to inflation. The Fed in conjunction with the government has manipulated the Consumer Price Index so that it will always understate the real inflation rate. Then the Federal Reserve can argue that they have to print money because inflation is too low. Numerous Fed Presidents then claim the Fed has to achieve 2-3% inflation to comply with their mandate of price stability and full employment. How 2-3% inflation is consistent with price stability is beyond me. And here is the last part of the inflation scam. If, for some reason, the CPI ever ticks higher than 2-3%, the Fed will simply ignore it and claim that core inflation, which excludes food and energy (where inflation is most evident) is the real measure of inflation. This way they can keep interest rates low and credit easy. It is a perfect win-win scenario for the Fed, and the only folks who lose are the American public.

Case in point, today's CPI release from the Bureau of Labor Statistics:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.2 percent before seasonal adjustment.

The index for all items less food and energy was unchanged in October, the third month in a row with no change.

 
Does anyone in their right mind really believe inflation is only running at 1.2% year over year? Apparently, the complicit criminals at the WSJ do because they ran a headline titled "CPI Data: Fed Was Right, Inflation Frothers Still Wrong," which tries to justify Fed printing money to prevent falling prices. Despite the fact that commodity prices have surged across the board, the media keeps parroting the Fed's propaganda of no inflation because the CPI says so. Does this kind of propaganda work? Don't people see the real inflation rate in their daily lives? Apparently not.
 
Below is a chart of commodity prices year to date. Outside of cocoa, rice, and natural gas, commodity prices are all up strongly as a result of dollar debasement.
 
click chart for larger image
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Here is chart from John William' Shadow Stats, which shows the real level of inflation.
 

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Which number most fits your real world experience? I can say that John Williams' number is much more reflective of inflation in my life. But then again, I live in the real world and do not have the luxury of excluding food, energy, and other necessities.
 
Black Swan Insights

The Great CPI Scam--and We Lose Again