Inflation Is Too Low? Are You Kidding Us Bernanke?

Federal Reserve Chairman Ben Bernanke said this week that inflation in the United States needs to be higher.  Yes, he actually came right out and said that.  It almost seems as if Bernanke is trying to purposely hurt the middle class.  On Wednesday, Bernanke told the press that “both sides of our mandate are saying we need to be more accommodative“.  Of course he was referring to the Fed’s dual mandate to keep unemployment and inflation low, but Bernanke has a very unique interpretation of that mandate.  According to Bernanke, inflation in the U.S. is now ”too low“.  The official inflation rate is currently sitting at about 1 percent, and Bernanke insists that such a low rate of inflation is not good for the economy.  He would prefer that the rate of inflation be up around 2 percent, and he is hoping that more “monetary accommodation” will help push inflation up and the unemployment rate down.
But what Bernanke will never admit is that the official inflation rate is a total sham.  The way that inflation is calculated has changed more than 20 times since 1978, and each time it has been changed the goal has been to make it appear to be lower than it actually is.

Warbird launch

From The Economic Collapse Blog:

If the rate of inflation was still calculated the way that it was back in 1980, it would be about 8 percent right now and everyone would be screaming about the fact that inflation is way too high.

But instead, Bernanke can get away with claiming that inflation is “too low” because the official government numbers back him up.

Of course many of us already know that inflation is out of control without even looking at any numbers.  We are spending a lot more on the things that we buy on a regular basis than we used to.

For example, when Barack Obama first entered the White House, the average price of a gallon of gasoline was $1.84.  Today, the average price of a gallon of gasoline has nearly doubled.  It is currently sitting at $3.49, but when I filled up my vehicle yesterday I paid nearly $4.00 a gallon.

And of course the price of gasoline influences the price of almost every product in the entire country, since almost everything that we buy has to be transported in some manner.

But that is just one example.

Our monthly bills also seem to keep growing at a very brisk pace.

Electricity bills in the United States have risen faster than the overall rate of inflation for five years in a row, and according to USA Today water bills have actually tripled over the past 12 years in some areas of the country.

No inflation there, eh?

Well, what about health insurance?

Yup, that has been going up rapidly as well.  Since 2010, employee health insurance premiums have been rising an average of between 8 and 9 percent a year.

So where is this low inflation that everyone has been talking about?

It certainly cannot be found in college tuition costs.  Since 1986, the cost of college tuition in the United States has risen by 498 percent.

What about at the supermarket?

We all have to buy food.  It sure would be nice if inflation was low there.

Unfortunately, anyone that shops for groceries on a regular basis knows exactly how painful food prices are becoming.

And over time, those increases really add up.  An article by Benny Johnson details how the prices of many of the things that we buy on a regular basis absolutely soared between 2002 and 2012.  Just check out these price increases…

Eggs: 73%

Coffee: 90%

Peanut Butter: 40%

Milk: 26%

A Loaf Of White Bread: 39%

Spaghetti And Macaroni: 44%

Orange Juice: 46%

Red Delicious Apples: 43%

Beer: 25%

Wine: 60%

Electricity: 42%

Margarine: 143%

Tomatoes: 22%

Turkey: 56%

Ground Beef: 61%

Chocolate Chip Cookies: 39%

So how in the world can Bernanke possibly come to the conclusion that inflation is too low?

Is he insane?

If you want to see a really good example of the impact that inflation has had on our economy in recent years, just check out this amazing chart which shows what Bernanke’s reckless policies have done to the prices of commodities during his tenure.

Meanwhile, paychecks are not rising at the same pace that inflation is.  In fact, median household income in the United States has fallen for four years in a row.  Overall, it has declined by over $4000 during that time span.

So the cost of living just keeps rising, but the middle class is making less money than before.

That certainly is not good news.

Of course a big reason for this is because the quality of jobs in America continues to steadily decline.  Only 47 percent of adults have a full-time job at this point, and 53 percent of all American workers make less than $30,000 a year.

Most families are just barely scraping by from month to month, and Bernanke has the gall to say that he needs to try to get prices to rise even faster.

Is Bernanke also going to increase all of our paychecks in order to make up for the “inflation tax” that is being imposed on all of us?

Of course not.

And sadly, it appears that the number of Americans that are losing their jobs is starting to move upward again.  We just learned that initial claims for unemployment benefits rose to 360,000 last week.

That is getting dangerously close to the 400,000 number that I keep talking about.

The middle class in the United States is shrinking with each passing day, and Bernanke seems absolutely clueless.

His answer to every economic problem always seems to involve printing more money.  Thankfully, about 1.8 trillion dollars of that money is being stashed away at the Fed and has not gotten out into the real economy yet.

