Over the past decade, we've been told that inflation has been tame — actually below the target the Federal Reserve would like to see. But if that's true, then why does the average household find it harder and harder to get by?
The ugly reality is that the true annual cost of living increase is far outpacing the government's reported inflation rate. By nearly 10x in many parts of the country.
This week, we welcome Ed Butowsky, developer of the Chapwood Index, to the program. His index is a 'real world' measure of how prices are increasing much faster than the wages of the 99% can afford:
In my business, I wanted to make sure that I was building portfolios that weren’t just efficient but got people the rate of return that they needed. I thought: My goodness, what I need to do is give people a list of everything they spend money on and have them track quarter by quarter exactly their increases, so I can do a better job as a financial advisor in determining what return I need to target.
I got a hold of a list of 50 major metropolitan areas and found people in every city and I gave them a job: I asked everybody to send me what items they spend their after-tax dollars on. I got about 4,000 different items. Then I took the 500 that most frequently appeared on the list and we've been tracking specifically these same items in every city since that period of time. I weight this list based on what percentage of a normal income people spend on each item.
The purpose of this index is to let people know that, if you live in California, your cost of living increase goes up somewhere between 12-13.5% a year. And if you're not making 13% more in salary, then you're losing purchasing power; and that's why people fall further and further behind. If you are in New Mexico, it's about 7%.
Basically, over the last five years, the average increase for all 50 major cities is 10% vs the average CPI of 1.5%. So it's easy to see that for people who are in the middle income, lower income or people who are living off of a pension that's adjusted based on the CPI, they've lost 8.5% of their purchasing power if everything was adjusted to the CPI year over year. Do that over five years, over 10 years — now you know why there's such a separation between wages and wealth.
Click the play button below to listen to Chris' interview with Ed Butowsky (38m:05s)
Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson. In the Crash Course in Chapter 18 we cover something I call “fuzzy numbers” and in there we find out all the ways the government statistics are bent, stroked, massaged, manipulated—always with the net effect of making economic conditions seem rosier than they really are. Unemployment excludes discouraged workers and GDP is over stated by understating the true price increases of consumption expenditures. But the worst statistical lie of them all is perhaps the Consumer Price Index, or CPI, which purports to measure inflation.
Here today to discuss the true nature of inflation with us is Ed Butowsky, who created the Chapwood Index—an actual measure of inflation that is devoid of the usual statistical tricks. From the website, ChapwoodIndex.com, we find this description: The Chapwood Index reflects the trust cost of living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after tax dollars in the 50 largest cities in the nation. Ed, I really can’t wait to dive into this with you. Thank you for agreeing to be on our program today.
Ed Butowsky: I appreciate it more than you know, having me and shining a light on this. I started this index many years ago—and maybe we will dive into why I started it. It just blows me away how impactful the under reporting of the CPI is in the entire world. I mean I can actually draw a conclusion that this under reporting has actually impacted the balance of power in the world. Absolutely. It might be a little bit of a reach but I get there and it seems logical when I say it.
Chris Martenson: How about we start here – before we dive in. Tell us a little more about yourself and your background.
Ed Butowsky: Sure. I’m a wealth manager. I grew up at Morgan Stanley in the business. I was very fortunate and somewhat lucky, but I became the top investment broker in the country. I actually had the most assets under management and did the most business back in 1998, 99. And I eventually left Morgan Stanley in ’02 and went over to Bank of America, which was a really bad move. Then I eventually just went off on my own. So I managed money. A lot of people know my work through a movie called Broke on ESPN. I do a lot of work with professional athletes and I put that movie together. It’s a documentary talking about the – basically how many people go broke and the financial struggles that athletes have. And now I manage a firm, it is called Chapwood Investments, in Dallas. I have clients on both coasts and around the country.
Chris Martenson: Fantastic. Now let’s get to the Chapwood Index. What initiated – that is a big labor of love I assume. What prompted you to start and create the Chapwood Index?
Ed Butowsky: This is what happened: My mother was dying from cancer. We knew she was going to die and I went home to surprise her on the last birthday that she was going to have. When I surprised her, she actually surprised me by not being in the house. She was still about four months away from passing away. But I went in and couldn’t find her. I drove down to the hospital. I drove to the different places where she might be. Then she walks in from work, and what was shocking was—I didn’t even know she had a job. I said "where have you been?" out of love and concern. She said, “Well, I was at work.” I said, “You got a job?” Her words were, “Your father didn’t adjust my alimony for COLA.” And that statement right there was the statement that changed my life. First I thought she just drank Tab. I was like "what do you mean COLA?" I didn’t even know what COLA was.
