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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LongGoldLongSilver · Oct 13, 2011 - 11:15am
Dr Durden · Oct 13, 2011 - 11:16am


Is almost pointless.

People are going to have to see their disposable income get eaten up and the balance on their IRA's at $8 before they do anything substantial. They have to experience it. They say it takes 10 years to get cancer, but what that really means is the 90% of the disease progression goes unnoticed. It's not until the pain and suffering drops to them to their knees that they take action. With the Lamestream media providing the distraction, it's not until it's too late that people finally realize something is truely wrong.

It's not bad, it's not good. It's needed. It has to be this way. Get out of the way and let it happen.

Tom L · Oct 13, 2011 - 11:16am

Dairy rising?

And y'all wonder why I have goats? 


· Oct 13, 2011 - 11:16am


Butter expensive? 

It's a good thing American's didn't have to use Cherries this summer to fill up their cars. The prices were ridiculous!


Shill · Oct 13, 2011 - 11:16am


CORRECTED-UPDATE 2-Ireland warns on euro zone banks 'dumping' assets
| Reuters

WASHINGTON (MarketWatch) -- The Treasury Department said Thursday it plans to sell $7 billion reopened 30-year bonds next week. 30_YEAR -1.94% . The auction will take place on Thursday.

Bay of Pigs · Oct 13, 2011 - 11:17am


He is a pitiful joke. Nice try.

Shill · Oct 13, 2011 - 11:19am

Workers aren’t getting

Workers aren’t getting raises, while food and fuel prices crimp budgets

Scrylla · Oct 13, 2011 - 11:20am

It appeared that there had

It appeared that there had even been demonstrations to thank Big Brother for raising the chocolate ration to twenty grams a week. And only yesterday, he reflected, it had been announced that the ration was to be reduced to twenty grams a week. Was it possible that they could swallow that, after only twenty-four hours? Yes, they swallowed it. Parsons swallowed it easily, with the stupidity of an animal. The eyeless creature at the other table swallowed it fanatically, passionately, with a furious desire to track down, denounce, and vaporize anyone who should suggest that last week the ration had been thirty grams. Syme, too-in some more complex way, involving doublethink, Syme swallowed it. Was he, then, alone in the possession of a memory? 

LongGoldLongSilver · Oct 13, 2011 - 11:20am


Edit: Sorry for posting it twice...donno if it's possible to delete one of them.

Edit 2: Well, better with another chart at least;) Did a so called swap.

GoldMania3000 · Oct 13, 2011 - 11:20am

Food shoping

have you gone food shopping lately. I don't know how families afford it. I'm just one person and I've notice that when i go shopping I get almost nothing for $50. nothing. 5 years ago I used to get a lot for $50. It must costs hundreds of dollars for a family of 4 or 5 for one weeks worth of food. Two years ago I use to get a bagle for .50 cents. it's now doubled. that's inflation right. don't give me deflation. Although maybe it's stagflation.

Fruits are up, veggies are up...Coke and pepsi are even up. It aint getting better. And those with families it's going to be very difficult.

RedRover · Oct 13, 2011 - 11:24am

OxyMoron Activism.

Just got back from a bike ride & was reflecting upon my influences lately & I deviate slightly from my normal influences, regularly to hear consensus from different realms. So, yesterday I tried out this interview with Cliff High, on the whole webbot thing, he's got going on and he was saying that we're going to see food & energy prices go up, however other stuff won't be expensive, so it'll be confusing to people. OK, so that was along the lines of what I've been thinking.

Then, I started thinking about the whole Occupy Wall Street/ Boston, etc.. and from looking at friends on facebook, the same people who are going to all these (Cap Carbon, etc), seem to be the same people who are going to these Occupy rallies.

So, on one hand, their saying.. carbon taxes (yay) and then, the next weekend, their occupying Boston saying you 1 percent are making it difficult for the little guy, we want economic freedom, etc.. (& Carbon Taxes). The two (2) stances just totally conflict. So, I reflected more & I'm like, most of these people that I know, I feel like their re-living their view of the 60's.. (with a drive to be like, 'I was there'), I occupied wall street. Much like relatives of mine are able to say they went to Woodstock.