But someday that money will be unleashed on the real economy, and it will create crippling inflation.

Unfortunately, Bernanke doesn’t seem to really be too concerned about the mountains of cash that the big banks have parked at the Fed.  He is just happy that his reckless money printing has pumped up the stock market to new all-time highs.

He should enjoy this little period of euphoria while he can, because this bubble will burst like all false financial bubbles eventually do.

And when this bubble bursts, the foolishness of Bernanke and the Federal Reserve will be glaringly apparent to everyone.

 

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Comments

  1. You see? This is what I was referring to yesterday (or the day before?) when I mentioned the dual use of the term ‘inflation’ that can only be deciphered by the context of the moment. In this instance, by inflation, Bernanke was talking of CURRENCY inflation being insufficient.
     
    With a dismal paucity of borrowing (we ARE in a global condition of Debt Saturation), creating an insufficient amount of new currency to offset the ballooning complex compounding of interest, the FED has no choice but to print up completely bogus ‘bridge currency’ to maintain circulation as it’s being drained by BOTH Principal Amortization AND Interest Service … simultaneously sucked from the economy.

  2. Oh don’t get me started on the CPI. I have recently been studying some of the methodology behind the numbers. The B****ds use all sort of tricks to keep the numbers down; Substitution & Hedonic regression, and Geometric mean.
     
    Our stats people the ONS definitely under report inflation, looking at their own data they have reported domestic energy has only risen 23% since 2008, this is a complete fabrication My energy costs have risen 200% in that period. I have the cheapest energy tariff I can find. Therefore if that data is incorrect then the rest must be highly suspect.

    • Seems you are a businessman? 
      I agree about STATS. They need some of these “tools” to interpret data, but they use them to 
      “generate” data, and thes use it to mislead. They become the “tools” THEMSELVES! 

    • Mark Twain is quoted as saying that “There are lies, damned lies, and statistics”.  The increase in BS content with each category is readily apparent.  
       
      The Gov and the Fed manipulate these numbers for 2 primary reasons.  First, keeping the numbers for inflation and unemployment low makes them and their policies look better than they really are.  This is helpful at election time and when collecting campaign funds.  Second, they avoid a sheeple panic from those who are now blissfully lulled back into a deeper slumber by the “knowledge” that all is well or at least not as bad as it could be.  It is but they are simply unaware of it.
       
      Also not mentioned by Gov types, whether in the Gov or at the Fed, is that taxes have increased considerably as well.  My most recent property tax statement arrived a couple of weeks ago and it is up by more than 10% over the last statement.  In a sane world, such an assessment would be tantamount to an offer to buy at this inflated price.  Sadly, in the real world, however, it is not.

  3. INFLATION KILLS. It kills everything it touches. We cannot have deflation for the reason that Pat Fields notes above. Currency inflation is vital.
    What can we expect from a man whose ENTIRE life has been a fraud, from his PhD to his fiscal policies.  He is a psychopath, simply and completely.  While he may not be going around the neighborhood in a clown suit, killing the kiddies and burying them in his back yard, his policies are killing millions worldwide through food inflation. These effects are a direct result of QE.

    I predict that when the final body count is tallied, Buck FNRanke will have the highest Democide death toll in the history of humanity.He’s making Mao look like a piker. 
    His was is not through bombs and bullets.
    His way is through debt and FIAT. 
    But what can you expect from a jumped up ignoramus phony in the employ of a band of Eurotrash banksters and elites.

    Those two juggernaughts will kill hundreds of millions worldwide by starvation and destitution.  A billion people go to bed hungry in this world because they cannot afford their daily meals.  25% of the children in our country have fod insufficiency.   100,000,000 people in the US rely on government transfer payments, SNAP, EBT  and food subsidies to fill their stomachs.  If this is not a huge indication of third world status I must have missed the freaking bus. We are slowly being starved to death through hedonic embeggarment.

    And know this.   I am not criticizing anyone who’s on government supplementation.  Whether they voluntarily walking into debt penury and starvation* following the Pied Piper of Paper money, or were frogmarched into this parlous state, the goverment paved the way with lies and deceipt on a scale not seen since Roman times.
    All of this is as a result of terribly destructive and terroristic policies that the Fed has implemented for the last 100 years.  The last 30 years have seen a doubling down on our destruction. DEMOCIDE on a world wide basis is proceeding apace. The FED is a self contained WMD set to destroy us.
    These sons of bitches are out to get us.  Bernanke is just another psychopath dressed up in a nice suit with an avuncular mein, dead set on policies that will be our undoing.  Who needs Nutrisystem when you have the Federal Reserve System;  sending us to our deaths.  Maybe they should put up the Golden Arches over the Fed building.  100,000,000 million killed this year.
    Meh!
    * Starvation is not just having a bad case of the ‘skinnies’ It’s also a result of a terrible diet of junky food and bad nutritional processes. Being obese is not a sign of good heath It is a sign of bad food choices that speed up the death process. GMO Foods are part of this process IMO

    •  
       

    • “But what can you expect from a jumped up ignoramus phony in the employ of a band of Eurotrash banksters and elites.”
       
