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Deflating Inflation

Thu, Oct 13, 2011 - 10:08am

Mrs F returned from a trip to Target yesterday, full of vim and vigor regarding the prices of everything she had to purchase. I explained to her that the U.S. government deliberately understates the true rate of inflation and then proceeded to explain why they do it. It then dawned on me that many of you could use a refresher, as well.

It's quite simple, actually, but first you need some background. You've likely heard me mention the economist, John Williams, before. If not me, then you've certainly seen Santa make reference to him. John's site is:


On his site and through his subscription service, John goes through the painstaking process of re-calculating "official" U.S. government statistics based upon the methodology used when the statistics were originally created. John was interviewed by Glenn Beck back on Tuesday and here is s link. The interview is brief but, if you're unfamiliar with John's work, this will help get you up to speed. (And please don't fill this thread with comments about Glenn Beck. I like Glenn but it's the message, not the messenger. Got it?)

Now that you know how government statistics have been reformulated and manipulated over time, you need to know why. The answer is quite simple, really. MOPE. Perceptions must be "managed" in order to keep the entire Ponzi afloat.

Think of how many times you hear total U.S. debt expressed as a percentage of GDP. How many times have you heard pinheads like LIESman tell you that "overall U.S. debt, when expressed as a percantage of GDP, is not that big of a deal. In fact, it's quite low. No problem here!"

Think of how many times you've seen our esteemed chief executive or one of his minions come out to trumpet the "outstanding jobs growth and unemployment rate". "Yes, 9% is a high number but, historically, it's not too high to be overcome".

Most importantly, think of how many times you've heard it declared that "inflation remains relatively tame". "The CPI was this but ex food and energy it was that" and all is well. But yet you head off to the market like Mrs F and you see that milk, which a few months ago was $3.19/gallon going for $3.69/gallon, and you wonder how this can be true.

Of course the answer is, it's not true! It's all BS! Think about the inflation numbers specifically. If the true rate of inflation was allowed to be published, would the 10-year note be trading at a yield of 2%? Would the 30-year bond be trading at 3%? Of course not! If inflation is really 10%, the real (inflation-adjusted) annual return on the 10-year note is -8%. Over the life of the note, the holder sees their purchasing power guaranteed to diminish by about 2/3. What kind of mindless fool would buy this? NO ONE! If the actual rate of inflation was accurately disseminated, the yield on the 10-year note would have to soar to 12%, maybe even 15% just to attract buyers. Double-digit interest rates would make servicing the current debt virtually impossible. The overall debt and deficit would immediately soar to truly unsustainable heights and the Great Government/Financial/Military Ponzi would unravel almost overnight.

So, the statistics must be distorted and spun in the government's favor. There is no other option.

However for you, my dear reader, there are options. Understand that what you've just read is true and plan accordingly. This system of lies and deceit will, eventually, fail. In the meantime, you will have accumulated extra hard assets. Everything from land to rice to gold and silver. You should accumulate these things now before they become too expensive to be purchased in bulk.

Shakespeare once wrote: "Truth is truth. To the end of reckoning." And so it shall always be. Prepare accordingly. TF

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ScottJ · Oct 13, 2011 - 10:11am


beach_bum · Oct 13, 2011 - 10:12am

Jim Rogers: Bernanke Is Lying to Us

Jim Rogers tells it like it is.

In the EPJ Daily Alert, I have been pounding away at the fact that no new QE is required, that the money supply (M2) is exploding. Rogers correctly points to this money growth in the clip below.

Also, Larry Kudlow is correct in his view that the European Central Bank is likely to join the Fed in the money printing. If they do, it will be the first time ever that the world could face a massive global inflation.

Kudlow is correct that the stock market will skyrocket under these conditions and Rogers is correct that commodities will soar.

Prepare yourself for climbing prices like you have never seen before, to differing degrees both Rogers and Kudlow know what is coming. video clip here: https://www.economicpolicyjournal.com/2011/10/jim-rogers-bernanke-is-lyi...

JackPutter · Oct 13, 2011 - 10:24am

What is MOPE?

