INVESTORS EDGE
 

Editorials

Testimonials
  • POWERFUL INSIGHTS

    I consider The Daily Bell essential reading for anyone desirous of understanding the way the world really works.

    Lord William Rees-Mogg
    Author, Former Deputy Editor, Financial Times

  • A MUST-READ FOR EVERYONE

    The Daily Bell is a must-read for anyone who wants to understand the effects of the state on our economic future.

    Dr. Thomas DiLorenzo
    Professor of Economics, Loyola University Maryland

  • THE DAILY BELL IS A MUST-READ

    Because the world is changing so rapidly, it is difficult to keep up, which means The Daily Bell is a must read. I consider the information critically important reading.

    Dave Morgan
    Author, Editor of Silver-Investor.com

  • INTELLECTUAL JOLT

    Sit down to read from The Daily Bell and experience a jolt of intellectual energy.

    Dr. Nathaniel Branden
    Psychotherapist, Bestselling Author

  • MESSAGES OF TRUTH

    The Daily Bell website is one of the authentic voices cutting through the clouds of vapid opinion, the morass of mediocre media and the confusion of Orwellian doublespeak. The Bell website lives up to its name, ringing unheard messages of truth in our ears.

    Jeffrey Armstrong
    Award-winning Author, Vedic Philosopher

  • CONSISTENTLY SOLID

    The Daily Bell features consistently solid analysis of and thoughtful challenges to contemporary statism. I am proud to be on the team.

    Dr. Tibor Machan
    Author and Philosopher

  • ESSENTIAL READING

    Liberty is under assault by Big Government. The Daily Bell is an essential tool for information for those who want to fight for freedom.

    Steve Forbes
    Chairman and Chief Executive Officer of Forbes Media

  • READ IT EVERY DAY

    A defender of free markets, The Daily Bell takes a libertarian approach to expose and unravel global misinformation. Read The Daily Bell – every day!

    Charles Payne
    FOX Business Analyst

  • EXCELLENT RESEARCH

    I really enjoy reading The Daily Bell for the excellent research and content provided on a wide variety of issues vital to the Freedom Movement.

    Dr. Mark Skousen
    Author & Founder of FreedomFest

  • OUT OF THE DARK

    The Daily Bell leads us out of the dark tunnel of manipulated press into the light of free press.

    John Perkins
    Bestselling Author

  • ONE OF MY FAVORITE SITES

    The Daily Bell is one of five sites that I review every day because I find there a clear, common-sense interpretation of everyday events.

    Hugo Salinas-Price
    Mexican Billionaire, Founder of Grupo Elektra

  • REFRESHING

    I enjoy reading The Daily Bell because it often has refreshing and novel ways of looking at things.

    Bill Bonner
    Bestselling Author, Founder of Agora Publishing

  • PREMIER FREE-MARKET ANALYSIS

    The Daily Bell rings out for liberty every day. It is the premier online source for insightful and hard-hitting free-market analysis and interpretation of economic, political and business events.

    Dr. Richard Ebeling
    Author, Professor of Economics at Northwood University

  • TRUTH AT WORK

    There are very few publications out there that have the smarts and guts to tell the truth about the dictatorial forces at work destroying our civilization. Thankfully The Daily Bell is one of them, and it appears in the mailbox every day.

    Nelson Hultberg
    Author, Director of Americans for a Free Republic

  • A VIRTUAL WHO'S WHO

    The good and the bad, the big dogs and the small, the thinkers and the doers among libertarians and on the "Right" – you can encounter them all in The Daily Bell's exclusive weekly interviews. Indispensable.

    Dr. Hans Herman-Hoppe
    Author, Economist and Libertarian Philosopher

  • EXCELLENT PERSPECTIVE

    The Daily Bell affords an excellent alternative perspective on some of the noise and nonsense of mainstream media. In particular, I enjoy reading Anthony Wile's 'free-market analysis' on current subjects and articles. Very insightful.

    Frank R. Suess
    Chairman & CEO of BFI Capital Group Inc.

  • PART OF MY DAILY NEWS DIET

    I read it every day!

    Jim Rogers
    Bestselling Author, Co-founder of the Quantum Fund

  • GREAT INVESTMENT INFORMATION

    I love reading The Daily Bell! Interesting investment information, a political and social viewpoint that lets me know I'm not alone in the world and "annotated" with analysis. I highly recommend it to all interested readers.

    Rick Rule
    Founder of Global Resource Investments Inc.

  • EXCELLENT ANALYSIS

    The Daily Bell has a great libertarian point of view, and excellent economic analysis. Add it to your daily reading.

