Peter Schiff Reveals CPI Propaganda By Calculating Real Price Inflation!

• Peter Schiff Reveals CPI Propaganda By Calculating Real Price Inflation! 
  by http://goldsilverworlds.com/ 
  In a recent newsletter update and video message, Peter Schiff explains how the official price inflation measurement is not reflecting the daily reality. That is because since the 1970′s the preferred government inflation metrics have changed thoroughly. Beginning in the early 1980′s the methodologies were altered to compensate for a variety of consumer behavior. The new “chain weighted CPI” for instance incorporates changes in relative spending, substitution bias, and subjective improvements in product quality. If you simply focus on price, especially on those staple commodity goods and services that haven’t radically changed over the years, the underreporting of inflation becomes more apparent.
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  The conclusions should not come as a surprise to most of us. Our “intuition” already knows this but now it has also been proven statistically by Peter Schiff and his team. They conducted their own research to prove that real price inflation (the one that matters for 99% of citizens) is much higher than the official CPI index is revealing. Therefore the team randomly identified price changes of 10 everyday goods and services over two separate 10 year periods, and then compared those changes to the reported changes in the Consumer Price Index (CPI) over the same period. The 10 selected items are: eggs, new cars, milk, gasoline, bread, rent of primary residence, coffee, dental services, potatoes, and electricity. Just to make sure, the team ran the same experiment with 10 different goods and services: sugar, airline tickets, butter, store bought beer, apples, public transportation, cereal, tires, beef and veal, and prescription drugs. The results were notably similar.
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  The prices were analyzed in the period between 1970 and 1980 and then again between 2002 and 2012, because these time frames both had big deficits and loose monetary policy. But they straddle the time in which the most significant changes to inflation measurement methodology took effect.
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  Between 1970 and 1980 the officially reported CPI rose a whopping 112%, and prices of the anlayzed basket of goods and services rose by 117%, just a 4% faster than the CPI. In contrast between 2002 and 2012 the CPI rose just 27.5%. But the basket much faster, accounting for a 62% difference!  So the methods used in the 1970′s to calculate CPI effectively captured the price changes of the analyzed goods, but only got half of those movements more recently.
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