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Lies, Damned Lies, & Inflation Statistics

Public Policy

The government released their monthly CPI report this week. Even though it came in at an annualized rate of 3.6%, they and their mouthpieces in the corporate mainstream media dutifully downplayed the uptrend. They can’t let the plebs know the truth. That might upend their economic recovery storyline and put a crimp into their artificial free money, zero interest rate, stock market rally. If they were to admit inflation is rising, the Fed would be forced to raise rates. That is unacceptable in our rigged .01% economy. There are banker bonuses, CEO stock options, corporate stock buyback earnings per share goals and captured politician elections at stake.

The corporate MSM immediately shifted the focus to the annual CPI figure of 0.1%. That’s right. Your government keepers expect you to believe the prices you pay to live your everyday life have been essentially flat in the last year. Anyone who lives in the real world, not the BLS Bizarro world of models, seasonal adjustments, hedonic adjustments, and substitution adjustments, knows this is a lie. The original concept of CPI was to measure the true cost of maintaining a constant standard of living. It should reflect your true inflation of out of pocket costs to live a daily existence in this country.

Instead, it has become a manipulated statistic using academic theories as a cover to systematically under-report the true level of inflation. The purpose has been to cut annual cost of living adjustments to Social Security and other government benefits, while over-estimating the true level of GDP. Artificially low inflation figures allow the mega-corporations who control the country to keep wage increases to workers low. Under-reporting the true level of inflation also allows the Federal Reserve to keep their discount rate far lower than it would be in an honest free market. The Wall Street banks, who own and control the Federal Reserve, are free to charge 18% on credit card balances while paying .25% to savers. The manipulation of the CPI benefits the vested interests, impoverishes the masses, and slowly but surely contributes to the destruction of our economic system.

A deep dive into Table 2 from the BLS reveals some truth and uncovers more lies. Their weighting of everyday living expenditures is warped and purposefully misleading. Let’s look at the annual increases in some food items we might consume in the course of a month, living in this empire of lies:

  • Ground Beef – 10.1%
  • Roast Beef – 11.8%
  • Steak – 11.1%
  • Eggs – 21.8%
  • Chicken – 3.7%
  • Coffee – 3.4%
  • Sugar – 4.2%
  • Candy – 4.6%
  • Snacks – 3.5%
  • Salt & Seasonings – 5.3%
  • Food Away From Home – 3.0%

 

Despite these documented increases, the BLS says food inflation only ran at 1.8% in the last year. They show large decreases in pork, seafood, dairy, and vegetable prices. I grocery shop every week. I buy milk, fish, and vegetables and the prices have not fallen. The price of pork products has decreased from all-time highs, but is still well above prices from a few years ago. The BLS fraudulently keeps the food price increase lower by assuming you switch from beef to pork when the price of beef soars. That assumption does not lower the price of food. The assumption essentially builds in a lower standard of living for you in their model of the world. The other ridiculous assumption is the weighting for food eaten away from home. Giving this a weighting of 5.8% is outrageous when everyone knows obese Americans are chowing down at Taco Bell and the millions of other purveyors of toxic food sludge multiple times per day.

If you are like me, you probably need to live someplace. Food and shelter are the most basic of needs in a society. But according to the BLS they account for less than 50% of your expenses. Let’s examine some shelter related costs to see how badly the BLS is lying in this area:

  • Rent – 3.5%
  • Owner’s Equivalent Rent – 3.0%
  • Insurance – 3.1%
  • Water, Sewer, Trash – 4.7%
  • Household Operations – 3.6%

There is so much wrong with the BLS data, I don’t know where to start. The rental market has been on fire since 2012. Builders are erecting apartments at a breakneck pace. Independent, non-captured, neutral real estate organizations show rents surging to all time highs, growing by 5.1% on an annual basis. Real rents in the real world have grown by 14% since 2012. The BLS says they’ve grown by 9%. Who do you believe?

