VF500
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- Nov 8, 2010
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Why is the Fed monitizing our debt? Well, by skillfully "messaging" values either figured into or purposely left out of the CPI (consumer price index), Bernanke can show that the inflation rate is only about 0.6%. The Fed likes to see about 1.5 -2.0%. So let's look where his number comes from. First off, what was left out? It turns out that food and oil aren't calculated in. Really? Those two would seem like really important factors, don't you think? Well, it's argued that food and oil prices are "too volatile" to be included. Hmmm. So even though food and oil prices are going up, they aren't being "inflated". Oh. :roll:
What's America's real inflation rate?
Another thing holding the CPI down is the way home values are calculated. A change was made in 1983 to go from actual home values to "renters equivaltent values". What does that mean? The effect was to lower home values by having a lower renter equivalent value for the home. With the high rate of home foreclosures, housing prices have dropped substantially, which has reduced its effect on inflation. But, unless you're going to buy a lower priced home, the drop means nothing to you except for the possible drop in your current home's value.
The final effect is that inflation is being undervalued and the Fed can justify monitizing our debt and risk econnomic ruin. That directly plays into Obama's hands for his "wealth redistribution" plan.
What's America's real inflation rate?
Another thing holding the CPI down is the way home values are calculated. A change was made in 1983 to go from actual home values to "renters equivaltent values". What does that mean? The effect was to lower home values by having a lower renter equivalent value for the home. With the high rate of home foreclosures, housing prices have dropped substantially, which has reduced its effect on inflation. But, unless you're going to buy a lower priced home, the drop means nothing to you except for the possible drop in your current home's value.
The final effect is that inflation is being undervalued and the Fed can justify monitizing our debt and risk econnomic ruin. That directly plays into Obama's hands for his "wealth redistribution" plan.
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