| | The recent political effort to switch our measure of inflation, the Consumer Price Index (CPI), to the "Chained CPI" reflects the earnest with which politicians are trying to fraudulently benefit at the public expense. Here are the details. The CPI uses the current price of a 'basket of goods' as the measurement standard for price inflation. Regarding the actual items on the list, I haven't looked it up, so I'll just make it up as I go along here. Here is an imaginary 'basket of goods':
Imaginary CPI
1) One week worth of rent for a 2-bedroom apartment
2) One week worth of car insurance payments
3) One week towards 10 outfits of clothing, re-purchased every year
4) One week of top choice, lean red meat
5) One week of nutrient-dense, green, leafy vegetables
6) One week of clean water
7) One week of hygiene products
Now, in reality, when prices shoot up, folks don't keep buying the same things (because they cannot afford to). Take number 4 from the list above, for example -- lean red meat. Let's say it costs $5-a-pound and then inflation sets in, and it shoots up to $9-a-pound. Instead of buying the same quantity at the new price, many consumers will switch to cheaper meats, such as chicken, fatty ground beef, or perhaps even to ... "Spam." What chained CPI does is to incorporate these altered preferences of consumers and withhold from indicating any inflation unless they all continue to buy the same stuff as before (the stuff which they originally preferred). According to the chained CPI, if high beef prices force consumers off of beef and onto "Spam" -- then no "price inflation" occurred. In order for "price inflation" to occur when you start out with beef, the price of Spam has to go up.
Because it's so cheap to make and tastes so awful, it can take several years before the price of Spam increases. What that means is that, in actuality, prices are shooting through the roof but the government just sits there and waits for the last, almost-worthless, product to increase in price -- before it publicly admits that any price inflation has occurred. By then, the politicians currently in office will be long gone; laughing all the way to the bank.
Ed
(Edited by Ed Thompson on 12/30, 8:16am)
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The present workers of the United States Steel Corporation will receive their pensions in twenty, thirty or forty years. Today a pension of one hundred dollars a month means a rather substantial allowance. What will it mean in 1980 or 1990? Today, as the Welfare Commissioner of the City of New York has shown, 52 cents can buy all the food a person needs to meet the daily caloric and protein requirements. How much will 52 cents buy in 1980? Such is the issue. What the workers are aiming at in striving after social security and pensions is, of course, security. But their "social gain" withers away with the drop in the dollar's purchasing power. In enthusiastically supporting the Fair Deal's fiscal policy, the union members are themselves frustrating all their social security and pension schemes.