It’s funny how the mysterious owner’s equivalent rent calculation spits out a 3% increase in the last year. National home prices, based on Case Shiller data and NAR data shows prices up between 5% and 10% in the last year and up by 25% since 2012. Mortgage rates have risen to 4% from the low 3% range. Property taxes are soaring across the country as indebted localities rape taxpayers to pay for their gold plated government benefits and pensions. Evidently the BLS just ignores prices, mortgage payments, and real estate taxes when calculating their lies.

The final outrage is the weighting applied by the BLS to the owners equivalent rent. It accounts for 24% of the CPI calculation, virtually the same as it did in 2007. In case you haven’t noticed, the home ownership rate has plunged to 22 year lows since 2007, as millions of foreclosures booted people out of homes and millions of millennials are so loaded with student loan debt and stuck with low paying Obama jobs that home ownership is a distant dream. How can the BLS continue to weight home ownership at the same level when the percentage of rental units has soared?

There is no question the BLS should have dramatically increased the weighting of rental housing. In reality, the large increases in rental rates and the surge of rental households reflects a much higher inflation rate than is being reported by the government. The BLS figure is a blatant lie. The recent report from the Center for Housing Studies reveals the falsity of the government reported propaganda. Over 20.7 million renter households (49.0%) pay more than 30% of their income on housing. More than a quarter of all renter households, or 11.2 million, spend more than 50% of their income on housing. The median US renter household earned $32,700 in 2013 and spent $900 per month on housing costs. Renter housing costs are gross rents, which include contract rents and utilities. If the median renter household spends 33% of their income on housing costs how can the BLS give it only a 7.2% weighting in the CPI calculation?

The Center for Housing Studies report drives a stake into the heart of the manipulated, politically massaged, false data put out by the BLS to keep the masses sedated and their bosses fat, happy and rich:

Over the span of just 10 years, the share of renters aged 25–34 with cost burdens (paying more than 30 percent of their incomes for housing) increased from 40 percent to 46 percent, while the share with severe burdens (paying more than 50 percent of income) rose from 19 percent to 23 percent. During roughly the same period, the share of renters aged 25–34 with student loan debt jumped from 30 percent in 2004 to 41 percent in 2013, with the average amount of debt up 50 percent, to $30,700.

The faux journalists in the dying legacy media act baffled by the continued real decline in retail sales when the answer is staring them right in the face. True inflation in essential living expenses combined with declining real wages and increasing debt burdens has left the average household with little or no money to spend.

The next blatantly manipulated false data is related to healthcare. Let’s peruse some this detailed inflation data:

  • Prescription Drugs – 4.8%
  • Non-Prescription Drugs – Negative 1.6%
  • Medical Equipment – 0.0%
  • Medical Care Services – 2.3%
  • Hospital Services – 3.5%
  • Health Insurance – 0.7%

Anyone living in the real world knows Obamacare has resulted in a tremendous increase in demand for drugs, medical services, and medical equipment. Health insurance companies, drug companies, drug wholesalers, hospital corporations, and drug stores are reporting record profits as their stock prices hit all-time highs. When was the last time you saw prices drop or stay flat in the healthcare arena?

It is patently outrageous for the BLS to report an annual health insurance cost increase of a mere 0.7%. The annual cost of employee sponsored health insurance is 6.3% higher than last year, with the employee portion skyrocketing by 8.0% based on real data in the real world. I work for the largest employer in Philadelphia, with the most negotiating clout against insurers, and my portion has gone up by 10% to 20% annually for the last five years. Everyone working for a company has experienced the same or higher increases.

Even the Obamacare exchanges are seeing double digit premium increases in many states. Studies from Price Waterhouse Coopers and McKinsey found increases in average premiums between 6% and 10% across the country. It takes major cajones for the BLS to report 0.7% health insurance inflation, but their job is not to report factual information. Their job is to keep the ignorant masses ignorant of their plight. The bigger the lie, the more likely it is to be believed. The even more ridiculous aspect to the BLS data is that health insurance is weighted at .75% in the CPI calculation. The median household income in this country is $52,000. Employees are paying approximately $4,000 in health insurance per year on average. That is 7.7% of their income. The BLS weighting is absurd. Using a true inflation rate and true weighting would add at least 2% to the CPI figure.

