The Government is Using Inflation to Take More of Our Money

The politicians think they have pulled a real sly trick on the American public with buying into and propagating the Boskin Commission’s Core Index method of reporting inflation. By using this method they have avoided raising COLA payments to seniors on Social Security, veterans pensions, and federal employees pension. No one has been able to break this stance and many in the media simply take it as okay and meekly mumble that inflation is under control according to government reporting. This is blindness, self-inflicted.

To see the practical workings of the fallacy other than simply buying groceries and fuel please consider the following scenario. Since the essential component of the Core Index method of reporting inflation consists of excluding food and fuel in the calculation, let's look at how that works in the real world. Suppose you are a person working or running a business and you decide to eat or fill up your vehicle with gas. The contention of the Boskin Commission is that food and fuel are “volatile “ and therefore should be excluded when reporting inflation. But what if food and fuel prices are not fluctuating up and down but are rapidly rising as we see today? As you order your meal or fill up your tank more money is required from your pocket.

This means that unless you are willing to live with a lower standard of living you must raise prices on the products or services you sell or if you are a working person your wages must go up to offset the higher cost of living you are experiencing. As a business owner you must raise prices to keep your bottom line from turning sour. The point here is that food and fuel drive all price increases if these two categories go up. Everybody eats and most everybody travels. So while the government says , inflation is low the reality it is increasing rapidly as food and fuel accelerate and is not reported.

You would think if there was any concern with this core index reporting by the government they would insist on comparing core index figures with figures reporting inflation rates without core index figures. This would show what discrepancies are apparent and whether the core index has validity. The evasion the government is utilizing to dismiss the fallacy of the core index shows the government is not interested in honest reporting but hiding the inflation they are generating. Prices in food and fuel are not rising simply because of supply and demand.

The way the market works, as supply increases prices drop if demand remains stable or drops. Likewise, if demand soars and supply is short then prices rise as more people will pay more to get items in short supply. Now compound the issue with printed money saturating the market and you have all the ingredients that fuel inflation. For a benchmark of this phenomena take a look at the price of gold. Gold has been on a steady upward rise as government debt and infusion of printed dollars has hit the market. Paper money ,as more appears, is simply worth less than if it were in short supply. Simple economics for any commodity.

The swelling rage toward government spending is commendable and necessary if we are to avoid total collapse. But if we are not going to insist on the honest reporting of inflation we cannot be prepared to stop the printing of money which is going unchallenged.

The debt limit extension is a bellwether event which will show whether we have a new breed in Congress or more of the same imbeciles who think the extension of debt is necessary. Necessary for what? To continue deficit spending of course. If the debt limit is extended you can bet the nation will reach the same crisis in a few months and have to be revisited. If and when it is rejected will be the beginning of cost reduction by the government. For those seeking more power and more political pandering this will be the battle of last resort and you can be sure those who want to redistribute wealth and enhance their political power will fight tooth and nail to continue to raise the debt limit and go on with their deficit spending.

They will talk of greater priorities, moral imperatives and how progress must come from a government that passes more laws, more regulations, and more taxes. We have seen where their progress has brought us and it is to the precipice of socialistic failure. It is time to press on for honesty and accuracy in reporting of government spending and it should begin with the sham of the Core Index method of reporting inflation. If this continues to be ignored and glossed over the reality of hyper inflation will appear so rapidly it will be almost impossible to contain. Those of us who remember the Carter years, the double-digit inflation, and the high interest rates when the debt ceiling was much lower and deficits lower can only imagine the reaction to an inflation rate much higher and much more difficult to contain.

I fear it really is too late to avoid this ugly event but the cause is not too hard to discern. A mesmerized press, a lying government and a preponderance of spineless ignorant politicians along with a band of compartmentalized academics ignoring the role of ideas and pretending to maintain the status quo while simultaneously calling themselves progressives is holding on to the stage as the play has run its course and the audience simply waits for the curtain to close.

The promise of America is on the line and it is a sad testimonial for those who have been fortunate enough to experience her special status that she be allowed to sink into third world status because of a citizenry that is willing to accept a corrupt government reporting system on face value. The problem with democracy is the danger of a complacent citizenry willing to allow politicians free rein while shackling themselves under the political yoke. Our Founding Fathers talked of necessary uprisings. They too must have seen the obtuse evasions of politicians willing to destroy by dishonesty and fraud. It is said that experience keeps a dear school but fools will learn by no other. Analogously freedom cannot survive in a land of complacency.

If the people who are paying the bills are content to have the spenders lie to them, take from them and lead them into a financial abyss, do these citizens deserve anything but what they have condoned?

The question answers itself.