    Peter Schiff
    Chairman and Chief Executive Officer, Euro Pacific Capital

  • COURAGEOUS REPORTING

    There is no other publication in print or on the Internet like The Daily Bell. They have the courage to report the truth and analyze current foreign policy, politics and economic events in the context of a formerly hidden history of financial elites.

    Ron Holland
    Author & Monetary Analyst

  • RECOMMENDED READING

    For alternative views on contemporary politics, culture and science, from a libertarian point of view, check out The Daily Bell.

    Michael A. Cremo
    Author, Vedic Archeologist

  • INDISPENSABLE INFORMATION

    The Daily Bell is an indispensable source of news and information for those seeking to curtail the power of the welfare-warfare state.

    Dr. Grant Havers
    Chair, Department of Philosophy, Trinity Western University

  • PROFOUND AND PROVOCATIVE

    Every day, I rely on the Daily Bell for a different perspective you'll never find in the regular media. It's an analysis and timely insight that is profound and provocative.

    Craig Huey
    Author, Small Business Owner

  • VOICE OF REASON

    I have thoroughly enjoyed the analysis and interviews at The Daily Bell, which has so often been a voice of reason during these perilous times

    Dr. Thomas Woods Jr.
    NY Times Bestselling Author & Senior Fellow, Mises Institute

  • GUTS, OBJECTIVITY, WISDOM

    Rarely does a publication have the guts and objectivity to tell it like it is, yet the eloquence and wisdom to listen carefully to the ‘other side.’ This is The Daily Bell accomplishing its daily mission.

    James Jaeger
    Telly Award-winning Filmmaker

  • GREAT JOB, DAILY BELL

    I can say that, unlike the mainstream press, The Daily Bell knows the questions to ask and has the chutzpah to ask them. They realize that socialism and Keynesianism are wrecking the world and they are helping to save what is left of liberty and free markets.

    Richard J. Maybury
    Author, Editor of U.S. & World Early Warning Report

  • NEVER MISS AN ISSUE

    I love the Daily Bell. Every issue is principled and informative.

    Lew Rockwell
    Founder of the Mises Institute

  • A LEADING LIGHT

    The future is created by the people who build it, not the people who predict it will not exist. You can meet lots of important builders by reading The Daily Bell.

    Catherine Austin Fitts
    Former Assistant Secretary of Housing and Federal Housing Commissioner

  • SIMPLY TERRIFIC

    The Daily Bell does a remarkable job of exposing how money power uses central banking to crush people into submission via global government with economic and political slavery being the desired end result.

    John Browne
    Former Secretary of the Conservative Defense and Finance Committees, UK Parliament

  • CUTTING EDGE ANALYSIS

    At a time when growing majorities worldwide are tuning out mainstream news, people are seeking the cutting edge, insightful and thought provoking analysis that The Daily Bell consistently provides.

    Gerald Celente
    Bestselling Author, Founder of the Trends Research Institute

  • INFORMATIVE SOURCE OF INFORMATION

    The Daily Bell is an informative source of information and commentary from leading figures in the liberty movement. It's a pleasure to be interviewed alongside far more notable individuals.

    Alexander McCobin
    Executive Director of Students for Liberty

  • GREAT THINKERS YOU CAN'T GET ANYWHERE ELSE

    The Daily Bell has revived that great old institution of the personal interview, extracting information from today's great thinkers you can't get anywhere else. Outstanding!

    Jeffrey Tucker
    Author, Executive Editor of Laissez Faire Books

  • SOURCES YOU CAN TRUST

    The Daily Bell should be on everyone's shortlist of news sources you can trust. It's on mine, and we often refer to it in our own weekly news service at The Reality Zone.

    G. Edward Griffin
    Author, Founder of Freedom Force International

  • INSIGHT YOU CANNOT IGNORE

    The Daily Bell provides unique insights on contemporary political, economic and social problems that can be found in such a concentrated form nowhere else. Whether one agrees or disagrees with it, one cannot afford to ignore it.

    Dr. Edwin Vieira
    Author and Constitutional Expert

  • AHEAD OF THE CURVE

    The Daily Bell has come out of nowhere to introduce to the Internet community some of the most intriguing and proactive interviews there are out there. Let's hear it for creativity and being ahead of the curve.

    Bill Murphy
    Chairman of Gold Anti-Trust Action Committee

  • AWE INSPIRING

    The Daily Bell is one of the most innovative and in-depth websites on the Internet. The breadth of the content is awe inspiring and the amount of knowledge imparted is almost impossible to quantify. For me, as a liberty minded seeker of knowledge, it is a must read.

