Butowsky claims that “They have been manipulating the CPI to understate the amount of inflation for three decades.” He believes that the rationale for this distortion is to minimize entitlement payments, which have automatic cost of living increases that are based on the CPI. This is why seniors are having such challenges making ends meet. Butowsky is very clear on this: “It is an intentional attempt to manipulate transfer payments.”
To formalize his research, Butowsky developed the Chapwood Index, which measures cost changes of the top 500 items on which you spend money for each of the 50 largest metropolitan areas. He then calculates, on a quarterly basis, the actual price increases (inflation) that most Americans experience in their home areas. He believes that testing 25,000 items quarterly provides a much clearer picture of the inflation we are experiencing. His index has the inflation rate for the first half of 2012 ranging from 3.6% in El Paso up to 8.3% in Fresno, with most metropolitan areas falling between 5.5% to 7.5%. Remember that is just the first six months of 2012.
Whether you believe the Chapwood Index or the BLS’s CPI depends on your own experience. For those of us who analyze these things, it is difficult to believe the government’s numbers purely on a macroeconomic basis. Since Mr. Obama was elected, the Federal Reserve has three times printed money under the quaint name of “quantitative easing” (QE1, QE2 and now QE3). They have injected a total of $1.5 trillion into the money supply with a commitment of $40 billion more per month until the economy returns to real growth. When that happens, inflation has to take place, and, trust us, when OPEC sees actions like this they jack up the price of their oil because they know they’re getting paid in devalued dollars. You pay more for gas and the government gets money to pay its bills. It is Obama’s hidden tax and it falls principally on the middle class he tells us he is protecting.
The manipulation of the inflation rate certainly didn’t begin with Obama, and by the time he became president there was already systemic distortion. But Obama’s massive deficits and the Fed’s collusion have made things demonstrably worse.
My friends, when the government tells you an inflation number or an unemployment number or a GDP amount that doesn’t make sense, follow your instincts. Look elsewhere for solid information, because the figure out of Washington is probably bogus. And when President Obama states he has lowered middle class taxes remember his inflation caused by his reckless overspending has more than offset that in the devalued money you have in your pocket and the prices you pay at the pump and grocery store.
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