I have a new article on the news and commentary website, “EpicTimes,” on “Don’t Believe the Government About Price Inflation.”
Few things can be as deceptive as the appearance of statistical precision, and the government’s monthly Consumer Price Index report is a perfect example of this.
According to the government’s statistical number crunchers, price inflation is a relatively low and unworrisome 2 percent a year. But look beneath the surface of this artificial statistical creation, and the story is very different. Get closer to the actual real, individual prices that people have to pay in the marketplace and many of these prices that affect people’s everyday life have been increasing far more than claimed by the government.
The government plays a game of smoke and mirrors, as well, by distinguishing between overall price inflation and a “core” inflation that subtracts out food and energy prices – as if these two categories of goods did not very much matter to all of us as we go about our weekly and monthly purchases.
The Consumer Price Index hides from view two essential insights: The CPI assumes a representative American family that has little to do with diversity of real people in the real world as they go about their purchasing of things in their personal circumstances. So it is not surprising that the CPI has a surrealistic quality when compared to you own buying decisions in the marketplace.
And it glosses over the fact that central bank monetary expansion distorts the structure of relative prices in ways that set the stage for imbalances and inevitable corrections down the road that escape understanding when focusing an imaginary single statistical number each month that is supposed to summarize all that is really happening in a complex and every-changing economy.
Best Wishes,
Richard
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