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Inflation Has Been Killing You for 40 Years. Why Are You Noticing Now?
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Far be it from me to carry water for the Biden administration or to downplay the impact of inflation on working families as White House officials did in June when they dismissed rising prices as merely “transitory.” When 87% of Americans say they are very or extremely worried about higher prices, and one out of 10 people say they can’t afford to buy holiday gifts this year, it’s a serious issue.

Still, you can see why ruling elites are a little mystified by the collective freakout, and it’s not just because they’re so rich they don’t care (although that’s true).

Truth is, nothing new is happening.

Real inflation has been soaring for four decades. What changed is the artificially deflated official inflation rate, which is why people are finally paying attention.

Presidential administrations have repeatedly changed the methodology the Bureau of Labor Statistics uses to calculates the U.S. inflation rate. Why? Politics, of course. The government wants to fool voters into thinking that they are better off, or at least think that they aren’t losing ground as quickly as they actually are. Lowballing price increases also saves the Treasury money on big costs such as Social Security payouts, which are tied to the official inflation rate.

Housing, food and fuel account for a significant share of typical household expenses, but because they have been rising steadily in price for years, the feds keep lying about how much people really spend on those items. They’ve also factored in “shadow inflation.” The relative cost from year to year of, for example, a phone, is discounted going forward because an iPhone is of higher quality, with more features than Ma Bell’s “old reliables.” In reality, of course, you need a standard phone — which, today, is a smartphone. It’s not like you can time travel back to 1980 to buy a rotary dial. So the BLS doesn’t count a \$1,000 iPhone as a significant price hike over a \$20 plug-in model.

John Williams’ Shadow Government Statistics presents inflation the old-fashioned way, as it was calculated in 1980. The difference is significant, often as much as 10% per year. In September, for example, Forbes reported that the BLS announced the official inflation rate to be 5.4%. But the “real” inflation rate was 13.4%.

According to the official inflation rate, an item that cost \$100 in 1980 now costs \$336. Because inflation — official inflation — ticked up a few percentage points each year, it has not been a major political issue over the last 40 years.

No one was paying attention to the truth: Inflation has been destroying living standards for many years. According to Shadow Government Statistics, due to exponential calculations, that \$100 item in 1980 now costs about \$2,200. But median family income has stagnated; a \$100 paycheck in 1980 is now a \$335 paycheck, almost exactly the official inflation rate. Wages haven’t come close to keeping up, except for the top 1%. They’re doing great.

Median monthly rent has skyrocketed from \$243 in 1980 to \$1,098 this year; median house purchase price rose from \$47,200 to \$382,000. Gas was \$1.19 per gallon; now it’s \$3.41. College tuition, room and board was \$3,900 and is currently \$35,720.


So, inflation is an ongoing problem. The only thing that’s new is that we are noticing it because it’s being reported. Although, it’s important to note the inflation rate that is tanking President Joe Biden’s poll numbers is still being radically downplayed.

Because the rate is now high enough to register officially, Biden is the first president since Jimmy Carter to be blamed for inflation. Ronald Reagan, both Bushes, Bill Clinton, Barack Obama and Donald Trump had high inflation, too — but they got off scot-free.

“There is a psychology to inflation that is different from everything else, and it tends to drive how people view the economy because they experience it every day whether it is at the grocery store, gas pump or buying household goods,” says Democratic pollster John Anzalone. As the last 40 years prove, though, the government is also very good at convincing people not to believe their own lying eyes.

• Category: Economics • Tags: Inflation 
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  1. I don’t understand. What does this real issue have to do with the Rittenhouse hysteria over nothing.

  2. 40 years of bogus official inflation figures are matched by 40 years of bogus official unemployment figures.

  3. anonymous[354] • Disclaimer says:

    USA TV, ‘Saturday Night Live’, 4 November 1978, Dan Ackroyd does his Jimmy Carter imitation, opening the show with a funny speech on ‘Inflation is our friend’. One hears ‘President Carter’ say:
    video 1m26

    • LOL: meamjojo
  4. meamjojo says:

    “According to the official inflation rate, an item that cost \$100 in 1980 now costs \$336. Because inflation — official inflation — ticked up a few percentage points each year, it has not been a major political issue over the last 40 years.”

    And in 1935, bread used to cost 10 cents the loaf. That same loaf today can range in price in most supermarkets from \$1.99 to \$5.99! Frozen ice pops are just water with some flavoring. A package of 6 the other day was up to \$5.49! That’s nearly \$1 for flavored frozen H2O on a stick. Huh?

    Cashiers, burger flippers and other low skill jobs now get \$15-\$20 starting hourly wage here in the SF Bay area. The Federal government through trillions at everyone in response to the Covid scaremongering. California announced recently that they may have a \$31 billion budget surplus this year, which is on top of the \$76 billion surplus last year. Is there any question why politicians everywhere want Covid scaremongering to continue?

    When you throw all that new money into an economy via increased wages and “free” government largess, of course you are going to get inflation and lots of it!