      Is that a trick question, AG?  lol
       
      RGR… every time I see that photo, I wonder what that guys’ OTHER hand is doing to that poor gal.  :-O

    • What people don’t realize is just how poor you have to be to get food stamps. I amke $1227 a month and am eligible for a whopping $16 a month in food stamps. Thankfully I am somewhat self sufficient via the CSA as far as food goes.
       
      Same for electricity, typing this off today’s solar charge, screw the power company.

  4. Heck yes RGR   Every fool in a nice suit has been using stats to delude us.  Moog was telling Og that brontoburgers were plentiful, while he was shorting same with the Neanderthal in next cave down the valley.  Result,  Og bought into the BS and ended up starving while Moog ate high on the hog. 
    As for the Neanderthal;  not so good on math skills, he ended up with a place at the table, right next to the tubers and greens.

  5. Yes, Inflation is too slow.
    After 100 years of FED, still 3 or 4 cents of purchase power persist to remain for the dollar.

  6. “On Wednesday, Bernanke told the press that “both sides of our mandate are saying we need to be more accommodative“.  Of course he was referring to the Fed’s dual mandate to keep unemployment and inflation low, but Bernanke has a very unique interpretation of that mandate.”
     
    The Fed has managed to produce an EPIC failure of their stated “mandate”.  Unemployment has run amok AND the purchasing power of the US dollar, thanks specifically to inflation, has declined disastrously since the Fed came to be in 1913.  Of course, their early years hardly count in this disaster because the US still had a gold standard back then.  It took them 20 years to resolve that issue but once they did, it was pedal to the metal time!
     
    “So how in the world can Bernanke possibly come to the conclusion that inflation is too low?  Is he insane?”
     
    No, of course not.  He is merely playing out a part that he agree to play for a LOT of money.  His contract is nearly up and it is time for him to beat feet so he can relax and enjoy his hardly earned money at some luxurious but undisclosed location.  Bali might be good.
     
    “And over time, those increases really add up.  An article by Benny Johnson details how the prices of many of the things that we buy on a regular basis absolutely soared between 2002 and 2012.”
     
    And soar they have.  But you will note that virtually nothing on this list is included in the CPI.  When inflation becomes too high, one can “tame” it by simply not counting the many things that are inflating and counting more of the few things that are not.
     
    “Is Bernanke also going to increase all of our paychecks in order to make up for the “inflation tax” that is being imposed on all of us? Of course not.”
     
    Nope, sorry, not his department.  Both the Gov and the Fed studiously ignore inflation unless they can use it for their own benefit.  Note that when one earns a tiny bit of interest on a CD, bond, or other low-interest investment, no mention of the fact that real inflation has eaten the so-called profit from this 3-5 times over and then it gets taxed as if there was no inflation whatever.  This used to be a HUGE problem for anyone who bought a house, fixed it up, and then sold it a few years later for a “profit”.  If inflation is deducted from this “profit”, it will virtually disappear.  But because the tax on it was MUCH higher thanks to inflation, why, we’ll just leave it in there to ensure that the Gov gets ”their fair share”… as if they had anything to do with this other than screwing it up.
     
    “We just learned that initial claims for unemployment benefits rose to 360,000 last week.”
     
    Did we?  How can we trust ANY of the numbers coming from either the Fed or the Gov?  They have lied about just about everything that it is possible to lie about, even when lying was not necessary from their point of view.  We really do not know if this number is in any way accurate.  It could be 2 million, for all we really know!
     
    “His answer to every economic problem always seems to involve printing more money.  Thankfully, about 1.8 trillion dollars of that money is being stashed away at the Fed and has not gotten out into the real economy yet.
     
    Unfortunately, Bernanke doesn’t seem to really be too concerned about the mountains of cash that the big banks have parked at the Fed.  He is just happy that his reckless money printing has pumped up the stock market to new all-time highs.”
     
