The Four Percent Solution

The Bureau of Labor Statistics is run by a bunch of lying liars who lie. That’s the only explanation for the ongoing fraud called the Consumer Price Index.

How else can you explain the claim that the inflation is running at an annual rate of 4%? Anyone with eyes to see knows that the real cost of living is growing faster than that. Buy gas lately?

Anecdotal evidence: In my industry, steel, the cost of our bread-and-butter product, flat-rolled coil, sheet, and plate, has jumped about 25% since January 1, and our mill suppliers have already announced increases of another 25% to come by June 1.

This is the type of steel that goes into all sorts of consumer products, from automobiles to washing machines to closet organizers to lawn chairs.

Additionally, commodity prices have ballooned: Wheat has tripled in the last two years, corn is up 2-1/2 times, and rice has doubled over the last twelve months.

So how does the BLS come up with its bogus number? Well, for one thing, energy costs don’t factor into the number. So that 18% increase in that sector acknowledged by the BLS is kept out of the mix, which comes as little comfort to anyone who drives to work or heats their home.

More insidiously, we’re comparing today’s rotten apple with yesterday’s orange:

In the early 1990s, press reports began surfacing as to how the CPI really was significantly overstating inflation. If only the CPI inflation rate could be reduced, it was argued, then entitlements, such as social security, would not increase as much each year, and that would help to bring the budget deficit under control. Behind this movement were financial luminaries Michael Boskin, then chief economist to the first Bush Administration, and Alan Greenspan, Chairman of the Board of Governors of the Federal Reserve System.

Although the ensuing political furor killed consideration of Congressionally mandated changes in the CPI, the BLS quietly stepped forward and began changing the system, anyway, early in the Clinton Administration.

Up until the Boskin/Greenspan agendum surfaced, the CPI was measured using the costs of a fixed basket of goods, a fairly simple and straightforward concept. The identical basket of goods would be priced at prevailing market costs for each period, and the period-to-period change in the cost of that market basket represented the rate of inflation in terms of maintaining a constant standard of living.

The Boskin/Greenspan argument was that when steak got too expensive, the consumer would substitute hamburger for the steak, and that the inflation measure should reflect the costs tied to buying hamburger versus steak, instead of steak versus steak. Of course, replacing hamburger for steak in the calculations would reduce the inflation rate, but it represented the rate of inflation in terms of maintaining a declining standard of living. Cost of living was being replaced by the cost of survival.

The old system told you how much you had to increase your income in order to keep buying steak. The new system promised you hamburger, and then dog food, perhaps, after that.

Did you get that? The change in calculating the official rate of inflation was proposed during Bush I (by the traitorous Alan Greenspan) and enacted by the Clinton administration. This is not a partisan issue.

The official rate of inflation is a lie, spun for the benefit of elites who grow wealthier while those whose incomes are directly affected by inflation — people who live off savings, collect Social Security, or with salaries tied to the official CPI — are punished.

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