  5. meamjojo says:

    The problem with inflation determination is that the numbers are calculated by the government, which itself has a vested interest in showing low inflation for a wide variety of reasons, including lower mandated COLA adjustments, keeping SS payments as low as possible, holding down interest rates where higher numbers lead to higher government debt service and much more.

    Consumers don’t want to hear economists nonsense rationalizations about inflation where essential purchases such as food, apartments and gasoline get minimized and/or excluded from the so-called “core” inflation numbers.

    We need the calculation of inflation numbers to be offloaded to a politically independent organization that the government should then be forced to accept – no alternatives, if-then-else numbers or any of the other tricks used to massage the numbers lower than reality.

    This would help to bring some fiscal sense to Washington D.C.!

  6. Inflation is an increase in the money supply and should be called monetary inflation. Price inflation is the increase in the price for an object. Price inflation is due primarily to monetary inflation.

    Almost all economists are in favor of a central bank. Central banks prefer currency that they can just conjure into existence as opposed to money with was, once upon a time, gold and silver. No one can conjure gold or silver into existence, so in a sound money economy, monetary inflation is near impossible. It s only in a fiat currency regime that inflation is a problem.

    All you folks that keep voting for the next shady gov’t, consider that what you’re voting for is a continued decrease in your quality of life, since the gov’t supports the central bank. It’s the scum in the gov’t that lives very well by stealing your wealth by calling it taxes while simultaneously creating lots of currency to purchase votes and either give or lend that new money to their friends to invest with before the increase in the quantity of money affects price inflation. It’s the time lag that makes the first recipients of new money fabulously wealthy at your expense.

    Keep voting.

    • Agree: Bro43rd
    • Replies: @meamjojo
    , @Justvisiting
  7. I would argue that most people in the real world ( not making enough to pay \$3k a month in Blue City rent ) are freaking out about inflation because it is showing up in the one place you cannot do anything about- food. The fact that this inflation is not monetary but supply driven adds to the anxiety. I myself question when the next empty shelf event happens, as I doubt they will ever be filled back up after that. But those not as paranoid still probably feel like there might be something to worry about even if they cannot articulate it. Food is primal, and these people always thought food was from a unicorn glitter factory.

    • Replies: @meamjojo
  8. TG says:

    Excellent article, Mr. Rall. yes.

    One also notes that, since 2008 or so, the interest that regular people get on their savings accounts has been very close to zero. Which is theft. Of course, the interest that the super-rich get on their guaranteed-profit investments is way bigger…

    “Inflation is an increase in the money supply and should be called monetary inflation. Price inflation is the increase in the price for an object. Price inflation is due primarily to monetary inflation.” – I must respectfully disagree with this idea. It is certainly true that printing money like crazy can cause inflation, supply and demand and all that. And yet: don’t forget the real world! The rich are jamming in more and more people: and the rate at which we are building new houses is not keeping up, so of course prices will spike. And as there are more and more people, and crop yields are starting to level off, of course food prices will tend to go up (at least, relative to wages). Which is the plan.

    The idea that inflation is entirely a monetary phenomena I think is a major misconception. You can always kill cancer cells with a flamethrower: is cancer caused by a lack of flamethrowers? Of course not. If a shortfall in supply causes prices to spike, one can generally use extremely repressive monetary policies to crush wages and the real economy etc. thus keeping prices in line (thank you Paul Volker), but that doesn’t mean that all inflation is caused by monetary policy.

    One also notes that printing money like crazy is not inflationary if it is tied up in arcane financial investments. I mean, if we printed a trillion dollars, and buried it under the White House lawn, would that cause prices to rise? Of course not. There could be a quadrillion dollars in paper credit-default swap ‘wealth’, and it wouldn’t matter – as long as nobody tried to cash it out and spend it on something real! It’s only if the money is put in the hands of regular people who try to spend it on real commodities that are in short supply, that masses of money is inflationary…

    • Disagree: Bro43rd
  9. meamjojo says:

    Speaking of voting:
    20 Nov 2021
    Axios-Ipsos poll: Independents are fed up
    David Nather

    Independents’ faith in Americans’ voting choices is in a dismal place after the 2020 election, much more pessimistic than the way Democrats or Republicans feel, according to a new Axios-Ipsos poll.

    Why it matters: The historically bitter fight between Donald Trump and Joe Biden energized the most partisan voters, but it was a big turnoff to those whose views may align with one major party or the other but who don’t claim allegiance to either.

  10. meamjojo says:
    @James M Dakin

    And everyone of course remembers all those people who lined up for hours to get boxes of food when they became Covid unemployed last year? Most people were already living on the edge. Inflation is going to push some of them over that edge.

  11. Ivymike says:

    The inflation rate in the 19th century was negative, but most people were still poor, and it still sucked to be poor.

