It would have been a much more interesting article if it had just focused on cost of living increasing faster than inflation
I nearly fell out of my chair laughing at this line. Crazy Austrian folks call the increase in the supply of money "inflation" but that's not what most people think of when you say the word. The vast majority of people would agree that "inflation" and "the CPI" are basically the same thing. The CPI is the Consumer Price Index. It is a measure of the cost of living as set forth by the BLS here in the US.
So what you just said is that the cost of living is going up faster than the cost of living! That clearly can't be true, so there's a problem. The actual cost of living is going up faster than the government's measure of it. Okay, that's better. But it's still problematic.
If the government's measure of the cost of living is going up slower than the actual cost of living then a lot of people are getting screwed. Anyone on a fixed income that's inflation adjusted like Social Security or a pension. Anyone buying a TIPS bond, anyone who gets regular cost-of-living raises so that their salary keeps up with their expenses, etc.
If the CPI number was accurate then all these things would be OK. But since it seems like it's not the fact that huge swaths of socioeconomic activity is tied to these indicators is really pretty tragic.
I think Carl Sagan captured the essence of why these kinds of things take forever to get found out:
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back."
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I nearly fell out of my chair laughing at this line. Crazy Austrian folks call the increase in the supply of money "inflation" but that's not what most people think of when you say the word. The vast majority of people would agree that "inflation" and "the CPI" are basically the same thing. The CPI is the Consumer Price Index. It is a measure of the cost of living as set forth by the BLS here in the US.
So what you just said is that the cost of living is going up faster than the cost of living! That clearly can't be true, so there's a problem. The actual cost of living is going up faster than the government's measure of it. Okay, that's better. But it's still problematic.
If the government's measure of the cost of living is going up slower than the actual cost of living then a lot of people are getting screwed. Anyone on a fixed income that's inflation adjusted like Social Security or a pension. Anyone buying a TIPS bond, anyone who gets regular cost-of-living raises so that their salary keeps up with their expenses, etc.
If the CPI number was accurate then all these things would be OK. But since it seems like it's not the fact that huge swaths of socioeconomic activity is tied to these indicators is really pretty tragic.
I think Carl Sagan captured the essence of why these kinds of things take forever to get found out:
"One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It’s simply too painful to acknowledge, even to ourselves, that we’ve been taken. Once you give a charlatan power over you, you almost never get it back."