Inflation and the Future

The Credit Strategist Blog

The Federal Reserve watched for years as financial asset inflation rose at double digit rates while product and services inflation allegedly increased at very low single digit rates. They were able to do this for two reasons. First, they treat their inflation mandate as limited to products and services which leaves the gaping hole of financial assets through which higher prices can drive (and they did - in huge four-wheelers). And second, the inflation statistics on which they rely are manipulated to suppress price increases. They have little resemblance to what happens in the real world.

If the CPI were calculated today the same way it was calculated in 1980, it would be hovering at ~+15%, well above the ~+6% range currently being reported. This is shown in the chart below borrowed from Michael Synder’s excellent blog The Economic Collapse.