By Bob Shapiro
I’ve mentioned several times that our government under-reports the rate of rising prices. Prices are up about 30 times (that’s not 30%) since the Federal Reserve (FED) received the monopoly to print paper dollars in 1913. (The FED has printed well over 100 times as many dollars, but as innovation increases productivity, it keeps prices from rising as much as monetary debasement would call for.)
www.ShadowStats.com has a pair of alternate measures to the CPI. One is calculating today’s numbers using the way they would have been calculated in 1990. That shows the CPI rising at around a 5.5% annual rate, versus the reported CPI figure of 1.8% over the last 12 months.
ShadowStats other calculation uses the BLS methodology from 1980, which shows price inflation of 9.5% since a year ago.
I read on Yahoo! This morning of a Wall Street Journal report (paywalled) also indicating that the CPI grossly understates price inflation. (See Yahoo!’s article: Fed says ‘no inflation’ but middle class reality says otherwise.)
But, whether you accept the “Official” CPI numbers, prefer the WSJ’s study results, or think that one of ShadowStats’ inflation recaps is correct, all of them show prices going up year after year, decade after decade, at least since Eisenhower was President.
In a Capitalist country (that’s what our Founding Fathers originally set up) using Free Markets, prices should decline continuously as new and better ways of doing things improves productivity.
With over-regulation and other government tinkering with the US Economy, productivity gains will be slower, but prices still should decline over the long haul.
It is only with the FED’s continuous misuse of its role as the nation’s paper dollar printer, only with the FED’s debasement of the currency, only with the FED’s counterfeiting of Americans’ store of value, that prices can go up all the time.
Action Item: End the FED!