Another area that impacts every American every day is transportation. People need to drive or take public transportation in order to live their lives. Here are some more crucial inflation data points from the BLS:

  • New Cars – 1.2%
  • Used Cars – Negative 0.7%
  • Gasoline – Negative 23.3%
  • Vehicle Leasing – Negative 1.1%
  • Vehicle Insurance – 5.1%
  • Parking & Tolls – 2.4%
  • Public Transportation – Negative 3.2%

So we have near record levels of new auto sales, driven by subprime auto debt and 7 year 0% financing, with average vehicle prices at all-time highs, and the BLS reports prices only went up 1.2% in the last year. Edmunds, the authority in auto data, says prices went up 2.6% in the last year. Do you believe the BLS model or real data from the real world, broken down by automaker and vehicle? The even more ridiculous contention is that used car prices fell. I’ve bought two used cars in the last year and I can attest that prices are not falling. Edmunds reported that used car prices have risen by 7.1% in the last year. Leases as a percentage of total auto sales is also at record levels. Does this really jive with a decrease in leasing expenses? I think not.

There are 254 million passenger vehicles registered in the United States. We have a record level of auto loan debt totaling $1 trillion and a record level of auto leases. According to Edmunds, the average monthly car payment is $479. That is $5,748 per year. That equals 11% of the median household income. Why would the BLS only give this category a 5.7% weighting? Bankrupt states across the country have been jacking up tolls. The BLS says they went up by 2.4%. My beloved state of Pennsylvania has increased them by 10% per year for the last three years. The BLS says the cost of public transportation is plummeting. Has a Amtrak or any municipal public transportation system EVER reduced fares? Not a chance. They need more revenue to fund the government pensions of their union employees.

There are a few other categories that might be of interest to you:

  • Banking Fees – 5.9%
  • College Tuition – 3.4%
  • Childcare – 4.3%
  • Sporting Events – 8.8%
  • Pet Care – 3.5%
  • Cigarettes – 2.5%
  • Alcohol Served Away from Home – 4.0%

Isn’t it delightful that your friendly neighborhood Wall Street bank gets free money from the Fed, charges you 18% on your credit card balance, pays you nothing for your deposits, and then jacks up your bank fees? The relentless inflation in college tuition is being driven by the relentless doling out of student loans by the Federal Government to people who aren’t intellectually capable of completing college level material. The $1.4 trillion of student loans will never be repaid. The taxpayer will be on the hook for hundreds of billions in write-offs.

To celebrate the near zero inflation reported by your friendly government drones at the BLS take your family of four to a baseball game, spending $160 for tickets, $25 to park your car, $20 for two warm beers, $10 for two sodas, $24 for four hot dogs, and $10 for an order of cheese fries. Make sure you toast Greenspan, Bernanke, Yellen and the rest of the Federal Reserve governors who have purposefully reduced the purchasing power of your dollar by 96% over the last century.

You know your true level of inflation. You know it’s not 0.1%. You know it’s somewhere between 4% and 10%. You know your government is lying to you. You know the captured corporate media perpetuates the lies. You know those in control of the government must lie to keep their Ponzi scheme going. You know they are just following the Edward Bernays playbook. They want you to believe it’s for your own good. Do you think it’s for your own good?

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons…who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.” – Edward Bernays – Propaganda – 1928

The Burning Platform blog



17 Comments on "Lies, Damned Lies, & Inflation Statistics"

  1. idontknowmyself on Mon, 20th Jul 2015 8:17 am 

    The lies coming out official authorities seem to indicate that the real data are scary and should not be release at all.

