Inflation: U.S. Government Understating the CPI By a Full 7.6%!

From: The Market Oracle

Until now, the discrepancy between actual inflation and the government’s Consumer Price Index (CPI) was largely an academic debate few people paid much attention to.

Now, however, with real-world consumer prices jumping right before our eyes … while the government’s distorted CPI still lingers near the 4% area, the gap between the two is about to burst onto the scene as a scandalous cover-up.

According to John Williams’ Shadow Statistics , the premier source of unadulterated U.S. economic indicators …

    • While the March year-over-year change in the official CPI was only 3.98% …
    • The true CPI, based on the same standards as those that prevailed before the Clinton administration, is now 11.58%!

This means that the gap between the official CPI and the alternate CPI is now a whopping 7.6 percentage points.

In other words, the U.S. government could now be understating the CPI by a full 7.6%!

Moreover, over the years, this gap has widened dramatically. Until January 1982, there was no gap whatsoever; and until November 1986, the gap was usually less than 1%. But then, it started widening like mad, and has been getting bigger ever since.

See entire article with charts

Skousen in 2006: Big Inflation Coming––M3 No Longer Being Reported!

World Affairs Brief March 31, 2006 Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen’s World Affairs Brief

BIG INFLATION COMING reported this week that, “the federal reserve ordered two trillion dollars to be printed! … Three separate sources in the U.S. Treasury have told me that this week, the federal reserve ordered TWO TRILLION dollars to be printed! The US Treasury is allegedly running printing presses 24/7 to accommodate that order. Treasury employees were specifically ordered not to talk about this to anyone because it could cause economic collapse.” That’s a bit inflammatory. Press officials are never supposed to tell how much money is being printed. Even another $2 trillion isn’t going to cause a collapse, though it would and will eventually impact the value of the dollar. I’ve always said that the US has not yet used up all its power to inflate. I guess the PTB are starting in earnest. It is important to note that in response to growing dollar weakness, silver is at a ten year high and gold is nearing a 25 year high.

Robert HcHugh lets us in on what M3 was doing recently – and it was very inflationary. “M-3 has been launched into outer space, up another $56.3 billion last week, up $92.4 billion over the past two. This is some real horsepower. Over six weeks, the meaningless figure, ahem, is up $177.8 billion. These annualized growth rates are 28.7 percent, 23.6 percent, and 15.3 percent respectively. Those are the seasonally adjusted figures. The raw, non-seasonally adjusted, figure is up $293.3 billion over the past 12 weeks, on a pace to add 1.2 trillion in money to the economy … That’s right folks – soon to be discontinued money supply data ALREADY showing annualized growth rates in excess of 28% – and the Fed would have us all believe that this is a non-event.”

The staff at Free Market News tried to imply a direct relationship between the decision to not report M3 money supply figures and this new print move. “The M3 was the amount of cash the government printed to put into circulation, propping-up the U.S. economy.” This is not true, specifically. M1 is the sum of currency that is held outside banks, travelers checks, checking accounts (but not demand deposits), minus the amount of money in the Federal Reserve float. M2 is sum of M1 plus savings deposits (this would include money market accounts from which no checks can be written), small denomination time deposits (less than $100,000), and retirement accounts. M3 (discontinued) is M1 plus M2 plus the large time deposits (more than $100,000), Eurodollar deposits, dollars held at foreign offices of U.S. banks, and institutional money market funds. Cash eventually shows up in all of these, but the significance of removing M3 has more to do with hiding the numbers of dollars outside the US where most inflation goes so as to deny currency traders a key piece of the data which helps evaluate the dollar versus other currencies. They have alternates, of course, but losing M3 was important. Congressman Ron Paul (R-TX) has introduced legislation to require the Fed to resume reporting the M3 statistic. Urge your Congressmen to support The Sunshine in Monetary Policy Act.

Skousen: Masking the Inflationary Economy

World Affairs Brief June 16, 2006 Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen’s World Affairs Brief


According to Bloomberg, “U.S. consumer prices excluding food and energy rose more than forecast for a third consecutive month, increasing speculation the Federal Reserve will keep raising interest rates beyond this month. The 0.3 percent jump in the so-called core consumer price index reported by the Labor Department in Washington today exceeded the median forecast of a 0.2 percent increase by economists in a Bloomberg News survey. Core inflation over the last three months was the highest since 1995. Including food and fuel, prices climbed 0.4 percent.”

But as George Ure of Urban Survival comments, “What’s more interesting to me than the numbers themselves, is how the mainstream media has swallowed with virtually no disclosure the fact that the inflation reports in 2006 are not the same thing that we were looking at in 2005 … The Labor Department announced in 2005 that they were ‘changing weights’ of various components: Effective with release of data for January 2006, the Bureau of Labor Statistics (BLS) will update the consumption expenditure weights in the Consumer Price Index for All Urban Consumers (CPI-U) and Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the 2003-04 period.”

This is not the first time the BLS has tampered with the CPI. It’s a constant process of removing highly inflated prices from the “typical basket of goods” Americans buy in order to manipulate the numbers downward. The BLS creates lots of different categories, as well, in order to mask inflation. They have created what they call a “core inflation rate” which, strangely, does not include food and fuel! How can these two basic necessities not be included in the core inflation category? They do it because they have a political mandate to hide the chronic effects of government monetary creation. Continue reading “Skousen: Masking the Inflationary Economy”