As I looked into it I found a man named Albert Sindlinger who wrote an article about the manipulation of COLA and how the government in 1983 started manipulating that number so it would be lower, so they didn’t have to pay out as much money in government entitlement programs and increases in transfer payments of different kinds along with government salaries. And that really caught my eye because it made me realize that my mother—if she was having that alimony adjusted for COLA—she wouldn’t be able to keep up with her standard of living anyway. I wanted her to always live as a princess.
Chris Martenson: Of course. Thank you for that story. I’m sorry for your loss and also for the way in which you had to discover this ugly truth, which we all get to at some point, which is that this COLA, or Cost of Living Adjustment—there are good, solid reasons on the fiscal side why the government wants to keep that down. The COLA is adjusted based on something called the Consumer Price Index, or CPI. What is wrong with the CPI?
Ed Butowsky: Well there are many things, and you are right, this was done by the government to keep the government expenses down. Here is what people miss: The negative unintended consequence of them manipulating this number is this: People in the middle income and lower income brackets in the private sector – their salaries go up based on that number. So an employer will say "you know what – the cost of living or the CPI went up 2% so I am going to give you a 2.5% increase." And that is how that number impacts the world. And what is wrong with it – I mean people can go – there is a man named John Williams who you and I communicated over the internet about. John Williams does spectacular work in explaining how many different ways the government has manipulated the statistic. But up until 1983 they had looked at 1,700 items month after month after month without any manipulation. And then in 1983 they started playing games and saying "well you don’t need a steak. You could have had a hamburger and that didn’t go up as much, so we are not going to give you a price increase."
The other thing that has never been part of it has been taxes and insurance costs. So that has never been part of the CPI, but people should study it -- it would make for a lot of boring radio, but they have been doing it. And they did it again in '93 and '94 under the Boskin Commission. They got lots of academics together to try to justify keeping that number low. And eventually they will find someone who supports their thesis.
Now, democrats and republicans are both behind this because they all want to keep the amount of money the government spits out lower. Again, the negative unintended consequence is that people who work their tails off every day, follow the rules and get their increase on their salary based on that number they are being—literally they are committing financial suicide by following that and not challenging what their cost of living increase was because the CPI doesn’t reflect reality anymore.
Chris Martenson: Well absolutely. And at the risk of creating the boring radio, the details don’t matter because what these little wiggles and jiggles in statistical hitches do is they shear a percent or two off. And it doesn’t sound like a lot, but over time we are talking percentages so this is a compounding function. You just take a percent off for 10 years, you have got a big number on your hands when all is said and done. So this is something I do cover in great detail in the work I put out just to track it, not to try to recreate it. I was just pointing out the hedonic substitution, weighting. Here is an example: According to the Bureau of Economic Analysis, when I look at the cost of new cars, they say they have been going down every single year. Then I wander over—because of hedonics because the cars are getting better, the quality is better and so they adjust and do all their funny things. I don’t even purport to know what they do. All I know is they say cars are going down in price. When I look at the actual total lease terms and new car expenditures, those go up every year. They are just like two ships crossing in the night. So we cover a lot of that. Your Chapwood Index though doesn’t try to do any of that. What does it do?
Ed Butowsky: I was going to get into that. I was just afraid you might get upset if I got that boring.
Chris Martenson: No. We go into detail all the time.
Ed Butowsky: What I did is I started thinking that in my business I wanted to make sure that I was building portfolios that weren’t just efficient but got people the cost of... the income, or the rate of return that they needed. Then I thought well my goodness what I need to do is give people a list of everything they spend money on and have them track quarter by quarter exactly the increases so I can determine—to do a better job as a financial advisor—I can determine what I need to target. So I actually sent this out to my clients and I got a lot of people telling me to go stick it somewhere because there is no way in the world they were going to do that. Then I thought, you know what? I have a lot of friends on Facebook. I got a hold of a list of 50 major metropolitan areas and found people in every city and I gave them a job and I sent them – I asked everybody to send me what items they spend their after tax dollars on and I got about 4,000 different items. Then I took the 500 that most frequently appeared on the list from my friends. I then gave that list to my Facebook friends in all the different cities, and we have been tracking it—specifically the same item in every city for that period of time. And then we weight it based on what percentage of a normal income people spend. So if it is on a house, well there is a percentage of your income you spend on a house. There is a percentage you spent on food. So we weighted that based on that. I never give out the exact numbers because the last thing I need is people a lot smarter than me—and there are a lot of people smarter than me—really going at me. That is not the purpose of the index. The purpose of the index is to let people know that if you live in California, your cost of living increase—not your cost of living, but your cost of living increase—goes up somewhere between 12 and 13.5% a year. And if you are not making 13% more in a salary, then you are losing purchasing power and that is why people fall further and further behind. If you are in New Mexico it is about 7%.
I use this, and my Facebook friends have been terrific. I have a couple of them who bailed out. Matter of fact that's what happened. I just released my numbers today for 2015.
