Blogger's note: Once again our government is changing the way the consumer price index (CPI) is calculated. This will be done to mislead the people into believing that their personal financial conditions and that of the nation are better than they really are. I've written earlier that government data are falsified with focus on the Bureau of Labor Statistics (BLS), that falsely reports unemployment by ignoring the hundred's of thousands of people who have given up on finding a job. The true unemployment number would be 14-15% if the non-participants were counted and reported. It would be even greater if those who work only part time were counted.
Now comes another change in CPI to further deceive the American people. Sad, but disgusting. Oh yes, then there is the claim by the president and his sycophants that debt doesn't matter. Deceptive or stupid?
THE CPI AND THE DOLLAR -- BY STEVE KAUFFMAN
“It Ain’t Worth a Continental”
I have in my possession a Continental. It is a piece of paper currency issued by the Continental Congress in 1778. It has printed on it the following text and is hand signed by a person whose name I cannot decipher. It has at the top a handwritten number, “No. 1924307” followed by large printed words, “Thirty Dollars”. Below that line is printed this text. “This Bill entitles the Bearer to receive THIRTY Spanish milled Dollars or the value thereof in Gold or Silver according to a Resolution passed by Congress at Philadelphia, Sept. 26th, 1778.” By the time the Revolutionary War was over, it took 16,000 Continental Dollars to buy the same thing that one such dollar bought when Continental dollars were first issued. The expression, “It ain’t worth a Continental,” was the result of the out of control inflation that resulted from the Congress printing unlimited Continental Dollars to pay for the War. Those Continentals were never redeemed in Gold or Silver.
The Continental was money created out of thin air by the Continental Congress. When money is created out of thin air, it is called “Fiat Currency”. Its value is not based on gold or silver. The dollars being printed out of thin air right now by the U.S. Federal Reserve at the rate of $80 Billion a month are fiat currency. The U. S. dollar is being steadily and deliberately devalued. A dollar will not buy as much tomorrow as it does today, because of inflation.
How is inflation calculated? The increase in cost of a basket of items the typical shopper buys is calculated. The inflation rate in 1980 was officially reported by the government to be over 10% a year. Calculated the way inflation was calculated in 1980, the current rate of inflation according to one source, “Shadow Government Statistics,” is already hovering around ten percent (10%). The “Official Number,” the government number, the CPI, based on the revised current way of calculating the rate of inflation, not as it calculated was in 1980, is claimed to be TWO PERCENT (2%). The current method of calculating the "official" rate of inflation IGNORES the increasing cost of food and energy. Food and energy are no longer in the "basket." Today you need $160 to buy the same amount of stuff $100 bought in 2008. Your 2008 dollar is really worth only about 63 cents today. To equal the buying power of 100 dollars in 1970 you would need today 587 U. S. dollars. In 1970 a gallon of gasoline cost 27 cents.
Consider the Dow Jones Industrial Average (The DOW) "recovery." The Dow is hovering just under 15000. It hit a new record high recently. Hooray! Taking into consideration the real rate of inflation, the Dow would have to be at about 22000 today to be equal in real value what it was in 2008. Surprise! As the Fed continues to pump out ever less valuable paper dollars will the DOW and the stock market as a whole continue to climb, because the dollar is worth so much less? Or maybe "worthless."
“There are lies, damn lies and statistics.” So, what will your dollar really be worth ten years from now. Might the new phrase be, “It ain’t worth a United States Dollar” or “The dollar ain’t worth a Continental?” No government, from Roman times, has survived by systematically devaluing its currency. Our dollar is fiat currency and is being systematically devalued. Google “Fiat Currency” for a sad history lesson.
Steve Kauffman is a retired top business executive who holds an MBA from George Washington University.