The Goverment understates Inflation to its benefit

The government is grossly under reporting true inflation statistics. This may sound abstract but how does it affect us all? Social Security! The US Government has committed to pay people a social security benefit for the remainder of their life, which will come as no surprise to any of us given we all pay into that fund from our paychecks. What you probably didn't know is that the amount of your future monthly payment is prorated each year based on 'cost of living' adjustments for inflation. If the government understates official inflation numbers, it can underpay citizens in social security benefits. The two major issues I see are what Greespan calls 'substitution' wherein someone will buy pork instead of beef if the latter becomes too expensive (too inflated), but will that same person eventually substitute pork entrails for pork and so on and so forth? More importantly, however, Greenspan began to exclude 'volatile items' given they theoretically eventually revert back to a norm.

Therefore, 'official' inflation numbers are calculated by the government WITHOUT food or energy prices! The only thing that will prevent food and energy prices from remaining in the stratisphere is a global recession, which is possible, if prices are unaffordable, people will consume less, and prices will drop (substantially).

It is a joke to tell the American public that their dollar is only worth 2% less than it was last year! The gas tank and grocery store are scary places to be for many Americans who cringe when they see the daily price increases. Yet, the Government pays social security benefits as if the official numbers actually represented the inflated cost of living for most Americans.

The scarier truth is that if the Government accurately reported inflation: the country would be bankrupt, given the current undereporting could mean citizens are due up to 'double' what they have been receiving.

This system is in a lot of trouble and is paving the way for shift of empire. Between, social security, eroding power of the dollar, healthcare costs spiraling, gigantic debt load, financial engineering (subprime etc) and skyrocketing energy prices, the bottom 70% are truly going to see a cut back in quality of life. And as the global middle class whets its appetite for precisely that American way of life, a new balance of resources will shape up.

Price will be the mechanism that makes Americans consume less. Its about time.