It seems like most people have no idea what they stand for, because their caught up looking to be actively involved in something; without really grasping the fundamentals of what they stand for, as individuals. What's the phrase I'm looking for.. Oxymoron?? & these are my friends (yikes)!

Rui · Oct 13, 2011 - 11:25am
Shill · Oct 13, 2011 - 11:25am
henry · Oct 13, 2011 - 11:28am


Turd 2012

HeNateMe · Oct 13, 2011 - 11:29am


Anyone who truly believes Slovakia is going to be the impetus of "doing the right thing" is seriously delusional. It's Slovakia for Christ's sake. I wasn't even aware of its existence until this week. 

Money printing will continue, on both sides, above and below, in and out. Devalue devalue devalue.

These aren't my ideas, wish they were, it's just the knowledge I've gleaned from reading every post on here and other sources.

*Looks like Slovakia did capitulate 20 minutes ago. Wow! I honestly didn't know until I went over to zerohedge after writing the above comment.


¤ · Oct 13, 2011 - 11:32am

Pining, Perfidious, Xty...

Thanks for your help in all of that M2 conversation. You bring up some good points Pining how this goes forward and at what rate they keep doing this. There's no way to know of course, but generally speaking , things are accelerating a bit as is the scope.

We talk about a $1,000,000,000 like it was $1 million and Trillions like we used to talk about the Billions not that long ago. If the reference points are starting to become that distorted already then it seems like the hyper inflation aspect is under way but in a very stealthy way and in the beginning stages.

Kind of what TF just described above and the MOPE conversation I see developing. 

Were at the point where we talk about $500 Billion or $1 Trillion not being enough to offset this or add to that etc. It's getting a bit more distorted as there is more room being created for distortion and proportion to take place. The higher the M2 and debt ceilings allows more room for the chaotic swings.

At this rate, at some point in the next 10 years (not so wild a guess maybe) we'll be talking about about some things in terms of trillions or tens of trillions like it's no big deal. If every country doesn't expand or allow all other countries to creatively fix and expand their money/credit supply then we're screwed and it all resets.

I don't think that happens. I think they keep kicking the cans down the road together and grudgingly accept it as long as someone doesn't kick theirs too far ahead or doesn't lag too far behind. I think they've decided to to try and kick in unison. That's why the CB coordination is vitally important. It either all works together due to the massive currency swaps going on or the system fails quickly. Game over. Global war on.

I don't think that happens (sheer hope). I believe the decision to let Iran be the next one in this 10 year cycle is what's next and not anything global. Doesn't it strike anyone as odd that as much as the U.S. and Russia and China etc. butt heads over big issue's that in the end at these U.N. Security Council votes that they often go along with us or for the most part when it comes to military action they don't directly veto it?

There must be some trade off on a grand scale behind closed doors or diplomatically well ahead of time. (China premiere WH visit Jan 2011) The U.S. already has a green light for Iran imo from the others as long as trade continues and each country can get away with whatever the other countries let them in exchange for this to happen.

That's how I see it. Russia has Billions upon Billions invested in Iran and Syria. As does China. And yet they'll allow it. Ever wonder why?

It's the game of Stratego and RISK I've outlined before except in real life and metaphorically speaking.


Ill let you keep doing the art thing Perfidious. You have good tastes and it's just random enough that it's well done imo.

If you, or anyone else has some great classical music, please post it on my music and vid thread. I forgot to link the thread...hold on.

austrian12874 · Oct 13, 2011 - 11:32am


so far so good...silver trading at 30 plus minus 3

BagOfGold · Oct 13, 2011 - 11:32am

I'm off to the grocery store!!!...

'Freegans' Take Green to Extreme - New York Post

I'll see you there!!!...

Bag Of Gold

· Oct 13, 2011 - 11:35am

The Ascent of Money - A Must WATCH!