    The so call market and price discovery mechanism is completely broken.

    For example, here in Quebec I pay between 1.25$/litre to 1.35$/litre for gasoline with an current WTI price of 52$ and RBOB Gasoline Futures at 1.93$.

    When the price of the WTI was 100$ and RBOB Gasoline Futures 2.92$ I used to pay between 1.35$/litre to 1.40$/litre for gasoline.

    No much of a difference.
    I came to the conclusion that the market are completely broken and don’t reflect the real price of anything.
    If the statistics are made from broken market data, they are completely useless and should not be used in any real serious analysis.

  2. sidzepp on Mon, 20th Jul 2015 9:00 am 

    Having a large family of eleven children we relied on thrift stores thru the years. Even those are showing a rise in costs well above the fairly tale stories configured by the media and propagated by the media.

  3. q on Mon, 20th Jul 2015 9:12 am 

    According to “honest” market not only there is oil glut but everyone will soon be able to swim in physical gold as Scrooge McDuck. Only dollar and US stocks will be more and more precious.

  4. jjhman on Mon, 20th Jul 2015 12:33 pm 

    I have serious doubts that the conventional measures used today to gauge the health of our economy (local and world wide)are as meaningful as they were 20 years ago. Methods used, inferences made and theoretical underpinnings become obsolete long before their usage is ended, particularly by large bureaucracies.

    I’m sorry but I don’t seem to be able to wrap my head around a gigantic conspiracy involving the 2500 employees of the BLS and every major television, radio, on line and paper news source. If these numbers are as bad as the author says there is an explanation that does not involve conspiracy.

    Recently I searched online for a statement by any large number of scientists involved with the latest IPCC climate report. I could not find one. I conclude that the bulk of the hundreds of people involved generally agree with the report.

    Same here. Unless there is some kind of BLS revolt by hundreds of honest professionals I’m gonna believe that this is the best that honest professionals can do. It doesn’t mean the numbers are right but they are more likely to be useful than it is accusing them of being part of some monstrous plot.

  5. Outcast_Searcher on Mon, 20th Jul 2015 3:23 pm 

    It’s always easier to whine about a conspiracy than deal with a reality.

    Consider that the bulk of prescription drugs are marketed by highly competitive prescription providers like large chains and drug stores. Their generic prescription prices rose ZERO percent from the flat $10 for 90 days or $4 for 30 days, for the vast majority of cheap generic drugs. But of course, let’s not mention THAT.

    (And yes, that’s the last time I saw prices stay flat in the healthcare arena — as they have for several years — for those willing to shop for low prices.)

    I thought we’d see massive inflation by now, given the money printing that has gone on. I’ve been wrong. At least I’m willing to admit it instead of continuing to blame a conspiracy and cherry pick figures to “prove” high inflation.

    And since when does one month of figures make a reliable trend? Nowhere but in the conspiracy therist’s domain, where emotion and innuendo overrides data.

  6. apneaman on Mon, 20th Jul 2015 4:20 pm 

    You mean for those people that can actually afford to see the Dr right? Do you realize that a great many of your arguments start with the premise that everyone is “whining”? Whining about whining is whining.

  7. Chris Hill on Mon, 20th Jul 2015 5:03 pm 

    I don’t think the inflation figures are a conspiracy, even though I know parts of them don’t express reality. One part is substitution. If you substitute chicken for beef to save money, you are still suffering inflation, it shows in the reduced perceived quality of life. Another one is with computers, if today’s computer is twice as powerful as the last one you bought for the same money, it is not deflation; the webpages you view are larger, the advertising is more annoying and takes longer to load, etc. None of that is ever considered, they just see twice the power and adjust inflation downward. Then there are all the ways products get cheapened so the price doesn’t increase, I wonder how much of that is even visible, let alone quantified.

    I believe the inflation numbers are pretty bogus, but most of it is in areas most people can’t comprehend let alone measure.

