CPI is a lie

The government inflates the currency and then determines the rate of inflation, the so-called CPI.  But the CPI is a lie.  It is supposed to be at or near zero in the US and yet prices for most necessities are increasing.  This year, for the second year in a row, Social Security benefits will not rise for American senior citizens.  So reports Market Watch:

Understand that the CPI does not measure everyone’s cost of living. Rather, it is designed to represent changes in the market basket of goods and services bought by the average household each month.

However, seniors’ market basket is different. It consists mainly of such items as food, energy, taxes, transit fares, tolls and, of course, health care, such as insurance, doctors, prescription drugs, hospitals, assisted living and nursing homes.

These costs are not falling — they are rising quite rapidly. As a matter of fact, health-care costs are just about the only item that did not dip for even one month during the recession.

Shadowstats.com has alternative to the CPI to measure using the data that was in force in 1990, which gives a current inflation rate of about 8%.  Thus, Americans depending on Social Security are rapidly falling behind and the reason is that the CPI is a lie.

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3 thoughts on “CPI is a lie

  1. Pingback: Toilet paper: bellweather of inflation « The Righteous Investor

  2. This is a good post. That graph does sell a part of the story. However, since 1993, the CPI has not been adjusted by the government, however, that does not mean that inflation is properly shown by this graph. Because in CPI some sectors are measured in the packaging that products come in, the amount of substance in the packages are irrelevant. As in, a 32oz “bottle” of shampoo may be considered standard, but when a private company begins using 24oz “bottles” of shampoo, the CPI’s measurement of price for shampoo remains the same. Check out my article to get an interesting perspective on the joke that is the CPI.

    http://www.thecashflowisking.com

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