Based on the book by Neills Ferguson "The Ascent of Money-The Financial History of the World" Somebody uploaded the Netflix DVD to YOUTUBE-

Learn why Jim Sinclair's Fibanocci Numbers Are Important

The role of money and gold and silver throughout the entire history of money. 

Find out the historic roots of the historic 2008 Credit Crisis. 

How the Medics and Rothschilds came to power as banking families

Why history tells us that a huge financial crisis is imminent.

¤ · Oct 13, 2011 - 11:42am

More MOPE explained

Job Headlines Paint False Rosy Picture

By Greg Hunter’s

Headlines released after a better than expected jobs report painted a very optimistic picture. Bloomberg’s headline read “Recession Concerns Ease on August Jobs Data.” The story said, “Companies in the U.S. added more jobs than forecast in August, easing concern the world’s largest economy is sliding back into a recession. Private payrolls climbed 67,000 after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. The unemployment rate rose to 9.6 percent as more people looked for work.” (Click here for the entire Bloomberg report.)

Even though the official government unemployment rate inched up to 9.6% and 54,000 people lost their jobs, this jobs report was spun as some sort of ground breaking good news. Market Watch had a similar take with its Friday headline, U.S. stock futures jump as Wall Street relieved by jobs report.” (Click here for that story.)It looks like thoughts of the economy slipping back into a double dip recession are over if all you read are stories like these.

Pablo · Oct 13, 2011 - 11:42am

The bills, they are a' risin'



I think it's ridiculous that Food and Energy are excluded from core inflation. Go look at your own budget and tell me, what are your core expenses outside of rent/mortgage? Food and Energy, I'll bet.

I can tell you from looking in our budget tracking software that here in the Pablo household, where we have a strict weekly grocery list, the average monthly cost of our grocery spend has increased 36% since last year and 57% since two years ago. And the rate of increase is accelerating, to the point where it's almost comical, increasing 3.2% in July, 3.4% in August, and 4.2% in September. ​And this does not take into account paying the same price for a smaller food package.​ Go into the grocery and listen and you'll hear everyone notice the prices of eggs, milk, beef, cereal, waffles, etc has gone up. You can't ​not​ notice it.

They can try to MOPE us all they want, but unless a person is completely ignorant of their own personal finances, there is no way they can hide the price increases from the consumer.

Fred Hayek · Oct 13, 2011 - 11:43am

Go to the BLS site and see what items have "hedonics" adjustment

For the unfamiliar, the BLS or bureau of labor statistics is the pack of frauds who put out the official inflation numbers.

Among their bag of statistical tricks they have something called "hedonics" adjustments. This is something which has a kernel of reasonableness to it but which, of course, is popped into a piece of popcorn the size of the Dallas Cowboys' new stadium.

The idea doesn't seem unreasonable when applied to some electronics. If the new ChatterBox phone is the same price as the old ChatterBox but has many new features then the idea is that you're getting more for your money or the price has actually gone down for those same features. This is not a ridiculous argument.

But, if you go over to the Bureau of Labor Statistics site, and do a search for the term "hedonics adjustments", you'll find that they apply these same sorts of statistical adjustments to a wide range of products none of which seem to change much from year to year including children's clothing and men's suits! What's that, you didn't realize there's brand new pocket technology in that three button suit you bought this year compared to the one you bought last year? You're just not as sharp as the B(L)S.

Tesla · Oct 13, 2011 - 11:46am

Thanks Turd and Thanks Mrs F!

Thanks Mrs F for inspiring todays thread. When explaining the the reality of the worlds economic peril to people I always use grocery store prices as a metric for real inflation and then segue into money supply pre 2008 and now as an indication of where things are going and why the politicians are lying to us. Almost everyone can relate to food prices and it's a great way to get the conversation started and keep people interested in the explanations and the truth about the Federal Reserve and the worlds central banks in general.

Once people grasp the why of MOPE they are then able to wrap their heads around the more sinister aspects of market manipulation and price suppression of asset based competing currencies G/S.

It seems many people do not want to hear the truth and shut the conversation out immediately at first but then as time passes and they begin to observe the world more critically the seed that was planted takes root and then the conversation continues with interest at a later date.