Moderator Lincoln JackPutter · Oct 13, 2011 - 10:26am

Turd explains it in his posting above, it is defined as managing a population's perception of the economic situation such as to prevent or delay their realization of the actual economic reality.

aether · Oct 13, 2011 - 10:26am

most people i speak with think that money is printed BECAUSE of inflation,

not that printing money CAUSES inflation.

most are living under a rock, believing everything the TV tells them. its sad really.

ill keep stacking metals and im starting to look into buying things that produce energy (solar, wind etc)

Shill · Oct 13, 2011 - 10:38am
A Few Good Man "You Can't Handle the Truth"
treefrog · Oct 13, 2011 - 10:38am

prices of photovoltaic screens (solar panels) are dropping. now that the govt is offering a 30% tax ​credit​ on the installation of solar systems, this is becoming a very attractive option. during the day the sun shines and the screens turn it into power which feeds into your system, and back on to the grid. this makes your meter run backwards. ideally, it runs backwards in the day as much as it runs forward at night. net electric bill = nil.

i'm in the midst of a roofing upgrade preparatory to putting up my first solar array. i'm not sure, but i think the numbers will work out to it paying for itself in seven or eight years. crunching the numbers in hindsight in a few years will be more realistic.

yet another way to get ready for the approaching sh*tstorm.

Red Pill Swallower · Oct 13, 2011 - 10:41am

I was wondering too! Turns out it is Management of Perceptions Economics.

Ooops, someone has already replied.

Eman Laer · Oct 13, 2011 - 10:44am

Another reason the government has distorted the inflation rate lower for several years is to keep cost-of-living increases for social security recipients to a minimum. 

¤ · Oct 13, 2011 - 10:46am


Shill · Oct 13, 2011 - 10:46am

Just when it looks like the EFSF would go through unimpeded, don't count Slovakia out yet...



Bugzy · Oct 13, 2011 - 10:48am

If the correct inflation figures were used when clalculating GDP then the west has been in a depression for years. Green shoots.... Recovery.....Iranian death plots.....WMD .... Hang on! News just in. Skippy says the kids are trapped down the mine. We need some truth. Real truth. Elect skippy

Maryann · Oct 13, 2011 - 10:52am

I have been "couponing" for the last five years. Up until about a year and a half ago, it was possible to get some items for almost free or even occasionally free when taking advantage of sales, manufactures coupons, and store coupons. My Kroger that used to double and triple coupons has stopped doing that. The manufacturers coupons are not as good as they used to be or as frequent. 

I still don't pay "retail" for most food and health and beauty items, but it requires more effort and creativity. I do still find that produce can be bought cheaply at ethnic food markets (or price match at Wally-world), and Aldi's has good deals on basic items and good meat mark-downs. Turd is right, though, now is certainly the time to stock up if you haven't already started. There are lots of good free web sites to help you find coupons and store deals. 

Eric Original · Oct 13, 2011 - 10:53am

Good to see you return to your roots. You are at your best when doing posts like that. Picking tomorrows price of silver is a mugs game.

Seen the price of butter lately? Holy Schnike's!!

Santa's Elf · Oct 13, 2011 - 10:54am

Seems to me, part of that MOPE is giving the allusion of deflation in the markets. For example, people see house prices falling and cry "deflation". Yet when it comes to everyday expenses (gas, electricity, groceries, etc), inflation is the flavor of the month. And if you're a homeowner, you're getting brutalized on both sides. I bought my current home in 2001 for $220k....ten years later, it's back to its original worth of $220k (and that's assuming I could find a buyer at that price, which is a big assumption). My income, which I'm grateful to have, hasn't improved in the past three years, yet my grocery bill continues to surge in spite of my reliance on sales, coupons, etc. 

If mainstream America isn't aware of this inflation/deflation dichotomy now, I guess we'll have to be homeless and starving before we realize the fleecing we've all taken. This is well beyond frogs in boiling water...there's no subtlety amidst the lies anymore.

Shill · Oct 13, 2011 - 10:55am

And it may be this way for a long, long time. As long as the Banks are well capitalized and your lucky enough to have a job and earn a paycheck to stay afloat well this is our direction going forward, until something gives. Until that time get use to this up and down motion across all markets.

· Oct 13, 2011 - 10:56am

The price of unleaded gas in our town went up 10% overnight! I knew it was coming based on my education here in Turd's outhouse and the recent increase of the /CL futures prices, but it is still shocking. Sure am glad that we ordered gasoline yesterday to fill our tank next to the barn. My wife and her sister are canning chicken and all kinds of dry goods today. We have cooled down on the silver purchases to focus on food for a while. but I will take advantage of any potential beatdown in silver if it comes. The MOPE that you point out Turd is simply unbelievable! But most people in this country let them get away with it.

Happy Trading today!

Santa's Elf Eric Original · Oct 13, 2011 - 10:56am

That's what I've noticed lately Eric--anything dairy has taken the parabolic rise we hope silver will someday have. Milk and butter and cheese...oh my!