    Jeff Berwick
    Founder of DollarVigilante.com

  • VERY INFORMATIVE

    I read The Daily Bell every day and I find it very informative.

    Marc Faber
    Dr. Marc Faber, Author, Publisher of The Gloom Boom & Doom Report

  • INDEPENDENT

    Get outside the box with The Daily Bell and experience independent views.

    Paul Craig Roberts
    Author, Former Assistant Secretary of the Treasury in the Reagan Administration

  • FANTASTIC SOURCE

    The Daily Bell is a fantastic source of challenging thought from a wide range of freedom loving people.

    Dr. Joel Wade
    Author, Psychotherapist and Life Coach

  • THOUGHTFUL NEWS, EXCLUSIVE INTERVIEWS

    I always read the Bell. The news items are thoughtfully selected, and the interviews are unavailable elsewhere.

    Doug Casey
    Bestselling Author and Founder of Casey Research Group

  • SEPARATES WHEAT FROM CHAFF

    The Daily Bell is a true beacon to lead in helping the reader to separate the wheat from the chaff.

    Dr. Antal Fekete
    Author, Educator and Monetary Scientist

 

Subscribe now to start your FREE email subscription to:

The Daily Bell Newswire

By subscribing, I confirm that I have read the privacy policy and the terms of use policy in its entirety and I understand and accept these terms.

 


Peter Schiff

 
Inflation Propaganda Exposed

Editorial By Peter Schiff

Economists who hold the popular view that expanding the money supply will provide the best medicine for our ailing economy dismiss the inflationary concerns of monetary hawks, like me, by pointing to the supposedly low inflation that has occurred during the current period of rampant Fed activism. In a recent blog post aimed specifically at me, Paul Krugman noted that the sub 2.5% increases in the Consumer Price Index (CPI) over the past few years are all that is needed to prove me wrong. In fact, Krugman and others have even suggested that the CPI itself overstates inflation and that the Fed would be better able to help the economy if less strict methodologies were used. However, there is plenty of evidence to suggest that the CPI is essentially meaningless as it woefully under reports rising prices.

Magazines and newspapers provide a good case in point. The truth has not been exposed through the economic reporting that these outlets provide, but in the prices that are permanently fixed to their covers. For instance, from 1999 to 2002 the Bureau of Labor Statistic's (BLS) "Newspaper and Magazine Index" (a component of the CPI) increased by 37.1%. But a perusal of the cover prices of the 10 most popular newspapers and magazines (WSJ, Washington Post, Time, Sports Illustrated, U.S. News & World Report, Newsweek, People, NY Times, USA Today, and the LA Times) over the same time frame showed an average cover price increase of 131.5% (3.5 times faster than the BLS' stats). This is not even in the same ballpark.

Some defenders of the BLS may conclude that prices were held down by the availability of free online news content or the convenience of digital delivery. But that is beside the point. Prior to the digital age, the BLS could have claimed that newspaper costs were held down by public libraries that provided free access. It's also true that online publications deliver less value on some fronts. Not only do many people enjoy the tactile process of reading physical newspapers or magazines, but they offer the secondary value in helping to kindle fires, housebreak puppies, pack dishes, and line birdcages.

Another stunning example is found in health insurance costs, which is a major line item for most families. According to the BLS we can all breathe easy on that front because their "Health Insurance Index" increased a mere 4.3% (total) in the four years between 2008 and 2012. Interestingly, over the same time, the Kaiser Survey of Employer Sponsored Health Insurance showed that the cost of family health insurance rose 24.2% (5.5 times faster). But even if the BLS had reported higher costs, it wouldn't have made much of a difference in the CPI itself. Believe it or not, health insurance costs are assigned a weighting of less than one percent of the overall CPI. In contrast, the Kaiser Survey revealed that in 2012 the average total cost for family health insurance coverage was $15,745, or almost one third of the median family income.

If the BLS could be so blatantly wrong in reporting the prices of newspapers and health insurance, should we believe that they are more accurate on all other sectors? If the inaccuracy of these two components were consistent with the rest of the CPI's components, inflation could now be reported in double-digits!

Even more egregious than the manner in which prices are currently reported is the way that CPI methods have been changed over the years to insure that most increases are factored out. Since the 1970's, the CPI formula has changed so thoroughly that it bears scant resemblance to the one used during the "malaise days" of the Carter years. Main stream economists dismiss criticism of the changes as tin hat conspiracy theories. But given the huge stakes involved, it's hard to believe that institutional bias plays no role. Government statisticians are responsible for coming up with the formulas, and their bosses catch huge breaks if the inflation numbers come in low. Human behavior is always influenced by such incentives.

