Inflation Is Going To Get Worse
By Greg Hunter’s USAWatchdog.com
One of my consistent views on this site is “real” inflation is much higher than what the government is telling us. For example, recently the Bureau of Labor Statistics announced February’s inflation number (CPI) was “unchanged” at a 2.1% annual rate. Over the years, the BLS has changed the way it calculates inflation by using accounting gimmicks that understate what most people would consider the true cost of living. So, the government inflation numbers of today make inflation look much lower than it really is for main street America.
One of my readers, David from Salem Alabama, is under no illusion the inflation genie is captured in the bottle. David admits he is a “Dollar store junkie”, and shops at places such as “Dollar General and Big Lots, etc.” Here is an excerpt from a recent email to me from David on what he is seeing first hand:
1) Cat food: was 5 cans for a dollar NOW are 3 cans
2) Dog food: 5 oz was $.33 per can NOW $.55 to $.65
BIG cans was $.65 to $.75 NOW a buck or more…
3) Boxes of flavored rice: was 2 boxes for a $1.00 NOW ONE box for
$1.00 or $1.15 ??
4) A basic candy bar: was 3 for a $1.00 NOW is 2 for a dollar or
$.65 ea
5) Sam’s flavored water – was $.50 now $.65
6) The ‘Family pac’ ( ??? ) of potato chips, ‘Ruffles’ — at Wal-Mart
at ( $4.38 ) reg price is $4.99 BUT the bag is VERY small now and
price was, a few months ago, about $3 some thing !! ??
You get my drift?? AND: That CPI basket of 30 items is full of
BS!! WHAT is the real cost of things!! . . .”
What David has documented is the real cost of living or inflation. According to John Williams of shadowstats.com, the inflation rate in February is running at 9.4% annually. That is the “real cost of things!” (Williams calculates the inflation rate the way BLS did it in 1980.) In a recent report, Williams said, “. . . evidence continues to mount of higher prices across a much broader spectrum of products and services. . . . eventually — within six-to-nine months — the broader inflation issues also should surface in official reporting.”
Government calculations can distort the public’s perception of inflation. It is nowhere better demonstrated than in the price of gold. According to shadowstats.com, “. . . the 1980 gold price peak ($850) would be $7,494 per troy ounce in terms of SGS-Alternate-CPI . . .” (figured the way BLS computed inflation in 1980, which is the same way shadowstats.com computes inflation now) Shadowstats.com also predicts, “The just-enacted, effective government takeover of the healthcare and health insurance industry will damage the economy, widen the federal deficit and likely contribute directly to consumer inflation.” According to former Congressional Budget Office director Douglas Holtz-Eakin, the reason the new health care legislation will cause the economy to tank is government red ink will explode in the next 10 years. Instead of saving $138 billion as the president claimed, the country will go deeper in debt by adding “additional deficits of $562 billion,” says Holtz-Eakin. (Click here for the full report.) Because of the sinking economy, the government will, once again, feel compelled to start a new round of bailouts for the banking system and states. So far, nearly 40 banks have failed this year. With continuing commercial and residential real estate foreclosures, dozens more will be taken over by the FDIC at taxpayer expense. Also, many states face severe budget problems such as California, Illinois and New York, to name a few. In an election year, these states will all receive billions of bucks in bailout money. All of this new borrowing and money printing could cause a massive sell-off of the dollar. That means imported goods like oil would rocket up in price. According to shadowstats.com, “. . . that could move the U.S. into the early phases of hyperinflation in the months ahead.” So, look for the economy to slow down, especially when companies such as AT&T are projecting the new health care reform will cost it an additional $1 billion a year. And, look for inflation to pick up because the borrowing, bailouts and money printing are simply going to continue.
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About the Author
Greg Hunter
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.
Of coarse, though the Gov would never say so openly, inflation serves there interest. Higher prices lead to higher tax revenue, as taxes are percentage based but the Gov doesnt recieve the blame as they would with a tax increase.
Denny,
good point. Thank you for the comment.
Greg
In Canada we have same increase at the dollar store
And the same manipulation of cpi by our tyrant
Christian,
Good feedback, thank you!
Greg
Here where I live the inflation has got to be much worse. I know prices 10 years ago to 5 years ago to 2 years ago to today…and what people in this town where making isn’t the same as it was 5 or 10 years ago…but yet the price of everything…especailly groceries and gas in general…HAVE exploded…but they don’t report these numbers…they give us some outlandish % number that distorts the thinking of people…makin them really think nothing is changing.
