The government thinks it can deceive the public with inflation doublespeak. It has defined inflation out of existence.
The definition of inflation is “the rise of all prices.” In effect what it really means is the reduced value of the currency. When all prices go up, it means merely that the value of the currency is going down. Inflation has long been a political tool as it is in effect a hidden tax. It enables governments to spend more by “printing money” (not really done with printing presses but with accounting entries.)
To increase government spending in a balanced way, the economy has to be more productive and increase wealth. If this is not the case, then increased government spending is “unbalanced” in that it merely diverts private sector spending and wealth into public sector spending and wealth. It is in effective confiscation of resources from the people and dedication of those resources that by definition the people do not want. Because if they wanted them, they would produce and direct them in that way. Thus by definition, government spending is dedicated to priorities that the people have already decided they don’t want.
When you print money, you do not increase wealth. You do not enable long term capabilities to direct resources into the priorities of the people. Instead you dedicate them towards the lower priority goals that the people have already decided they do not want.
Inflation as a government policy is the modern method of government usurpation of the will of the people. For this reason it is often called a “hidden tax.” But now that most people are aware of the hidden tax of inflation, it is no longer hidden. So how can the government continue with its hidden tax? By hiding it of course.
So let’s get rid of inflation by defining it out of existence. Let’s change its definition from “the rise of all prices” to just the “rise of some prices” — specifically excluding all the big rising prices. This is intellectually dishonest.
Just as we have “9% unemployment by ignoring part of unemployment (when you include those who are unemployed because they have given up or are underemployed, you get a much higher number often quoted at 17%), we now have “2% inflation” because we are ignoring those prices that are going up the most.
If inflation was measured in a consistent way, such as it was in 1980, we would now be reporting 10% inflation, as explained by Dick Morris in his recent post.
Welcome to the era of entrenched government doublespeak. Will the people be deceived? There is a lot of evidence that the people see through the deception.