by Rick Jensen | July 27, 2014 12:03 am
Paul Krugman, liberal New York Times columnist and economist whose erroneous predictions and inflammatory opinions have inspired websites, blogs and columns by others detailing his multitude miscalculations, launched a Buk missile of a column at conservatives warning of inflationary government policies.
Yes, the man who predicted with no uncertainty that Greece would give up the Euro and U.S. unemployment under Obama would never exceed 9 percent (the U-3 unemployment rose over 10 percent and “real” unemployment was around 16 percent for most of his term so far) has decided that there is no inflation and anyone who reports on such increases in costs of living or correctly applies historical results of governmental policies producing inflation needs a twelve-step program.
If Krugman really cared about his readers he would be honest about Americans’ cost of living instead of aiding and abetting this government’s pretense that the CPI (Consumer Price Index) is an accurate gauge of your family’s cost of living. After all, isn’t that what “inflation” really means to you?
The Federal Government keeps reporting inflation as under 2 percent. Yet to you and I who did not major in economics, when the cost of food increases by 22 percent that definitely is real-world inflation. Anything else is semantics. If your income hasn’t increased respective to your food budget increase then that is definitely information worth knowing.
Is the government purposely publishing a falsely low inflation number?
Some believe so. After all, there would be reason for this government to keep inflation low. Consider the millions of Americans who receive Social Security payments, food stamps, federal school lunch programs and other welfare benefits that have a COLA (Cost of Living Adjustment) based on CPI.
Should official inflation trigger increased payments to these millions of people, this administration’s federal deficit would increase greatly. You might not see the 17 Trillion dollar debt increase as the unfunded liabilities of Social Security and Medicare are not included in the number, but the budget could bust.
As Perriane Boring noted in Forbes this year, “The government has a few resources at its disposal to manipulate the CPI. First, the Bureau of Labor Statistics operates under a veil of secrecy. The raw data used to calculate the CPI is not available to the public. When I asked why, I was told “so companies can’t compare prices.” This makes very little sense because companies can easily compare prices with data openly available on the internet. It also makes it impossible to audit their findings.”
Peter Morici, the University of Maryland economist with an extraordinary track record, recently wrote, “Testifying before Congress last week, Federal Reserve Chairman Janet Yellen cherry-picked data on inflation by noting prices are up, on a year-over-year basis, less than the Federal Reserve’s target of 2 percent.
The Labor Department’s Consumer Price Index has accelerated recently and averaged 3.5 percent for the three months ending in June.”
Why the 2 percent deception?
Yellen’s stated goal is to continue to report inflation as being “the committee’s 2 percent objective.”
Wait. Is the Fed pushing for more inflation?
Morici writes: “Ms. Yellen is ignoring the Fed mandate to ensure price stability. She has embraced the notion that if she induces enough inflation – in Fed parlance at least 2 percent per annum – the economy will grow more robustly.
That view has lots of support among politically liberal economists who offer little credible evidence… Letting inflation fly, and fibbing about it, seems to be Ms. Yellen’s imprint on Fed policy, but it will likely impose devastating costs on ordinary Americans.
Boosting inflation to chase growth by printing money to keep interest rates low will make bankers and private equity firms happy – and they donate considerable sums to Democratic candidates – but it will beat the heck out of the finances of ordinary Americans.”
If transparent inflation becomes policy, how will Krugman backtrack to provide cover for the government?
No wonder the Nobel family wants to abolish the politically polluted prize for economics.
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