Travis,
Thank you for weighing in.
Greg
Not to mention that everything is smaller. What was 32 ounces is now 1 pound, 10 oz. What was 16 ounces is now 14.5. What was a half gallon is now 1.5 liters. and the list goes on and on and on….
Judith,
As you point out, that is also inflationary. Thank you for making that point.
Greg
Are there any podcasts via Itunes we CAN listen to of you?? Thanks.
Linda,
Not yet but I think I am becoming a bit of a regular on Coast to Coast AM and a few other local radio stations. Thank you for your support.
Greg
Jaz sem že doživel hiperinflacijo v ex Yugoslavia in vem,da vsaka država zelo dolgo vzdrži predenj nastopi hiperinflacija.USA je še zelo daleč od hiperinflacije in collaps.
Marjan,
Translation: I’m already experienced hyperinflation in ex Yugoslavia, and I know that each country a very long time before their appearances hiperinflacija.USA refrain is still far from hyperinflation and collapse.
Thank you. I hope the U.S. does not collapse in hyper-inflation and that it is far away. Thank you for you comment.
Greg
That is one issue that I am concerned about. The whole country is going absolutely insane. And now no one trust any of our institutions or each other. We need some serious reflection, some more than others…before it’s too late. I hope it isn’t too late right now.
JJ,
I also hope it is not too late. Thank you.
Greg
I guess what I don’t get is that if inflation is increasing then also gold and silver and other commodities should be increasing at the same rate. Or is there a delay for one to catch up with the other? I know the gold & silver price are manipulated but at some point I would think something would give. Maybe I should be investing in food more (buying and storing it) and commodities less. It takes a lot more fiber to digest gold, silver and oil. It was a terrible joke I know.
Vee,
Be patient, Gold is trading at around $1,100 an ounce. Experts say, you can manipulate the markets but you cannot stop the long term trend. Tha long term trend for gold is up. Thank you for your comment.
Greg
Greg,public perception is so controlled by the media. When the MSM says there is little or no inflation, it is believed and spending behavior illustrates this. We are indeed a nation of sheep, completely dumbed down and apparently satisfied with life as it is. Until all americans can stand up and declare that “I’m as mad as hell and I’m not going to take it anymore,” nothing much will change unless the powers that be decide on change and just what the change shall be, always to their benefit. Bleak sure, but I feel, very real.
Keith,
Fight! Do not give up! Prepare for tomorrow because there will be one.
Greg
I don’t know if I buy this inflation projection. Here is why:
We have reached ‘debt saturation’ in the good ol USA, meaning, every dollar the gov’t spends is actually contracting the economy. Currently this contraction is $0.50 for every dollar spent, let’s say a billion is spent by the gov’t then the real overall economy will contract by 500 million.
So, eventually this will be recognized, we’ll go through another round like fall 2008 and I think this will cause a major disruption in the banking system, actually a complete collapse this time including the Fed, meaning the only ‘money’ available will be the physical cash people have in their pockets, meaning deflation as never even concieved of before.
Dan,
Good points! But you are fighting the last war. Real Inflation is already running at 9.4%. Sure nothing goes straight up but the long term trend for inflation is decidedly up. Thank you for your insight and comment.
Greg
Dan,
I’d love an explanation of the math on your theory. What does the math look like?
AMERIKANS DESERVE EVERYTHING THAT IS COMING THEIR WAY!
YOU FOLKS CHOOSE TO IGNORE THE SIGNS OF WHAT IS HAPPENING WHAT IS COMING FOR OVER 90 YEARS… PRESIDENTS HAVE ASSASINATED FOR TRYING TO EXPOSE THE TRUTH! LOOK UP GENERAL SMEDLEY BUTLER USMC.
AND YET YOU STILL SIT THERE STUFFIN YOUR FACE COMPLAINING ABOUT HOW MUCH CAT FOOD COSTS.
IT’S FOLKS SUCH AS YOU I WILL BE STEPPING OVER IN THE GUTTER WHEN THE AMERICAN PATRIOTS RISE UP TO FIGHT THE NWO AND THE FALSE PRESIDENT BARRY SOTORO.