  8. BobInget on Mon, 20th Jul 2015 6:10 pm 

    davidstockmanscontracorner.com / GAURAV AGNIHOTRI, OILPRICE.COM via Business Insider / July 20, 2015

    With the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downward on sentiments that Iran’s crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, OPEC’s high production levels and China’s market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future.

    So, with the prices of both Brent and WTI moving towards $50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the U.S. shale sector which is already dealing with rising debt and the ever-increasing risk of default.

    A recent Bloomberg report stated that U.S. driller’s debts stood at $235 billion at the end of first quarter of 2015, which is quite worrying. Does this mean that the U.S. oil sector is likely to witness a lot more layoffs than we have seen so far? Surprisingly, a recent IHS study had revealed that the U.S. shale sector has been boosting job creation in addition to supporting around 1.7 million jobs in U.S.

    All this as the overall unemployment rate in U.S. has been declining since previous years. But with rising negative sentiment pertaining to oil prices, is U.S. the shale sector prepared to face one of its biggest tests yet? Will the industry be able to sustain another long period of low oil prices or will it once again resort to trimming its workforce?

    Poster’s note:

    If traders can hold down oil prices a few more weeks, shortages will offer great profit opportunities. Never mind the economic harm,
    unemployment, oil traders come out smelling rosy.

  9. comicrelief on Mon, 20th Jul 2015 7:28 pm 

    Growth is need for inflation. Growth would then entail real wages increases. More money to spend more goods sold, high demand and so on. If the prices for services, goods and commodities rise but the purchasing power of the consumer is declining there is no damn inflation.

  10. Makati1 on Mon, 20th Jul 2015 8:55 pm 

    Really comic? You cannot have declining wages and rising prices? What planet do you live on? Does your housekeeper pay all the bills and buy all of your food? My SS income was frozen years ago because they spin the numbers and avoid having to pay increases by law. I am just one of many tens of millions they would have to give a raise to if the numbers were real. And, the country is already near bankruptcy. No, it is already bankrupt, it just prints Zimbabwean dollars to cover the fact … for now.

    The spin is reaching category 5 in all statistics these days. Lies are as common as ants and they are getting bigger and wilder, the closer to collapse we get.

    As for those who doubt that the media is controlled tightly by TPTB, perhaps you do not understand that over 90% of the media outlets are owned by six men …er… corporations:
    GE
    Newscorp
    Disney
    Viacom
    Time Warner
    CBS

    If you do not see the web, use your intelligence and search online for their connections. I cannot show the chart here.

    As for government departments, they all have their orders to keep any bad news behind the USMSM Iron Curtain. A “few” can control the rest if they also control the money. Remember that Al Capone was finally jailed by the IRS, not the cops. And they also control most so called ‘research’ groups by the same means. Paychecks/blackmail. You really don’t believe that the NSA, etc., is to control ‘terrorists’ do you?

    Soon, any American that speaks out against the government will be considered a ‘terrorist’ in the eyes of the law. If you doubt that that could happen in the ‘exceptional/indispensable’ country, read the history of Germany between the wars. The average German thought that way also. Look around and behind the curtain, not at the fluff that they want you to see. Look for the forest, not single trees. You will see that it is dying.

  11. Davy on Mon, 20th Jul 2015 9:02 pm 

    Mak, U.S. Is looking better than your not so wonderful Asia these days. ^>^ nuff said

  12. comicrelief on Mon, 20th Jul 2015 9:20 pm 

    Mak use your head, what dream world are you inhabiting. Where in the hell did I write that you cannot have rising prices and declining wages. I was making the exact opposite point.

    Next time read first then jump to conclusions. Can you come to grips with the fact that prices can rise to a million dollars for a cigarette, if there is no money to buy the thing, where is the inflation.

    Inflation goes hand in hand with REAL wage increases. That would mean for you, if you don’t understand, your pay packet increasing in step or ahead of rising prices.

