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- Mar 25, 2010
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Inflation Is Going To Get Worse
By Greg Hunter Printer Friendly Version Bookmark and Share
Mar 29 2010 2:39PM
One of my consistent views on this site is â€œrealâ€ inflation is much higher than what the government is telling us. For example, recently the Bureau of Labor Statistics announced Februaryâ€™s inflation number (CPI) was â€œunchangedâ€ 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 â€œDollar store junkieâ€, and shops at places such as â€œDollar General and Big Lots, etc.â€ Here is an excerpt from a recent email to me from David on what he is seeing first hand:
â€œ. . .There IS inflation big time!!
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 moreâ€¦
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. Samâ€™s flavored water â€“ was $.50 now $.65
6. The â€˜Family pacâ€™ ( ??? ) of potato chips, â€˜Rufflesâ€™ â€“ 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 !! ??
7. AND: have you â€™seenâ€™ the shrinking rolls of toilet paper too??
You get my drift?? AND: That CPI basket of 30 items is full of BS!! WHAT is the real cost of things!! . . .â€
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 â€œreal cost of things!â€ (Williams calculates the inflation rate the way BLS did it in 1980.) In a recent report, Williams said, â€œ. . . evidence continues to mount of higher prices across a much broader spectrum of products and services. . . . eventually â€” within six-to-nine months â€” the broader inflation issues also should surface in official reporting.â€
Government calculations can distort the publicâ€™s perception of inflation. It is nowhere better demonstrated than in the price of gold. According to shadowstats.com, â€œ. . . the 1980 gold price peak ($850) would be $7,494 per troy ounce in terms of SGS-Alternate-CPI . . .â€ (figured the way BLS computed inflation in 1980, which is the same way shadowstats.com computes inflation now) Shadowstats.com also predicts, â€œThe 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.â€ 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 â€œadditional deficits of $562 billion,â€ says Holtz-Eakin. 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, â€œ. . . that could move the U.S. into the early phases of hyperinflation in the months ahead.â€ 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.