YOUR ALL IGNORANT FOOLS! AND DESERVE WHAT YOU GET IN THE COMING YEARS OF PAIN AND STRIFE!
Sec,
I don’t like the government but I love my country. Americans do not deserve this. Wall Street does but Americans do not.
Greg
In general, what do you propose people do with this information to prepare and protect themselves Greg?
TL,
Go on the site and search for the post called, “Where do I invest my money” Read all the links in this article and write me back. I think this will help you. Thank you for your comment.
Greg
This is what happens when society becomes complacence. The Federal government has dropped the “Federal” Spending bomb since LBJ passed welfare. Then they were borrowing (stealing) from future Americans. Now they are borrowing (stealing) from the Chinese. I hope everyone noticed that unlike the American people, the Chinese have wised up and stopped buying US Government Treasuries. I hope the American Public wises up soon.
Contrary to common American belief, you can not get something for nothing. There is a price for everything, whether you pay it in dollars, civil rights or liberty.
George,
Amen to that brother.
Greg
Well, not sure if anybody should be feeling surprised that inflation is creeping up and the government is lying (denying) that it is.
If you are surprised – I only have one question – why ?
Look at the history. United States has always paid it’s debt with INFLATED DOLLARS. If you dis-agree please present one example when they did not.
Now that the debt is all time high and the pot of debt is about to explode what do you think is going to happen ? You think they (US) would pay debt in GOLD ? you gotta be kidding yourself.
If history is a teacher, then you were taught already – US only knows one way of paying it’s debt ie. by make money cheaper (that’s inflation).
It’s here, always has been, it’s going to stay here and this is how this problem (Debt) would be dealt with again.
– No wonder world wants to get out from trading in dollars.
Vinny,
Thank you for the comment.
Greg
Check out shadowstats.com for the real numbers.
Interest Rates can never rise again, as by November 2010 the ON BALANCE SHEET debts of the United States will be $14.5 trillion; a 3 percent rise in short-term yields is $420 billion of additional interest expense per year, ON TOP OF the current $1.6 trillion deficit, thus expanding it by 1/4th , to $2 trillion a year.
Interest rates can never be normalized again, ever, and if measured accurately they are profoundly NEGATIVE. Take a look at this alternate measure of inflation from John Williams of http://www.shadowstats.com:
Wow, after unwinding the ADJUSTMENTS (made by government to lie to you) inflation is at almost 10 percent on the items you use EVERY DAY; if interest rates were normal, overnight fed funds should be 10% RIGHT NOW! Notice how the GAP has widened over the last three DECADES? Just like Pinocchio’s nose, the lies just keep getting bigger and bigger. Think of it, negative interest rates approaching 9% — trillions of dollars of government spending throughout the developed world and NO GROWTH in incomes and economies. An inflation MEGA trend is firmly in place and will continue to unfold.
Kraig,
These are good numbers. I am a big fan of John Williams of shadowstats.com. I quote shadowstats numbers consistantly on this site. Thank you for the comment.
Greg
I agree, these numbers are good, but think of the consequences and you will understand why above I said there will be massive deflation. Imagine, the debt goes bad again, only this time it’s not like 2008 because who holds the paper debt now? It’s all been transferred to the Fed, this means the Fed goes insolvent and who handles check clearing, bank accts, etc? This means all electronic money will dissapear overnight and only people/entities with actual cash dollars in their wallets, socks, or safety dep boxes will have any ‘money’ – anyway, something to ponder…
Dan,
Thank you for your comments!
Greg
Dan, If what you say is true, why would I take a Federal Reserve Note; you know, the paper money that you say will be left, for anything. They are, after all, worth nothing. It only has value now because people think they can trade it for something else of value. If I own a gas station and the Fed has collapsed, you’d have to pay me gold or silver. I would not take you U$Ds unless I had a need for toilet paper. Think about what you are arguing to happen; we’ll be going back to a HARD currency and barter system.
Inflation is simply a hidden tax. By design our monetary system is intended to transfer wealth from those who earn it, to those who print it. buy silver!!! Physical silver bullion, plant a garden, and get some chickens. Worst case scenario you have some shinny stuff, some green stuff, and a new pal in your back yard.
Jesse,
Inflation is a hidden tax and it hurts the poor the most! Thank you for making that point!
Greg
Step back, and let The Implosion happen. Heed the lesson learned, then taught, by King Canute.
