Yesterday the stock market was buoyed by unexpectedly good
inflation report.
What specifically was the good news that got the market so giddy?
The lower inflation reflected a flat reading for energy, which helped offset a 0.9 percent jump in food. That was the biggest one-month surge since a 1.5 percent increase in January 1990.
Last month's increase was driven by widespread increases in a number of areas from bread, butter and margarine to milk and coffee. Food prices have been climbing rapidly over the past year, reflecting higher world demand and the impact of increasing energy prices on the cost of fertilizer and transportation of products to grocery store shelves.
For April, energy prices were unchanged and gasoline prices even fell by 2 percent, a decline that would strike motorists as strange, given that they have been watching the price of gasoline rise relentlessly in recent weeks.
It turns out that last month's 40 cent increase in the price in gasoline contributed to a decrease in energy prices by way of one of those magical "adjustments" routinely used to cook numbers and hide the true, stark inflation realities that the dumb, "un-adjusted" consumer has been feeling for years.
Inflation measures have been manipulated and fine tuned to the point of practical meaninglessness and if you ever wanted a glimpse at the simple mechanics behind the growing wealth gap, you don't need to look past this latest inflation report: understate the deteriorating conditions of the poor, thereby buoying the stock market for the benefit of (primarily) the wealthy.
It's time to bring our inflation measures back to reality but I have yet to hear any candidate even propose the idea. If Obama, for instance, really wanted to reconnect with the working "everyman" vote, he'd make such an overhaul a key part of his platform. Official inflation numbers lie behind all wage and cost of living adjustments after all.
Here's a few suggestions just to start the ball rolling:
--never again let me hear that "exclusive of volatile food and energy costs" garbage. If costs only ever go up, they’re no longer "volatile" ...they’re RAMPANT.
--rebalance the "basket of goods" more frequently to reflect the larger percentages of income being sucked up by the most quickly inflating things. They claim to do this, but obviously not often enough and clearly not accurately.
--get rid of the whole "heuristic substitution" crap. If steak becomes too expensive, don’t substitute hamburger and tell me I'm still eating steak.
--did I mention "rebalance the basket of goods" thing? I don’t give a crap if a Chinese toaster from Walmart still costs only $14.00 if it costs me $20 more every week to fill up my car. I’m in the market for new toasters about once every 14 years. Let me be clear: I just don't give a shit about the cost of a toaster.