The government *needs* to understate inflation because of all the entitlement programs that have cost-of-living pay out increases that are pegged to inflation. By the time the market bottoms out interest rates will be over 15% and stocks will have dividend yields close to 20%. It's not because companies will pay more dividend, but because stocks will be nearly worthless. Buy gold and silver bullion. It's actually still quite cheap compared to future prices.
Obviously you have no idea what you're talking about When i mention the fed i meant the federal reserve system. Anyone with a knowledge in economics would have known that.. The treasury has nothing to do with the federal reserve system. The article's argument is just simply silly, the entire concept of substitute goods is two similar goods that offers the same amount of satisfaction.
next time try using the right phrase or term to say what you mean.... "The Fed" or "the federal reserve" is correct and i am very aware of both terms.... "the federal bank" means something entirely different. the treasury actually interacts with the fed on many functions. it gives the fed the power to coin money which it constitutionally does not have the authority to do. and thank you for your grand synopsis of the article as being "just plain silly" although you didnt even read it or you would have initially understood what i meant when referring to the term "constant".
well... i am not ready to accept the "2 trillion dollar" figure... but it is extremely suspicious that they have ceased reporting M3 figures and gold does seem a bit bullish. as stated previously... what worries me most is another "arab false flag" to pin the blame of a crashing economy.
Of course this is entirely delusionary. Consumers respond to increases in prices in goods they want by substituting ones that they want less. If you go from steak at $20/lb to catfood at $1/lb---is that "deflation"? Bet the wonks would imagine so. Similarly like how there are changes downward in the CPI because of large, narrow changes in technology prices. "Gee, I can get 5 gigahertz and 500 gigs versus 1 Ghz and 100 gigs just a few years ago for the same price." They then pencil in a huge deflation in the price of the tech goods---even though the price of the 'Standard computer" needed to run most software (or the ones you can buy conveniently) has bottomed out quite well. Getting way more gigs on your iPod doesn't make up for paying more on gasoline, insurance, housing and health care which are exploding. All things you need and wish you really didn't. Another statistical adjustment. Your health plan keeps on going up and up through the roof. Your employer pays out more and more and so do you. Guess what: the part of that the employer pays (often more than 50%) gets counted at additional income in the statistics and not as inflation! (Even though the reality is that you keep on having to pay more and more to get a health plan of any given quality). Whenever there's an arbitrary judgement call they usually go to the one that makes the lowest inflation number and the highest income number, regardless of actual human experience.
Cheap things manufactured in China and elsewhere get cheaper Good things - housing, healthcare, education, energy - are getting more expensive, fast. Overall, my cost of living is growing at an annual rate of 8-10%.
The CPI figures are doctored worldwide......half of the battle for the reserve banks (RBs) is to manage consumer expectations of inflation. They are all using smoke and mirrors. If consumers think we have inflation or will have inflation then the RB's have lost the battle and interest rates will be ratcheded upwards. The substitution formula is all part of the smoke and mirrors. Let's see if gas prices are high I will substitute running my car on gas with wood, coal, or natural gas.....If airline tickets go up I'll substitute and drive between each coast or take a ship to europe. The run up in commodities is feeding price inflation (not wage inflation yet) and won't be able to be hidden for much longer. For those investors buying gold they are already hedging themselves against it.
The article is BS. First of all, it's very poorly typed, not using caps where needed. And more importantly, wouldn't open market operations be a lot more efficient ?