![]() In the last 30 years, a growing gap has been obvious between government reporting of inflation, as measured by the consumer price index (CPI), and the perceptions of actual inflation held by the general public. In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living. ![]() ![]() ![]() This is explained by Shadow Stats as follows: The inflation reported at Shadow Stats reports their inflation calculation versus US Government statistics. Republicans don’t have to gaslight, as their brand is already that they believe any minimum wage is “anti-market.” Political analyst Jimmy Dore points out what the establishment media won’t that the Democrats gaslight their constituents on increasing the minimum wage. Businesses lobby the government not to increase the minimum wage, and this allows companies to engage in a type of wage theft. It is not indexed to the CPI, however, even if it were, it would not keep up with the real inflation level. Well, the minimum wage has not been increased for many years. Scrolling right on the website shows that with 2 adults working and with no children, the living wage is still 1.5x the minimum wage. As soon as the number of children supported by one earner increases to two, the differential between the living wage and minimum wage is 4.5x. This is for the state of Alabama, which has a relatively low cost of living versus the minimum wage.Įven at the lowest level of expense, a single person with no children, the living wage is 1.899 or almost 2x the minimum wage. Notice the following living wage versus the minimum wage. Another benefit is to businesses for things like the minimum wage being moved upward only occasionally, which the unstated inflation is a yearly event. However, the official rate is not the actual rate as the US Government minimizes the reported inflation rate as it allows the US Government to pay out less in things like Social Security. This is because the inflation numbers covered up to this point have been the official US Government reported inflation rate. The problem is that the story is even worse than what is presented above. However, policymakers feel the drawbacks are outweighed by the fact that a positive inflation target reduces the chance of an economy falling into a period of deflation. (For example, successfully hitting a target of +2% each year for 40 years would cause the price of a $100 basket of goods to rise to $220.80.) This drawback would be minimized or reversed by choosing a zero inflation target or a negative target. Over time, the compounded effect of small annual price increases will significantly reduce a currency’s purchasing power. This is covered by Wikipedia in the following quotation. This image shows a shorter time frame and is a little easier to see. Hold on to your money over a long period of time without putting it at risk, and the US government punishes you by eroding its value. While a 2% inflation rate sounds small, over long periods of time, it has a very strong effecton the purchasing power of a currency. To begin, let us just look at the inflation level according to US government statistics.Ī significant effect of those that do not want to put their money at risk is that it declines due to constant inflation. Go to top The Long Term Results of Inflation
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