Inflation Watch

Current U.S. Inflation Rate

As of August 2014, the U.S. Consumer Price Index inflation rate is 1.99%. The Producer Price Index inflation rate (wholesale inflation) is running at 1.76%.

Comments and Analysis

The above numbers are absolute B.S.!

After living through high inflation in the U.S. in the 1970's, I am personally familiar with "high inflation." The current economic environment in the U.S. right now feels exactly like it did in the late '70's and early '80's. Since at least 2012, I have seen the price of everything I buy jump, and not by a little but by a lot. What the U.S. is currently experiencing is the very definition of high inflation--a significant, sustained increase in the general price level. But, the U.S. Federal Government Bureaus responsible for gathering price data and calculating inflation are saying otherwise.

Using 2004 as a base period for myself, I estimate the prices I pay for everyday items such as food, gasoline, electricity, medicine, housing and insurance have increased by approximately 100%. 100% over a 10 year period is a compound rate of about 7.2% actual inflation. However, the BLS estimates consumer inflation over this period has averaged just 2.4% -- a significant difference.

The problems with the current measures of inflation by the Federal Government are discussed at length by John Williams at Shadowstats.com, but even Williams' estimates of real inflation may be low.

This is a very serious problem! The U.S. Federal Reserve uses various measures of inflation (they are all about the same) to determine policies of setting short-term interest rates and determining how much to expand or contract the money supply. With quoted inflation being so low, the Federal Reserve has unbridled freedom to print money at will. I believe most of the real inflation witnessed over the last four years has come from the Fed's excessive expansion of the money supply. The Fed's money printing spree is enabled by the under-reporting of inflation.

In summary, real inflation is much higher than the U.S government is saying. And, the low quoted inflation is enabling the Federal Reserve to expand the money supply at a rate that is causing real inflation to be high. Bottom line? This whole charade has put the average American household in distress.

Submitted for your approval by Kyle Atkinson, CEO of FFC LLC.