    Demand destruction world wide is playing havoc with commodities, goods and services. If you want inflation, send a check for a million bucks to the taxpayers, they can then go and buy the shit and create demand and higher prices.

  13. ghung on Mon, 20th Jul 2015 9:54 pm 

    Gold, silver, platinum; all tanking. WTI below $50 tonight. Other commodities down…..

    Food, on-demand energy, healthcare,, necessities holding fast. Price discovery returns despite their best efforts.

  14. q on Tue, 21st Jul 2015 2:44 am 

    Many miners and oil producers are tanking too. Without enough miners the metals supply will be problem. And without sufficient oil production the same will happen with food etc.

  15. Lawfish1964 on Tue, 21st Jul 2015 7:17 am 

    The recent rout in commodities is to me suggestive of deflation, not inflation. Deflation is the boogie-man for economists and spendthrift governments, because a general down-trend in consumer prices (caused by the fact that consumers are poor and simply don’t have the money to spend) makes debt worse. If your income is decreasing over time, your debt relative to your income is increasing.

    Inflation is the magical answer to debt, because you pay back dollars you borrow today with cheaper dollars tomorrow. Debtors win and creditors lose. Since I am a debtor, I’m rooting for inflation, not deflation, but I’m not seeing it. I was a year ago, when meat prices spiked, but it seems since then things have normalized. Add to that the huge drop in oil prices, and we probably are at net zero inflation.

  16. Makati1 on Tue, 21st Jul 2015 9:54 pm 

    Lawfish, maybe you need to get out of the Us for a year or so and then go back. I am hit with sticker shock every time I go back to the states for a visit. Especially in the grocery stores. I have bought most of the food and supplies for my family for decades and am sensitive to the price changes since I never had enough money to not have to ask the price of something not marked.

    Not too long ago, canned veggies were less than 50 cents per 12oz can. Milk was under $2 gallon. Now, the boxes and bags are the same size and price, but they are full of air and less product. If you do not read the actual weight of contents, you may not realize that the price PER UNIT went up and up over the last few years. My favorite candy bar went from $0.49 to $.98 in the last five years. I know my income did not double in that time.

    Now, I do not buy much when I visit the Us, but I see PER UNIT prices increasing every visit on the items I do buy (food, clothes, seeds, etc.). If you don’t, you are not paying attention.

  17. Makati1 on Wed, 22nd Jul 2015 12:56 am 

    Worth a few minutes of your time:

    “U.S. Retail Sales Fall, Again – The Next Crash Is Near”

    “…the U.S. government (like all Western regimes) refuses to adjust its “retail sales” number for inflation, and also tells ridiculous economic lies, claiming the official “inflation rate” is near-zero, even as we see food and real estate prices skyrocketing at a never-before-seen pace. But while you can lie about an economic collapse to populations of Kamikaze Lemmings , you can’t hide the economic carnage produced from that collapse – forever…

    Thus, roughly every eight years, the One Bank and its Western political servants stage an official “crash”. It triggers a collapse in our bubble stock markets …

    With the Crash of ’08 now nearly eight years behind us as we look in our rear-view mirrors, this can only mean that the Next Crash is near. But we also know that the Next Crash is coming soon, because these crashes are deliberately timed to coincide with the U.S. presidential cycle – and the next U.S. election is now little more than one year away….

    The crashes are timed to coincide with the eight-year “changing of the guard” in the U.S. Two-Party Dictatorship. The incumbent, Tweedle-Dee, is blamed for the crash, and temporarily banished to political exile, in disgrace (for precisely eight years). Tweedle-Dumb is hailed (by the Corporate media) as the White Knight, riding to the rescue of the U.S. population… Then, eight years later, the roles are reversed. And no matter how many times the U.S.’s population of Lemmings watch (and live) this rerun, they’re fooled every time…”

    http://www.zerohedge.com/news/2015-07-20/us-retail-sales-fall-again-next-crash-near

    Yep! The next few years are going to be interesting!

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