From CNBC:
…A special index created by the Labor Department to measure the actual cost of living for Americans hit a record high in February, according to data released Thursday, surpassing the old high in July 2008. The Chained Consumer Price Index, released along with the more widely-watched CPI, increased 0.5 percent to 127.4, from 126.8 in January. In July 2008, just as the housing crisis was tightening its grip, the Chained Consumer Price Index hit its previous record of 126.9…
This is no surprise to most of us – we know as we buy our food, pump our gas and otherwise just live day to day that we’re being squeezed. My father-in-law hasn’t had an increase in his Social Security check in years…because Uncle Sam says prices haven’t risen. And by the official number, it hasn’t – but the CPI has been driven down by the collapse of home prices and, astoundingly, the main CPI number deliberately excludes food and energy prices.
If you are in the market for a house, this is good times for you – I recently saw a house which originally went for about $350,000.00 sell for $80,000.00 after foreclosure. But if you already own your home then you are highly likely to be “underwater” and, in addition, your pay has likely stayed pretty much the same for the past few years…meanwhile, the food, gas and clothing you buy has been steadily rising in price.
There are two reasons for this state of affairs. The fundamental problem is one of production – we here in America do not make, mine and grow enough of our own stuff. This makes us dependent on foreign supplies and thus we have little ability to keep prices down by ramping up production on our end. The second reason is, of course, the massive printing of money by the Federal Reserve. In order to bail out insolvent banks and keep stock prices high, Bernanke has printed up bags of money. And you should really let that sink in: in order to keep rich people rich, Bernanke has essentially been picking your pocket by way of the printing press. Every time he whistles up another bag of cash to bail out a bank, the money you have becomes worth less. Bernanke might as well pull a gun on you and demand your wallet – though we’ll never get anything as straightforward as that out of him. Amazing to think that the man at the head of our financial affairs falls lower in the honor stakes than a mugger.
Here’s the bad news – there are already rumors that after the latest round of “quantitative easing” is finished yet another will follow. Why? Because liberal economic theory seriously contends that printing money is helpful and, additionally, if Bernanke were to shut off the spigot, stocks would lose half their dollar value in a flash. Can’t have that, now can we?
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