Ron Paul: Chained CPI Chains Taxpayers

Jim WillieOne of the least discussed, but potentially most significant, provisions in President Obama’s budget is the use of the “chained consumer price index” (chained CPI), to measure the effect of inflation on people’s standard of living. Chained CPI is an effort to alter the perceived impact of inflation via the gimmick of “full substitution.” This is the assumption that when the price of one consumer product increases, consumers will simply substitute a similar, lower-cost product with no adverse effect. Thus, the government decides your standard of living is not affected if you can no longer afford to eat steak, as long as you can afford to eat hamburger.
Changing government statistics to exploit the decline in the American way of life and benefit big spending politicians and their cronies in the big banks does nothing but harm the American people.

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From Dr. Ron Paul:

The problem with “full substitution” should be obvious to anyone not on the government payroll. Since consumers did not choose to buy lower-priced beef before inflation raised the price of steak, they obviously preferred steak. So if the Federal Reserve’s policies create inflation that forces you to purchase hamburger instead of steak, your standard of living is lowered. CPI already uses this sort of substitution to mask the costs of inflation, but chained CPI uses those substitutions more frequently, thereby lowering the reported rate of inflation.

Supporters of chained CPI also argue that the government should take into account technology and other advances that enhance the quality of the products we buy. By this theory, increasing prices signal an increase in our standard of living! While it is certainly true that advances in technology improve our standard of living, it is also trsic semper tyrannisue that, left undisturbed, market processes tend to lowerthe prices of goods. Remember the mobile phones from the 1980s? They had limited service, constantly needed charging, and were extremely expensive. Today, almost all Americans can easily afford a mobile device to make and receive calls, texts, and e-mails, as well as use the Internet, watch movies, read books, and more.

The same process occurred with personal computers, cars, and numerous other products. If left alone, the operations of the market place will deliver higher quality and lower prices. It is only when the government interferes with the operation of the market, especially via fiat money, that consumers must contend with constant price increases.

The goal of chained CPI is to decrease the government’s obligation to meet its promise to keep up with the cost of living in programs like Social Security. But it does not prevent individuals who have a nominal increase in income from being pushed into a higher income bracket. Both are achieved without a vote of Congress.

Noted financial analyst Peter Schiff correctly calls chained CPI a measurement of the cost of survival. Instead of using inflation statistics as a political ploy to raise taxes and artificially cut spending, the President and Congress should use a measurement that actually captures the eroding standard of living caused by the Federal Reserve’s inflationary policies. Changing government statistics to exploit the decline in the American way of life and benefit big spending politicians and their cronies in the big banks does nothing but harm the American people.

 

Comments

  1. We have something worse than the spectre of chained CPI.  We have the chained CPI of government.  We have a government that’s grown from a small, direct, more honest and accountable entity to a massive oppressive corrupt leviathan. 
    As this monster grows at an exponentially inverse rate to fabricated inflation in its transparent attempt to convince us that inflation is 1.6%, it consumes us in a relentless piecemeal manner.  We are being eaten alive by the lies of this government while we try to put food on our tables.  The larger the government grows, the smaller the inflation calculation. Soon we will be told inflation is negative, just like the ECB tries to create NIRP; at which time this game ends. EBC cards were reduced in November by 12%.
    What is the difference between the president of Venezuela saying inflation is 12% when it’s 55% and Obama saying inflation is 1.6% when its 12%?  Nothing.  Lies don’t fill empty bellies.
    Technology makes for lower inflation?   Really? As much as I like fruit I don’t eat Apple.  No mattere how much a hungry person texts, technology won’t fill an empty stomach   Texting while starving is not a suitable guage for inflation.
    Ron Paul should know better than to ask that a measure be created, capturing the eroding standard of living caused by the Fed’s inflationary Policies. If Paul is old enough to remember Jimmy Carter, he should remember the MISERY INDEX.  It got Carter defeated. It was a measurable index, quantifying the affect of inflation on the people in this country.

    Are you better off today than you were 5 years ago?

    If Chained CPI is the means of measuring inflation today, then we willing allow our jailers to imprison us with these same chains.

  2. “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
    – John Maynard Keynes
     
    Physical Silver cannot be inflated away in the manner that is being done with fiat paper currencies.  A time is coming (and for some the time has already come) when saving Silver will be the only reasonable means of protection from wealth confiscation.

  3. We need to get a law passed that makes the way inflation gets calculated be accurate and not some faked out if we drop this it will look lower formula.
     
    Or just overthrow this communist/marxist/waste of air for a president, and clean house in congress. Change it so 2 terms max for congress then out. No pension, they use the same healthcare and insurance we do. No big spending budgets for the office either. They want an extra aid they can pay it from their own pockets.
     
    And make it mandatory that anyone running for president/congress must show all school records that exist, show proof of citizenship. If anything was fraudulent they are ineligible for office. Get caught in a lie while in office and automatically out. No trial, no waste of taxpayer money on lawyers and hearings. Out and don’t let the door hit you on the ass. Once out ineligible to run for ANY public office, not even dog catcher.

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