We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
How to Lie With Statisticswas the first book I was required to read when I was studying for my Master's in Economics. The book wasn't designed to show us how to lie, but to make a point. It's easy to lie with statistics. 100% of the time. 60% of the time, lying works all the time. It's all about positioning. Al Franken cut his teeth by showing how Republicans lied using tricky graphing techniques, then started using his own special brand of lying to continue to hoodwink his constituents.
The book was really designed to get students to think about context. When I present data, I never present just data, I present context. It's not enough to say that Man-Made Global Warming correlates with the reduction in pirate activity. We all know correlation is not causation, the context of why the lack of piracy is causing Global Warming is critical.
I recently posted about why interest rates won't rise. Part of that discussion continued on in the comments section, regarding inflation and savings. Normally, interest rates are slightly higher than inflation (positive real interest rates), and typically fall below the rate of inflation when the economy is in a rut (negative real interest rates, when people spend more than they save, driving up inflation but eventually causing interest rates to rise in order to attract savings). Yet we have not seen a general rise in inflation or interest rates in the last few years. There are many reasons for this, and those reasons are helping to keep real interest rates negative and low. If we knew the truth, we'd probably see more consumers behave differently, and it's likely the Fed couldn't continue engaging its policy of printing more money. But hiding inflation is exceedingly easy to do. Especially if you utilize hedonic adjustments, which is one of many methods used to delude the populace.
Hedonic adjustments can be justifiable. For example, if a regular banana costs $1, but a banana that keeps you full all day and meets your minimum daily health needs is only $5, it would appear the 'cost' of a banana is 400% higher than it should be, if you want to live. However, if it takes 10 regular bananas to match what you can get from 1 $5 banana, then you've actually realized a 50% decrease in price! Hedonics DO make sense,when in the realm of productivity gains for the consumer.
However, as the linked article from Zero Hedge points out, you can use 'enjoyment quality' to make a 400% increase actually appear to be a 7.1% decrease. You get no real additional value out of a 42 inch plasma TV that you didn't get from a 27 inch LCD. But the government can quantify and justify that the price you paid was actually LESS for the big screen plasma, even if it wasn't. Voila! You've saved money by spending more! Looking at the list of areas where hedonic adjustments are applied show a variety of useless of price decreases, simply so the government can imply regularly that you are spending less than you really are. It helps our politicians maintain "the money illusion." This benefits them, allowing them to engage Keynes' famous quote, “Lenin (the founder of the former communist Soviet Union) was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose”.
So yes, technically our inflation rate has been far higher than you realize, and the Fed has been making your savings worth less and less each year. No, it probably won't end well, so enjoy it while you can, and remember to try and find the contextual support for any government data. There usually isn't any.
Government inflation numbers are intended to deceive. Benefits that are tied to a CPI that is manipulated downward leave the recipients poorer in real terms while the politicians can claim that they are increasing their benefits (in nominal terms).
Far more useful than government numbers is to establish your own CPI numbers using the things you typically spend money on throughout your life.
Then you have to determine, given your stage in life and your financial situation, what will hurt your worse, inflation or deflation, and make adjustments accordingly.
Just remember that it is the Blue Wall who enable them to get away with this. Do you know where they live in YOUR neighborhood? And have you made plans to deal with them appropriately when the time comes?