In the real world, how many people believe that the real inflation rate in the USA is the official 6--8%? These numbers come from the fox that is in charge of the hen house. Government salaries, social security payments, and income tax brackets are tied to the official inflation rate. And of course the government wants to pay back its 31 trillion dollars of debt with devalued dollars. Therefore the government has good solid reasons for lying about the real inflation rate.
I think most people will agree with the first paragraph, and in fact, consider it too obvious to belabor. What isn't so obvious is why the government doesn't lie even more? What's to stop them? In a sense, this is cheerful news: your government could be totally corrupt and get away with it, but apparently, it is content to be only half-corrupt.
Consider how easy it is to lie more completely. It has become time-honored and respectable for the Federal Reserve to consider an inflation rate that omits food and energy. Does that make sense to the average citizen? Of course not. Well then, why not leave out the cost of a used or new car, or the cost of repairing them? Or you could "hedonically adjust" (downward) the price increases in automobiles because they are becoming more "green." You could do the same to skyrocketing utility bills.
If price increases in meat become inconvenient, why not jiggle the spreadsheet to include bug protein and deemphasize pork, chicken, and beef? If the bug protein processors are getting government subsidies (such as solar and wind energy producers) then just ignore that.
If simple arithmetic for a peasant-shopper suggests that eggs have gone up by 400%, why not argue that cage-freeness lowers that number to 40%?
An individual needs to anticipate decades of higher inflation and think about how they can benefit from it. Somebody is going to benefit, after all -- Elites are not going to be impoverished by inflation. Back in the 1970s, commodities were a pretty good hedge against inflation. What about raw land? It might be a cliché, but it ain't a bad idea to invest in things that the government can't print more of.
What about selling various bond funds short?
On the long side, there are military contractors, software pirates, surveillance technologies, artificial intelligence for internet censorship, and what I think is the ultimate growth industry: private prisons.
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| from econ.com.sg |
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