Chris Martenson: I am looking here on your website. My eyebrows are up on my forehead because this is really, really far away from what the Federal Reserve is talking about. They are afraid of deflation, "oh my gosh inflation is too low." There is nothing too low. Let me just average this by eyeball. I can do 10% in my head. 10% using the rule of 72, that means that my cost of living is going to double in just seven years—this is what you are saying. For these people living in these areas, every seven years basically the cost of living is going to double.
Ed Butowsky: That is exactly accurate. What is not is the CPI number, which has averaged 1.5% over the last five years. So basically over the last five years the average increase for all 50 major cities—I break it down on the website city by city, but the average is 10% and the average on the CPI is 1.5. So it is easy to say that for people who are in the middle income, lower income, or people who are living off of a pension that is adjusted based on the CPI—they have lost 8.5% purchasing power if everything was adjusted to the CPI year over year. You do that over five years, you do that over 10 years, now you know why there is such a separation.
I have to highlight one point: There is a lot of discussion in this country, Chris, about the cost like—how the rich are getting richer and the poor are getting poorer. Here is the difference and something people don’t highlight, which I am happy to do today. People who are upper income earners, generally speaking, their income is dictated by their performance, not from a salary increase tied to the CPI. These people take risks. If they do well they make a lot of money. If they do poorly they make no money. But that is what a one-percenter—as everyone in this country tends to call them—works. They don’t make money based on salary. They make money based on performance, and that is why we have had such a widening of that gap.
Chris Martenson: And they make their money in many cases on their assets as well. A paycheck is a sure way to the poor house by what we are talking about because if your paycheck is growing at CPI and you’re 8.5 full points away from reality, you are going to fall behind. I get goose bumps—I guess I am nerdy this way. I get goose bumps when I talk about this because all of a sudden, Ed, everything that I am reading about makes sense. Allegedly my economy is doing really well—2-3% growth, right? But I look at the actual levels of employment. I look at the number of people on food stamps. We look at maybe even how the political parties are developing and we discover that there is real stress there. Stress that you wouldn’t detect in a 4.9% unemployment world. Stress that you wouldn’t detect in a growing economy, but we feel it there and your work explains that, right? That is the way I tie those pieces together.
Ed Butowsky: It does and I'd like to make a comment about the jobs numbers at some point. But in terms of focusing—at the very beginning I said how it has changed the balance of the country or the world. Let me now jump on your nerdiness for moment and double down on it and let me share this with you: The reason our country isn’t as powerful as it is used to be is because we don’t have enough money in this country to pay for what we spend. The reason that we spend so much more is because people, once they reach a threshold of pain, they will do anything to take care of their families. They will do anything to take care of themselves and so on. So what do they do? Well, they reach out to the government when they have no other choice and it puts more strain on the government. Then the government doesn’t have the money so then we go and we borrow the money from other countries. Well, I got news for you – we are borrowing money from other countries to pay for programs because of the CPI manipulation and over spending, and the biggest part of our expenditures are these—I call them entitlement programs or government programs—and those are only having more strain and more demand on them because people are falling behind in the private sector.
So China loans us money and Russia loans us money and so do the OPEC nations because first of all we need it, but the reason we need so much of it is because so many Americans are falling behind and they need assistance. To me, that goes back to that 1983 decision to start manipulating the CPI.
Chris Martenson: Great. Thank you for that. This is why I focus on it is because they feel like white lies. I understand why the government does it and you know this has happened under every administration I have tracked. This is not a political statement. This isn’t Democrats. This isn’t Republicans. As you mentioned before this is both. Both parties have this interest in sort of shaving at these things. Your interest is tracking things and reading off of the interest here you got Starbucks Coffee, it is Advil, it is gasoline, it is sales and income taxes tolls, fast food restaurants, toothpaste, oil changes, car washes, I recognize everything on this list. These are the things I spend money on. So you are saying if I live in one of these 50 major metropolitan areas I am going to experience roughly 10% increase across all of these.
Ed Butowsky: That is correct. You know what, anyone listening right now, they all know it is true. Ask anybody, did your cost of living not go up? Does it not cost any more? Of course it does. When was the last time you saw a happy old person? It is because of this kind of nonsense. And they don’t understand the virus that they live with every day. It is not just old people but everybody. They live with this and now with interest rates low, any money in savings, they are getting nothing on it or 1% and they are just committing financial suicide by having it there because of this manipulation. I want to shine a light on it. And I am really happy you do the work you do because this needs to be discussed.
