True Inflation Exceeds 7%
Inflation statistics given by the U.S. government show that the inflation rate is below 2%, but widely available data indicate otherwise.
If the economy were currently as strong as it was in 1985, the median worker would be making $120k per year (not $56k). A Stanford MBA graduate today earns roughly what the average Joe made 31 years ago. The difference is that the average Joe of 1985 didn’t spend $434,000 getting his job.
Government bureaucrats have their numbers, and suspicious minds have wildly different ones. Economists undoubtedly have explanations for the reported numbers. The velocity of money is lower, banks needed liquidity after the Great Recession, and quantitative easing was an important economic stimulus. All of these sound like reasonable explanations for driving inflation up, but none of these concepts rationalize decades of misrepresented statistics. Are economists having trouble going against the grain, or is there a deeper reason why inflation isn’t portrayed accurately?
Indeed there is a reason for the inaccuracy. Numerous government programs are tied to inflation. Allowing official inflation statistics to rise with actual inflation would raise government spending, and the cycle of printing money to cover spending would be self-defeating.
The CPI is tied to the incomes of about 80 million Americans…