Mr. Hunter, I don’t know if you’re a friend of any kind with Paul Craig Roberts, or only know him as a journalistic peer, but even he has now taken a page from The Atlas Shrugged Playbook and has decided to no longer be a hapless accomplice to The Ultimate Exercise In Futility.
There is, or rather once was, a time to stand athwart the path of “progress”, yelling “Stop!”, and perhaps having a glimmer of hope the desired result was attainable.
That time is long past. The New Vandals, Visigoths, and Huns have overrun everything, and defence now consists of staying as far out of their way as possible while they loot the landscape.
Once they have done their utmost, they will then self-extinguish because they will come to the sudden realisation that they have consumed everything and they, themselves, are incapable of producing anything. Then, the way will finally be clear to return from the “Galt’s Gulches” of the world to start the rebuilding process.
Man,
I enjoy your comments! Please keep making them!!!
Greg
Amen bro, have read Atlas Shrugged 3-4 times, but it’s been a while.
Perhaps the best comment I’ve heard along these lines recently was: “Why does your financial advisor live in a nicer house than you do? Why does the same guy drive a fancier car than you? Why does he eat at fancier reastraunts, and wear fancier clothes than you? What does he produce for the world? Does he make your life better? Do you make someone’s life better, if so, who is worth more?”
And who can forget Jim Rogers: Soon the people driving Lamborgenes will be farmers, so the financial types better start learning to drive tractors or they will be the unemployed asking for handouts.
Again, you stated things well, thanks,
Dan
Buy PHYSICAL Gold and Silver now. $1100 is not expensive when you’re paying in potential worthless paper.
I stress physical, because ETF’s, just like the dollar is not backed by gold. It is just a worthless piece of promise advising otherwise. How else can they keep the true price of gold down? Issue more ETF’s!
Ask yourself this, why is the silver to gold ratio over 60 times the price of silver in 2010, when in 1980(?) it was around 17 times?
If Gold should be at the CPI adjusted rate of $7500/oz, that means silver should be $440 /oz, not a bad 2500% increase for worthless paper.
on a side note to whoever wants to listen, read Herbert Hoovers memoirs on the great depression and you will be shocked at the similarities of today.
All the best.
NT,
Right on target! Thank you.
Greg
I was unemployed until the fall of 2008, one of the many, and so I pondered whether I should take a gov’t job with the DOE. Granted it payed about 30% better, more stability, and of course had better benefits than a private sector job I was contemplating at the time. So, I reflected on my time in the Army during the Gulf War, and chose the PRIVATE SECTOR job, largely because of what I knew would be red tape and also for philosophic reasons.
I can honestly say that I think the health care bill will be the downfall of this once powerful and majestic nation. I think this bill alone will bring complete and utter economic ruin to my and every other Americans future. Whether it is with hyperinflation, Zimbabwe fashion, or deflation – which I think – it will be devastating.
I only hope We The People fall back on our Constitution. I believe the fall of the Republic is inevitable, and with each new financial program we accelerate the process. Like I say, I hope we fall back to the Constitution and perhaps decide a few new amendments are necessary – like private property, term limits, citizenship limits, personal taxation limits (not corporate, which I could explain why if desired), and mostly economic and personal privacy guarantees in this ‘digital info’ age.
It’s not too late for the USA to get out of this mess, but I’m afraid our fearless leaders do not recognize that Keynesian economics has limits that have been exceeded/violated, and now we must return to Austrian/sound-money principals. Or at least follow a Jacksonian and Lincoln dollar policy.
-Dan
Thank you Dan.
Greg
Greg, 1933 when we told the US debt holders that US Dollar (U$D) was now $35 to the ounce of gold instead of the former rate of $20 per ounces of gold, it did not impact most as we were the exporter. Americans made most of what they consumed here, including oil. That is if you over look the US Governments confiscation of Gold from private citizens.
I took gold at $20/oz and added 5.1% inflation per year to the $20 price; rather arbitrary I admit but it is scary how the Historical price of Gold matches many times. If you look at inflation based on price of $20/per oz of gold from 1932 verses U$D, inflation has been about 5500%
Gold $20/oz in 1932 Gold at $1100/oz 2010 $1100/$20 =5500% from 1932 to 2010
Good stuff George!
Greg
Yeah, I think I will stick to my guns…