    These two statements seem mutually exclusive.  If this printed money is largely still banked with the Fed, then how can it possibly be affecting stock prices?  Printed money does not affect the price of anything.  It is distributed printed money that does…  and a lot of this IS being distributed to buy crap assets from the banks balance sheets (at wildly high prices).  The magician’s trick here is that money IS being printed in large amounts, it goes to the banks to purchase their financial sewage, and the money used to buy these assets mostly is then used to buy UST paper… and stocks, which is why the Dow 30 is 15,000+ and not half of that.  The Gov then spends the money from the UST paper sales on all manner of things, so the money is being circulated.  They just fudge the inflation numbers such that it doesn’t seem to be causing inflation when it really is.
     
    “But someday that money will be unleashed on the real economy, and it will create crippling inflation.”
     
    Perhaps.  That idea would be consistent with a huge amount of money suddenly dumped into the economy all at once.  But that is not what is happening here.  It is also unlikely to ever happen, IMO.  No, this money will not be dumped into the economy but it will be metered into it slowly over time.  Yes, it WILL cause inflation and it already is causing it.  The stock market is near all time highs right now, not because business is booming but because it is being inflated, just like the tech stock and housing bubbles before it.  Make no mistake here.  There are asset bubbles forming right now and they are in bonds and in stocks.  
     
    My own personal thought on this is that it is not only necessary, it is probably critical.  The US is in a depression as we speak but it has been papered over so as to make it less than easily visible.  Without all these Fed and Gov machinations, it is likely that the US would have already entered a death spiral from which no recovery is possible.  I am not saying that these actions are a good thing but that the choices available are VERY limited when one approaches a SHTF time.  This is the narrow neck in the hour glass and the available sand is largely gone. National production is actually down but appears to be 1-2% thanks to the disguise of 8-9% inflation.  National unemployment is around 15% but is being disguised as half of that by the fake numbers that are continuously created out of thin air and then published as if they had any meaning whatever.  They do not but we are made to think that they do by continuous media repetition and the vilification and ridicule of anyone who dares to tell the truth of our situation.
     
    But… WTF… let the bread and circuses continue until they simply cannot.  Then and only then will the true reckoning come.  When it does finally come, it will be of truly epic proportions.  Got preps?
     

  7. Conchita and Conchata
     
    RGR  I had to put the Trouble-mint twins out to pasture.
    It was sad but for the best.  They left singing.
    We got the ‘no job’
     
    We do the ‘hob nob’
    We cry the ‘sob-sob’
    We dance the ‘wib-wob’
    We do the ‘flash mob’
    To get some scratch, Bob
    Double mint Double mint Double mint Gum
    Cheers
     
     

  8. It would be nice if our money actually had more purchasing power.  It would be nice if you could earn a decent interest rate on a simple savings account or pension investments.  Bernanke and his fellow private bankers could care less about what’s good for anyone but them and the financial elite they report to.  These clowns benefit from debasement.  So they debase.

    • MrBoompi
       
      Banknote currency can ONLY lose purchase power. It’s a phenomenon that ought to be fully expected, but to get that grasp takes an understanding of the scheme’s basic structure. To get a handle on THAT, requires discernment between what’s REAL and what’s IMAGINARY.
       
      ALL CURRENCIES, whether ‘dollars’ ‘rupees’ , ‘renminbi’, pounds’, ‘francs’, or cetera, are loaned out in principal amount only, with interest compounding on that principal … as long as it stays in circulation. Notice that the interest servicing currency isn’t created with the initial loan, so it can ONLY be created by FURTHER borrowing to bring that interest servicing currency into existence. Remember, this is a GLOBAL mechanism! Everyone on the planet is subjected to this conundrum of banknotes compelled into creation by interest. Currency inflation and debt co-generate each other … automatically, by design.
       
      Notice I said that the interest compounds … as long as the banknotes stay in circulation. This is true even if banks themselves maintain that status for THEIR ‘liquidity’. NO ONE is going to mark banknotes as ‘EXTINGUISHED’ and give up what little purchase value remains in them. EVERYONE will keep them in circulation until they’re LITERALLY as worthless as they always HAVE BEEN in FACT. They’re NOT ‘money’, they’re Trade Facilitation Instruments’. Money has recognized intrinsic value equal to the good sought to be exchanged for that money. The very term ‘paper money’ is an oxymoron in REALITY. A slip of paper, whatever officious printing applied to it is … a slip of paper, with intrinsic REAL value of a … slip of paper!
       
      As for interest on banknote ‘savings’ … if you loan your car to a neighbor to go to the store, do you owe that neighbor interest?

  9. Either way, if Bernanke thinks that there aren’t enough inflation, then he’ll just print more US dollars which will drive precious metals’ prices higher. Maybe the reason why he said that inflation is too low is because inflation is getting higher so by telling, everyone would think that it is a good thing that inflation is now rising and that Bernanke made the right decision.

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