  12. BorisMay says:

    It is not 40 years. It is since the Fed was founded in 1914 in the US and since 1826 when the Bank of England was privatised in the UK.
    My grandfather used to say that when he was a lad in Manchester (UK) in 1900 he could buy a half pint of beer, a packet of 5 cigarettes and a box of matches and still get a half penny change from 6d (pre decimal money when there was 240 pence to the pound sterling). Today that would cost you £4.70 (or £4/14/0 which is 4 pounds and 14 shillings in pre decimal currency or 1128 pennies if bought in Manchester UK today using the old currency.

    Inflation is what happens when you hand currency and money creation to private bankers which both the US and UK have done. And your national debt comes from the compound interest that the private bankers charge for ripping off the general public with their IOU notes that they pass off for cash.

    It is unbelievable how utterly gullible the general public and politicians are in the west. A recent survey asked Westminster politicians how Britain’s currency was created and not one had any idea.

    You can only control inflation by a government issuing its own currency in a quantity enough to facilitate trade but not more. Usury must be outlawed because it always restricts the amount of available cash for businesses causing unemployment, homelessness and poverty. But you ask a modern economist about that and the brainwashed idiots will tell you inflation is healthy.

    We need a revolution to oust the banking fraternity from power. It is the bankers that are funding the Build Back Better Covid scam and until people recognise this the people will always remain economic serfs to the bankers.

    • Replies: @HdC
  13. The first issue of Federal Reserve notes, printed in 1914, carried the promise that they could be redeemed in “gold, silver or lawful money, by the bearer on demand” at the U.S. Treasury or “any Federal Reserve Bank”. In 1933, the gold and silver exchange clause was eliminated. In 1950 the “in lawful money” redemption clause disappeared. The bearer demand clause finally vanished from the notes printed in 1963 and after. Meanwhile the other circulating U.S. currencies, Silver Certificates and United States Notes, also backed by precious metal, were quietly withdrawn from circulation and were gone by 1968. Earlier, back in 1933, FDR abolished the Gold Certificate notes, and at the same time consolidated the Fed’s hold on the money supply by ending the highly successful National Banking system, which since 1863 had chartered some 15,000 private banks, allowing them to issue their own federally-guaranteed \$5, \$10, \$20, \$50, and \$100 notes for general circulation.

    Gold coinage ended in 1933 and silver coinage in 1965. Now our money is exclusively Federal Reserve paper notes, which bear a statement merely affirming their status as legal tender instruments. Yet the signatures of the Treasurer and the Secretary of the Treasury remain on the notes today, evidence of what paper money was originally, a promissory note, a receipt for something of tangible value held in trust by a government scrupulously faithful to the fiscal welfare of its citizens. And what a coincidence, that a dollar buys in 2021 what less than two cents bought in 1914, while inflation had been essentially nil with good coin and paper backed by precious metal. Interestingly, in 1914 you could buy a nice new Model T for \$400, paying for it with twenty Double Eagle coins, whose gold content today is worth about 37,000 U.S. dollars, approximating today’s price for a nice new car.

    Few, on the left, right, or center, seem to grasp that the steady decline in the buying power of the dollar is the result of deliberate central banking policy, not an inherent property of money.

    • Agree: Bro43rd, HdC
    • Thanks: Ace
  14. Hans says:

    Clement VIII nailed this exactly 40 years ago:

    “All the world suffers from the usury of the Jews, their monopolies and deceit. They have brought many unfortunate peoples into a state of poverty, especially farmers, working-class people, and the very poor.” – Pope Clement VIII, 1592

    20 years ago, the (((FED))) was instituted and the value of the buckaroo has been gnawed away ceaselessly ever since.

  15. @RoatanBill

    Keep voting.

    I have not even been registered to vote in twenty five years–but you can blame me as well.

    Everybody else does!

    • Replies: @Ace
  16. HdC says:

    To add to your illustration of inflation: In 1975 when I began my second, professional, career in Montreal Canada, a Friday fish and chips lunch, plus 2 glasses of beer, cost \$CDN 1.75.
    46 years later the same lunch, WITHOUT the beer, costs 8 to 10 times as much.
    I understand that fraudulent monetary policy, eg. quantitative easing, is the fundamental reason for currency inflation with the symptom of rising prices for commodities.
    And yet, I wonder how much of the price increases are due to shortages caused by population growth combined with the current shipping and transportation difficulties.
    Case in point. The home my wife and I purchased in a small town in Ontario 6 years ago has doubled in price since then. Is this due to inflation? Or, is it due to the fact that the Canadian government admits up to 400,000 immigrants yearly, who all need housing.
    Canada has a population of about 37,000,000 or so. And I see no indication that the house/apartment construction is increasing the available housing stock by 1% annually. Thus I conclude that the increase in housing prices may be largely due to demand exceeding supply.

  17. Interesting, the Carter/Biden parallel. Notice, too, that both took office after decades failed wars and increased social programs, Great Society and Bush/Obama No Child Left Behind/Obamacare.
    Add in the Trump/Biden Covidiot Stimulus money and voila!

    I can only hope and pray the end of the American Empire is as peaceful as that of the Soviets. I’m not holding my breath.

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