Inflation Actually Near 10% Using Older Measure

By Proof

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Welcome Back, Carter!

John Melloy in CNBC's Fast Money:

After former Federal Reserve Chairman Paul Volcker was appointed in 1979, the consumer price index surged into the double digits, causing the now revered Fed Chief to double the benchmark interest rate in order to break the back of inflation. Using the methodology in place at that time puts the CPI back near those levels.

Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 percent in February, according to the Shadow Government Statistics newsletter.

Since 1980, the Bureau of Labor Statistics has changed the way it calculates the CPI in order to account for the substitution of products, improvements in quality (i.e. iPad 2 costing the same as original iPad) and other things.

Backing out more methods implemented in 1990 by the BLS still puts inflation at a 5.5 percent rate and getting worse...

If the Misery Index = Unemployment rate + Inflation rate, then, with 10% inflation and unemployment over 9% (17 if you figure in those who have quit working, are underemployed or ran out of benefits) , then Obama's is close to, if not higher than Jimmy Carter's 19.72!

H/T Memeorandum

Cross posted at Proof Positive


  1. Props to CNBC for highlighting this, at least. I would have liked them to explain a little better why product substitution is so obviously distortive to the CPI numbers (ie: in their example, the iPad 2 might be assigned an arbitrary cost of half its actual cost for CPI purposes; or if it was actually double the cost, the CPI would treat it as costing the same), but I have to give them credit for at least mentioning how bogus the current CPI is.

    I dream of a fantasy world where the media doesn't even bother to print the obvious government lies, and this is a step in the right direction.

  2. Preposterous, the guberment would never move the goal posts to make things appear better than they really are.

  3. I think we need to bring back an emphasis on the misery index.

  4. I remember the Carter years... The Obomba years are much worse!

  5. Nick: Yeah. I think some of it might just be too subjective. You can't always put a dollar value on "new and improved", especially if the producer had to make it lighter/cheaper/faster to maintain his margins and market.

    Chris: I'm shocked. Shocked!!

    Trestin: An idea whose time has come again!

    John: Sadly, you are spot on.


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