Salient to Investors:

The annual CPI reported figure of 0.1% is a lie and has become a manipulated statistic using academic theories to systematically under-report the true level of inflation – between 4% and 10% – in order to cut annual cost of living adjustments to Social Security and other government benefits, and over-estimate the true level of GDP. True inflation in essentials combined with declining real wages and increasing debt burdens has left the average household with little or no money to spend.

Artificially low inflation figures allows big corporations to keep wage increases to workers low and the Fed to keep the discount rate far lower than it would be in an honest market. Wall Street banks, who own and control the Fed, get free money from the Fed, charge 18% on credit card balances, pays virtually nothing on deposits, and have raised bank fees.

BLS says food inflation was 1.8% over the past year, despite beef, eggs, chicken, coffee, sugar, candy, etc all rising at well above this level. The BLS assumes people switch from beef to pork when the price of beef soars, in effect building in a lower standard of living for people in their model. The BLS assigns food eaten away from home a weighting of only 5.8% when everyone knows this is much higher. The BLS assumes food and shelter account for less than 50% of your expenses: rent 3.5%, owner’s equivalent rent 3.0%, insurance 3.1%, water, sewer, trash 4.7%, household operations 3.6%. Despite a rental market on fire since 2012 and builders erecting apartments at a breakneck pace. Real rents in the real world have grown by 14% since 2012 vs. the BLS statistic of 9%. Case Shiller and NAR data shows house prices up between 5% and 10% in the last year and up by 25% since 2012. Mortgage rates have risen to 4% from the low 3% range. Property taxes are soaring.

BLS says the owners equivalent rent accounts for 24% of the CPI calculation, the same as in 2007, despite home ownership dropping to 22-year lows.

The large increases in rental rates and surge of rental households reflects a much higher inflation rate than reported by the BLS. The Center for Housing Studies reports over 49% of all renter households spend more than 30% of their income on housing, more than 25% spend more than 50% of their income on housing. The median US renter household spends 33% of their income on housing versus BLS rating of only 7.2% in the CPI calculation.

The share of renters aged 25–34 paying more than 30% of their incomes for housing increased from 40% to 46% over the past decade, and the share paying more than 50% percent of income rose from 19% to 23%. The share of renters aged 25–34 with student loan debt rose from 30% in 2004 to 41% in 2013, with the average amount of debt up 50% to $30,700.

The BLS reports annual health insurance premium inflation of only 0.7% despite the annual cost of employee sponsored health insurance being up 6.3% from last year, and the employee portion rising by 8.0%. Price Waterhouse Coopers and McKinsey report healthcare insurance premiums rising 6% to 10% across the US. The US median household income is $52,000, while employees are averaging $4,000, or 7.7% of income, in annual health insurance.

The BLS reports transportation costs rose only 1.2% in the last year despite Edmunds reporting a 2.6% increase. BLS says used car prices fell in the past year  despite Edmunds reporting a 7.1% rise. The BLS assigns a 5.7% rating to transportation costs despite Edmunds reporting the average annual car payment is $5,748 per year, or 11% of that median household income. Same story with tolls and public transportation.

Inflation in college tuition is driven by federal student loans to people who are not intellectually capable of completing college level material. The $1.4 trillion of student loans will never be repaid.

Deja Vu? Edward Bernays said in 1928 that in almost every act of our daily lives, we are dominated by a relatively small number of people who pull the wires which control the public mind.

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