The truth is the truth - eventually all/most who are exposed will begin to awaken. DON'T give up on your friends and family - just as it has taken many of us a long time to awaken so will many of them if you are patient and methodical. It is a process and a lot of work to overcome the programming and brainwashing we have been immersed in all our lives. Your friends and family are worth the effort so don't be impatient and plan your presentation in steps.

stained white shirt BagOfGold · Oct 13, 2011 - 11:52am

I'm off to the grocery store!!!...

Carrot Top is a freegan!! Who would have known.

If they figured the CPI on a round of golf it would be 0%. The price of the round of golf has dropped but the cost of beer has risen enough to offset any savings.

backseatdriver · Oct 13, 2011 - 11:52am

Its always been inflation

It has always been inflation for many many decades with very "small pockets" of deflation seed sprinkled in but they never take because the inflation soil is so bad. That said I have railed on this topic numerous times over the last four weeks, (but who am I but some dude staying home trading and taking care of an infant). :)

Federal Reserve Money Stock charts especially the M2 shows inflation in all its glory(from a government POV) as the money flooding the system is staggering. I think the new M2 money supply comes out today actually, someone could check that if they feel inspired, or want to get depressed.

Aside from the Feds own money stock chart (M) aggregates, there is one superior measure of gauging the inflation. Its called the TMS or True Money Supply. It is a Murray Rothbard formulation, and I cant imagine that the majority here are not Austrian Economics fans, so the chart should be bookmarked for future reference to shoot down all "neigh sayers".

The True Money Supply (TMS) was formulated by Murray Rothbard and represents the amount of money in the economy that is available for immediate use in exchange. It has been referred to in the past as the Austrian Money Supply, the Rothbard Money Supply and the True Money Supply. The benefits of TMS over conventional measures calculated by the Federal Reserve are that it counts only immediately available money for exchange and does not double count. MMMF shares are excluded from TMS precisely because they represent equity shares in a portfolio of highly liquid, short-term investments which must be sold in exchange for money before such shares can be redeemed. For a detailed description and explanation of the TMS aggregate, see Salerno (1987) and Shostak (2000). The TMS consists of the following: Currency Component of M1, Total Checkable Deposits, Savings Deposits, U.S. Government Demand Deposits and Note Balances, Demand Deposits Due to Foreign Commercial Banks, and Demand Deposits Due to Foreign Official Institutions.

FWIW, I love Turdtown University. Good topic and thread professor Turd!


ScottJ · Oct 13, 2011 - 11:53am

Bottom in for silver

IMO Only...

I see a potential breakout of 33 (highest truth) coming soon...

Bay of Pigs · Oct 13, 2011 - 11:56am


You can always head over to Mish's site and get your fill of that topic there.

Gallon of milk in Maui? Try $8 (when not on sale). Loaf of bread? $6...

I'm not joking.

JackPutter treefrog · Oct 13, 2011 - 11:57am

Hey Treefrog

What roofing mods did you need? I'm thinking of this option. Plus electric car. Snow/wind outage heat, fridge, and TV/Internet. I've got the electricity bills to make the calcs. Just haven't gotten there yet.

That option is if I want to stay in this house. The population is higher than I want. (That's good or bad depending on viewpoint.)

North Seattle area (actually anywhere around Lake Washington) can be put under water in mega-tsunami situation, I figure anything under 175' elev is floatsville depending on the event.

Other option is to move out aways and build/buy another place and make it my own. I wish I had the resources back when I was younger and with a functioning Left-Rear-Quarter panel. I think farming on small scale is an admirable pursuit. (Katy out there gardening and tending the goats.)

Hey Katie, generally I think human sacrifice is frowned upon, especially in small towns.

RedRover · Oct 13, 2011 - 12:00pm

Scott J, Moderator Status?

Scott J, what's up.. you were a moderator & now, you're not?
What's up with that?

cpnscarlet Bay of Pigs · Oct 13, 2011 - 12:04pm

Cain? Why?

@BOP - You say he is a pitiful joke. Why? What's the Achilles Heel here? Or is he an empty suit?

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