In 1950 a loaf of bread would cost you .25 cents. In 1964 that same loaf of bread would cost you .25 cents. Same for a gallon of gas, or a pound of hamburger, or a quart of milk. Inflation, for the every day items that we always buy, was nearly nonexistent. Then, in the mid 1960's inflation began to rear its ugly head and the government felt the need to change the rules on how we measure inflation. It became a convenient government cover, eliminating the charge that government spending and government practices were responsible for the reduction in your average earnings power.
Why is this important? Again, consider the period from 1950 to 1964. When prices for basic necessities remain stable, those 4% interest rates you received on your savings account represented "real savings", a welcome addition to your personal net worth. And when you received a promotion, or a pay raise at work, that too was greatly in your, and the national economy's favor. When the price of milk and hamburger and bread remained constant, that savings interest, and your pay raise enabled you to go out and buy a new car, or re-model your home, or buy the latest greatest refrigerator. All of these purchases boosted our economy, created new jobs, and increased our personal wealth.
Then, in 1965 President Lyndon Johnson decided that he wanted to spend trillions of dollars on his Great Society programs. Now, taken separately, America was probably wealthy enough to expend those dollars to satisfy Johnson's "Sugar Daddy" urges. However, sadly, Johnson also decided he wanted to fight a war in Vietnam and there was simply not enough money in the pot to do both. So Johnson put that long war on America's credit card. Part of the money came from robbing the Social Security Fund, but as the years went by even that wasn't enough to keep this massive spending from affecting inflation rates.
Within a few years of this elevated spending it became necessary to do something that would hide ever rising inflation rates. By the time Richard Nixon became president our national inflation rates were becoming a real concern. Something had to be done as Americans were in near riot mode over escalating coffee and sugar and beef prices. And by the time Jimmy Carter was ousted from office America was suffocating in 20% annual inflation rates.
So, the Bureau of Labor Statistics (BLS), whose job it is to determine the inflation rate, began to change the criteria for measuring inflation. Rather than a straight year over year measure of increases or decreases, the BLS came up with innovative ways to cover up the problem of rising prices.
One of the most dishonest means was to eliminate the price increases for basic necessities from the measurement index. For example, using phony economic theory, the BLS says if the price of beef rises over 20 percent in a single year, Americans do not suffer since they would automatically give up buying beef and substitute chicken or pork to satisfy their beef needs! I'm not making this up folks! Go to the BLS site and read it for yourself!
Still another "fudge factor" is the BLS's new approach to measuring prices across the board. For example, if the price of milk and eggs goes up, the BLS will disallow the price increase by showing that the price of a computer chip has gone down, thus offsetting the price increase of your dairy needs! Try eating computer chips at breakfast!
And how many of you know that if the government decides to provide an additive to a gallon of gas, an additive that boosts the costs of that gallon of gas, the BLS will not measure that price increase since they deem an environmental benefit offsets the price of that gas and need not be counted!
Okay, so what does all this government gobbledygook have to do with you, "Joe Consumer?" Well, it means that every year the price of beef and bread and milk and cotton and coffee and sugar go up. These price rises severely reduce your buying power because while your basic needs rose by 8 percent last year but you received just a 2% pay raise, or pension hike, and you've lost 6 percent in buying power. As this hidden inflation, covered up by government lies, continues over a decade, you've lost 60 percent of your buying power...and didn't even know how it happened!
Each year your federal government issues a decree that the inflation rate was only 2.9% and they expect every one to cheer. But, sadly, when you go to the grocery store, or fill up the gas tank, a terrible reality sets in and the government's grand lie becomes a bitter brew to swallow. Those "price counters" who have no apron string ties to big government will tell you we are experiencing annual 8% inflation rates and our "real" take home pay is eroding at an alarming rate.
Just revisit that .25 cent bread, and that .25 cents per gallon gas over a 15 year period, see that the price of what you "really" used stayed stable when the government operated within their budget. Now look how wide the disparity between what the government says you're paying...and how much you're really paying and you begin to see the immensity of their lies.
One final note. The federal rating agencies have already downgraded America's debt. The number counters are now saying the federal government will be spending fully a third of all taxes just to pay interest on the national debt by the year 2016. If you think it's bad now, try not think of consumer suffering, and the real inflation rates that will be buried behind phony BLS inflation statistics. And please, don't even contemplate what will happen if China and Japan ever decide that they'll no longer be buying a trillion dollars of America's debt each year. That is unless you have no problem with $10 dollar a gallon gas and a five dollar bill for a loaf of Wonder Bread.
Sad. Damned Sad.
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