Eric Original · Oct 13, 2011 - 10:56am

Drought in coupons this summer for sure, but don't you think there's been a little uptick over the past few weeks? That's what I'm seeing, and I'm restocking the bunker. yes

Hammer · Oct 13, 2011 - 10:56am

The politicians have to be able to say they did everything necessary to appease the constituents under that constitution (and to also defend themselves from the mob - "it wasn't us, we did it by the book." defense).

Once that formality has been cleared, the Fund gets its approval.

That is my personal view on Slovakia. It is a matter of political expediency and process forced on them that just delays the eventual result. Again, this is just my personal opinion as there is just no way I can see the Euro going down through the actions of such a small Euro player like Slovakia (no disrespect to the country nor its citizens).

It will be interesting to see how it actually turns out but if I had to go for a result, i would go with the one I have laid out above.

Eric Original · Oct 13, 2011 - 10:58am

No kidding. Screw gold and silver. Start stacking butter and cheese!

Mickey · Oct 13, 2011 - 10:58am

coli in many industries is kept low

CPI is more or less a spending index, not an inflation index. You cannot afford steak you buy hamburger meat. And with imports thats been kept low too. Think TVs and PC's etc. But the everyday stuff--food energy education, medical care--where folks spend most of their money--is skyrocketing. Although on medical care technology, not cheap, is much better than 20-40 years ago.

ISGR--is a company that makes machines for non invasive prostate cancer surgery--each machine cost over a million. How do you factor in that cost benefit.

Senator Mark Kirk sent an e mail out today to illinois residents about how bad things in Illinois are financially. Bummer-The state should go BK and do a workout re-negotiating everything. And then live within its means

argent rampant · Oct 13, 2011 - 11:01am

There's a whole lot more to this guy than "former Pizza man", as the MSM sums him up.

Check it out at wikipedia.


I Run Bartertown · Oct 13, 2011 - 11:03am

I'd suggest thinking even beyond the food/land/medical/defense stuff, too. Tools, building/repairing materials, ladders, storage bins, buckets, work gloves, clothes.

We're awash in 'stuff' now and it'd be a shame for all the hard work of all those Chinese workers to not make its way into your supplies before they decide that another arrangement is in order.

retireyoung · Oct 13, 2011 - 11:05am

I appreciate the subject for today. And, more importantly, it seems to generate responses that are of more interest to me.

Eric Original · Oct 13, 2011 - 11:08am

Breaking on CNBC: Slovakia says YES.

Glad we got that out of the way. I can get on with my life now. Have to go grocery shopping. How's that for timeliness on today's thread!

Shill · Oct 13, 2011 - 11:10am


Slovak parliament approves EFSF expansion: reports

Stormdancer · Oct 13, 2011 - 11:11am

Richard Sulik of the SaS may have failed to bring the question of constitutionality to bear on the ESFS vote. A new vote appears now be scheduled for the next few minutes.

What's interesting to me, is that some members of parliament voted FOR the measure last time in hopes of preventing the current government from falling.

Those votes are now free to vote against the ESFS expansion since the fall of the government has already happened. It's unlikely that there are enough of those to overcome the 62 votes Smer witheld in the last vote (which are now, at least verbally, committed to a "yes" vote....but....we should know in a few minutes.

This isn't quite as "in the bag" as it appeared two days ago....

paulindoon Stormdancer · Oct 13, 2011 - 11:13am

According to ZH:

Slovakia Passes EFSF Expansion Vote

Submitted by Tyler Durden on 10/13/2011 - 11:10 Slovakia

Well, that's that.


Now: perhaps we can finally get some details of what will happen next instead of just blind short covering squeeze on rumor-based headfakes?

Maryann · Oct 13, 2011 - 11:14am

In fact I did notice that there were quite a few coupon flyers in my paper this past weekend. They do seem to ebb and flow. There is a 12 week cycle in types of foods that go on sale, for example paper towels and toilet paper will be at their lowest every three months so when I started couponing I would try to buy enough of that particular item to last that long. Now I am doing a little longer storage but you still have to rotate or you will need to add on to your house. smiley

Yes, dairy has gone up a lot but I find my Aldi's has the best prices on milk, usually around $2.00 a gallon. Eggs too, although sometimes they are cheaper at the ethnic food mart. I could talk all day about this so I'll stop now!

Ok one more thing. Yes Dr. J to canning! I have just started learning and I am so proud of my canned chicken . smiley

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