Inflation is the monster under your bed that nobody wants to talk about. It's the silent thief that robs you of your hard-earned money without you even realizing it.
And right now, that monster is waking up from its slumber, ready to wreak havoc on the economy. But here's the thing: what you've been told about inflation is only part of the story.
Not only have certain truths about inflation been kept from you, but those in power have actively perpetuated a lie – and the worst part is, it's all been a calculated move.
Truth #1: It's Much Higher Than You Think
The first truth about inflation is that it's much higher than the official numbers suggest.
You see, inflation is typically measured by the Consumer Price Index or CPI, which tracks the prices of a basket of goods and services over time. But what you may not realize is that the CPI is based on a flawed methodology that systematically understates inflation.
For example, the CPI assumes that when the price of something goes up, people will simply substitute it for a cheaper alternative.
So if the price of steak goes up, the CPI assumes that people will start buying more chicken instead, and the impact on inflation will be mitigated.
But in reality, people often don't have that choice – maybe they can't afford chicken, or there's simply no other options available. In those cases, the full impact of the price increase is felt, but it's not reflected in the CPI.
Another flaw in the CPI is that it doesn't account for changes in the quality of goods and services over time. For example, if you buy a smartphone today, it's much more advanced and feature-rich than a smartphone from ten years ago.
But the CPI doesn't adjust for this improvement in quality – it simply counts the price of the phone as it is. As a result, the CPI overestimates the value of our money and underestimates inflation.
So, what's the big lie? It's the idea that the official inflation numbers are accurate and that inflation isn't a big deal. In reality, the truth is much more alarming.
According to independent economists and organizations like ShadowStats, if we measured inflation the way we did in the past, it would be closer to 10-15%, not the 6-7% that the CPI reports. And if we take into account the impact of inflation on things like housing and healthcare – which make up a significant portion of most people's budgets – the true inflation rate is even higher.
Why would the government want to understate inflation?
Well, there are a few reasons.
For one, it makes them look better – if inflation is lower, it means they're doing a good job managing the economy.
But it also helps them save money on things like Social Security payments and inflation-linked bonds.
If they can convince people that inflation is low, they don't have to pay out as much.
But the truth is, the real impact of inflation is felt by everyday people like you and me.
It means that our money buys less than it used to, that we have to work harder to make ends meet, and that we're less secure in our financial future.
So, if you're feeling like the cost of everything is going up and that your money doesn't go as far as it used to, you're not alone – and the real numbers are even worse than you think.
Truth #2: Supply Chain Disruptions Are Not As Big Of A Factor As You Might Think
The next truth about inflation is tied to the myths around supply chain disruptions.
While it's true that the pandemic had an impact on supply chains worldwide, the reality is that this explanation is only partially true, and there's a lot more going on behind the scenes.
In reality, many multinational corporations are using the pandemic as an excuse to cover up their own greed and price gouging tactics.
Companies are taking advantage of the situation by hiking up prices on goods and services, far beyond what can be justified by the actual increase in material costs.
They are using inflation as a cover to mask their own profit-driven price hikes.
For instance, let's take a look at the prices of meat products.
When the pandemic hit, Tyson Foods – the largest processor of meat products in the US – increased its prices significantly, citing higher material costs due to supply chain disruptions.
However, while inflation was at around 7%, Tyson's prices rose at a much higher rate, with some products up to three times the rate of inflation. This resulted in a 48% increase in profits for Tyson Foods compared to the previous year.
And Tyson is not alone in this. U.S. companies as a whole have had one of the most profitable years ever in 2021, posting the highest profit margins on record since 1950, simply because they hiked up prices using the excuse of inflation to make enormous profits.
So don't be fooled by the myth of supply chain disruptions causing price increases. The truth is that corporations are taking advantage of the situation to make huge profits at the expense of consumers like me and you.
It's time to demand accountability and take action to stop this blatant greed from driving us further into the inflationary abyss.
Truth #3: The REAL Impact Of Inflation On The Economy
The third truth is related to the true impact that it’s had on our economy.
Inflation can have a significant impact on different aspects of the economy, and it's essential to understand how this affects your daily life.
Firstly, inflation affects the value of money, which is measured by purchasing power. When inflation increases, the value of money decreases, and you'll need more money to purchase the same goods and services.
This can be seen in the rising prices of essential items such as groceries, gas, and housing, which have become increasingly expensive in recent years.
Secondly, inflation can lead to economic instability.
If inflation rates rise too quickly, it can cause uncertainty and instability in financial markets, leading to economic downturns.
This is especially true for developing economies, which are more vulnerable to inflationary pressures.
Thirdly, inflation can lead to income inequality.
As the cost of living increases, those who are already struggling financially are hit the hardest.
The rise in prices can quickly erode the purchasing power of low and fixed-income earners, pushing them further into poverty.
On the other hand, those with higher incomes or investments can often keep up with inflation, leading to a widening income gap.
Finally, inflation can impact international trade.
When inflation rates in one country rise, it can cause the country's currency to depreciate, making its exports more competitive in international markets.
However, this can also lead to higher prices for imported goods, which can hurt the country's consumers and businesses.
So what’s the lie?
The Lie: Inflation Will Be Going Away Soon
The lie here is that inflation is a temporary issue, and this is something that many people have been led to believe.
While it's true that inflation can be cyclical and that it may fluctuate over time, the truth is that it's not going away anytime soon.
There are many factors that are contributing to inflation, including the increase in money supply, price gouging by corporations, and supply chain disruptions, and these factors are not going away in the short term.
If we continue to assume that inflation is temporary and fail to take it seriously, we could face serious consequences in the long-term.
This includes a further erosion of the purchasing power of our money, which could lead to reduced quality of life for many people.
Additionally, inflation could contribute to further economic inequality, as those with fewer resources are hit hardest by rising prices.
It's important to acknowledge that inflation is a serious problem that is not going away anytime soon.
While there are steps that can be taken to mitigate its impact, such as investing in assets that appreciate in value over time, it's important to acknowledge that we are in a new reality of higher prices and reduced purchasing power, and that we need to adjust our expectations accordingly.