The CPI Lie

"Last year, if you did not eat, drive to work, heat your home, visit a doctor, buy a house, buy insurance of any kind, have a child in college, pay any state or property taxes, then your cost of living agrees w/ the goverment's Cost of Living index"
-- Cylde Harrison

Inflation is the government gift that just keeps on giving, and giving, and giving..

Despite that the central planners in Washington would have you think, true inflation is really monetary inflation. When the Federal Reserve increases the M3 money supply by 40% from 2000 and 2004, that means you're living (roughly) under about 10% annual inflation.. a good point higher, that is, than the 2-3% range numbers you see from the government's CPI metric. Of course, even in this 3% range, prices will tend to double every 25 years.

The true source of inflation is not greedy consumers, nor avaricious workers, nor price-gouging corporations; rather, it's the central bank itself and the ability it has (and employs) of creating money out of thin air.

One way (of many) in which the CPI is flawed is that it excludes the cost of mortgages, instead tracking the cost of rents. Fed easy credit policies have allowed many Americans who would not have met credit standards 30 years ago to now purchase a mortgage, which in turn diminishes the demand for apartment rentals. With less demand in the rental market comes lowered (or at least "controlled") prices, while the cost of a mortgage of course is skyrocketing.

Reagan campaigned in 1980 on the pledge
of bringing back the gold standard

As per the Reagan campaign pledge above, remember that 1980 was only 9 years after August 15, 1971 when Richard M. Nixon closed the international gold window and brought convertibility into gold for the U.S. dollar to an end. In 1980, there were still those who harbored the faint hope of bringing back that gold standard and making the dollar "as good as gold" once again. It was to these conservatives that Reagan appealed to in his 1980 campaign.

Inflation is of course one of the most important reasons to get rid of the Federal Reserve System. Ironically, the Fed was ostensibly called into existence to provide greater liquidity in the capital markets, while controlling inflation. Since the Federal Reserve System was put in place in 1913, the value of the U.S. dollar has shrunk to 4% of what it was once worth:

U.S. monetary inflation since the Fed was established
(click to enlarge)

What are some other reasons to abolish the Fed and return to a hard money standard? Here are just a few:

• The Fed is incapable of achieving its stated goals;
• The Fed is a private cartel operating against the public interest;
• The Fed is the ultimate instrument of usury;
• The Fed is the ultimate agent of monetary inflation (and deflation);
• The Fed is the ultimate instrument of totalitarianism;
• The Fed creates business cycles that destabilze the economy;
• Fed policy openly and actively encourages war;

Congress could still buy back Fed operations from the central bank for $400,000, if it had the will to do so.