The newer CPI methodologies are designed to report not just on price movements, but on spending patterns, consumer choices, substitution bias, and product changes. In other words, the metrics have been altered to track not so much the cost of things, but the cost of living (or more accurately, the cost of surviving). But if you simply focus on price, especially on those staple commodity goods and services that haven't radically changed in quality over the years, the under reporting of inflation becomes more apparent.

As reported in our Global Investor Newsletter, we selected BLS price changes for twenty everyday goods and services over two separate ten-year periods, and then compared those changes to the reported changes in the Consumer Price Index (CPI) over the same period. (The twenty items we selected are: eggs, new cars, milk, gasoline, bread, rent of primary residence, coffee, dental services, potatoes, electricity, sugar, airline tickets, butter, store bought beer, apples, public transportation, cereal, tires, beef, and prescription drugs.)

We know that people do not spend equal amounts on the above items, and we know their share of income devoted to them has changed over the decades. But as we are only interested in how these prices have changed relative to the CPI, those issues don't really matter. We chose to look at the period between 1970 and 1980 and then again between 2002 and 2012, because these time frames both had big deficits and loose monetary policy, and they straddle the time in which the most significant changes to the CPI methodology took effect. And while the CPI rose much faster in the 1970's, the degree to which the prices of our 20 items outpaced the CPI was much higher more recently.

Between 1970 and 1980 the officially reported CPI rose a whopping 112%, and prices of our basket of goods and services rose by 117%, just 5% faster. In contrast between 2002 and 2012 the CPI rose just 27.5%, but our basket increased by 44.3%, a rate that was 61% faster. And remember, this is using the BLS' own price data, which we have already shown can grossly under-estimate the true rate of increase. The difference can be explained by how CPI is weighted and mixed. The formula used in the 1970's effectively captured the price movements of our twenty everyday products. But in the last ten years it has been quite a different story.

If these price changes in our experiments had been fully captured, CPI could currently be high enough to severely restrict Fed action to stimulate the economy. Instead, the Fed is operating as if inflation is extremely low. As a result, they are making a huge policy mistake that will come back to haunt us. During the last decade the Fed spent many years denying the existence of a housing bubble, even as a mountain of evidence piled up to the contrary. That error caused the Fed to hold interest rates too low for too long, blowing more air into the bubble and imposing enormous negative consequences on the economy. The Fed, now similarly blind to the inflation threat, is repeating its mistake, only this time the negative consequences will be even more dire.

Apart from the statistical problems that hide inflation, there are also macroeconomic factors that have helped keep prices down despite the quantitative easing. Massive U.S. trade deficits and foreign central bank dollar accumulation mean that much of the printed money winds up in foreign bank vaults, not U.S. shopping centers. As foreign consumer goods flow in, and dollars flow out, a lid is kept on domestic prices. In effect, our inflation is exported as foreign central banks monetize our deficits and recycle their surpluses into U.S. Treasuries. The demand has pushed down bond yields which has allowed the U.S. government to borrow inexpensively. Of course, when the flows reverse, bond prices will fall, yields will climb, and a tidal wave of dollars will wash up on American shores, drowning consumers in a sea of inflation.

Unlike Krugman and the Keynesians, I would argue that it is impossible to create something from nothing. I believe that printing a dollar diminishes the value of all existing dollars by an aggregate amount equal to the purchasing power of the new dollar. The other side takes the position that the new money creates tangible economic growth and that real economic value can therefore be created by putting zeroes onto a piece of paper. I think that those making such absurd claims should bear the burden of proof. For more on the interesting topic of hidden inflation, see my video that I just posted.

Rate this article:

Total Ratings: 0 - Average Rating: 0.0

Books by Anthony Wile
Financial
Freedom

The High Alert Way to Discover Winning and Profitable Investment Ideas

Free Download   Order Now

The Best of
Anthony Wile

Select Editorials & Exclusive Interviews As featured at TheDailyBell.com

Free Download   Order Now

High
Alert

How the Internet Reformation is causing a financial hurricane - and how to profit from it

Free Download   Order Now

The Liberation
of Flockhead

A modest, monetary fable

Free Download   Order Now


Anthony Wile
Meet High Alert's Chief Investment Officer

Anthony Wile, High Alert's Chief Investment Advisor and Chairman of the Partnership Selection Committee, is an active investor, business strategist and consultant, financial markets commentator, publisher and author.

read more

 
 
Investors Edge

Member Login

Join Today