Chris Martenson: It absolutely does. And here is my – I promise people listening: last bit of nerdiness. But I want to convey this. It is actually really important. I know it sounds a little bit complex, but of those three ways that they statistically manipulate these – the CPI, Consumer Price Index, I want to talk about weighting. Weighting is important. I love what you said about how you weighted yours. And I understand you are not going to release the actual weightings, but no matter how many smart people want to shine a light on the way you do your weighting, you can’t do worse than what I am about to describe. Healthcare. Healthcare is weighted in at less than 5% in the current CPI basket. So that means that one out of $20, according to the people who assemble the CPI, is spent on healthcare because that is what it is weighted at. But when we wander over to the Bureau of Economic Analysis and we peer into our GDP numbers, we discover that healthcare spending is 18% of our gross domestic product. I can’t reconcile those numbers. Those are not even in the same zip code with each other at this point in time—the idea that 5% of the basket is healthcare. And I can tell you that for people in my position as a small business owner who is self insured—thank you for the Affordable Care Act—it just went up for me 28% last year by the way. Thank you very much for that, everybody who was responsible. That is like one of the largest and most obvious gaps that people can understand completely. Look at the drug prices increases last year from all the majors not even including that pharma bro guy and all his craziness. But drug prices, cost of trips to the ER, delivery room for maternity, or watch what happens when your new insurance policy is delivered and your deductibles have skyrocketed and the coverage options have declined and all of that. That is what happens when we weight something inappropriately: Even if it is going up a lot, we end up counting it less. Your index then is weighted, but it is weighted towards what people actually spend their money on. It is the whole universe and you are coming up with an average of 10%.
Ed Butowsky: Yeah, and I will tell you the way I get the information is as pure as can be. It is directly from people in those cities. I used to do it quarterly and then people started revolting. They didn’t want to do it, so I do it semi annually now. You know what? The numbers are there. Nobody can refute—these are the numbers. You can call companies and say "how much did this go up? How much did that go up?" And when you start doing this—nobody has done the work. I have. And when you do this, it is kind of sobering because now you finally understand what is going on and why people can’t keep living the lifestyle that they had grown accustomed to. My parents, sadly, as I had mentioned earlier, my mother had passed away and so did my father. But when we would get cards from my in-laws with the Christmas money, it was $100, it was $50. Now my kids just kind of get a card. My kids are older now. I say, “Don’t worry. It is the manipulation of the CPI.” So every time they get a bad present they go, “I know. Manipulation of the CPI dad. I know. I know.” So you can tell what an excited family I have, right? It is okay it is the manipulation of the CPI, it is not her fault.
Chris Martenson: "Did you grow up scared of monsters?" "No. Much worse."
Ed Butowsky: Exactly. Much worse. The CPI manipulators. That is what you got to worry about.
Chris Martenson: Well, here is a question: Another index came out a little while ago; I’d love to get your view on this – The Billion Prices Index which purportedly tracks the prices of a billion items. Huge difference between what they are reporting. They seem to come in really close to the CPI with very minor sort of sub percentage adjustments. And you are coming up with a very different number. How is that?
Ed Butowsky: Well a billion items I mean 1.) They can track lots of things that don’t go up, but the things that matter are the things that you use. That is great. Keep doing that. But it sounds kind of worthless to me. I would rather only look at the things based on what we actually spend our money on. I mean I don’t buy dentures so I don’t – it doesn’t really matter to me. What matters is the amount of items, the amount of money we spend on what we actually use. I mean there is – I would love to look at the list but that is kind of – that has got to be a pretty boring thing to look at. It just doesn’t have any relevance to the real world just like the CPI doesn’t.
Chris Martenson: Yeah. I don’t buy a billion things every year so I am pretty sure that index doesn’t really track me either. Question: Have you had any response from or interactions with the Bureau of Labor Statistics—the keepers of the CPI—to your index? Have they responded?
Ed Butowsky: No. But I will tell you this: I rarely ever promote this. What is amazing to me is how many people find my index really refreshing in basically confirming what it is that they had already had in their minds. I got a call one day from the SEIU which is the Service Industry Labor Union and they wanted to use my index in their negotiations, which I thought was pretty cool. But I never really marketed it. I don’t make any money at it. I really just did it to honor what went on with my mom, but I also look at a lot of older people and I want them to understand the only way you fix something is to understand it. So I do want people to look at it more. I do want people to talk about it more. I want people in my industry to focus on it so when they are building a portfolio that historically gets them a 6% rate of return and your client’s increase is 10% you are really not doing anything for them except helping them commit financial suicide.
Chris Martenson: At a slower rate. Maybe somebody else is getting 3%. If a measure of a country is how it treats its citizens, particularly its poorer citizens, I look at what the Federal Reserve did in driving interest rates to zero. So anybody who is on a fixed income looking for bond returns, something reasonably safe or maybe a return on a CD or a savings account even, they have just absolutely been given zippo for that. And on the other side, the other branch of the government—because I consider the Federal Reserve just a branch of the government, even though it is a private sort of thing. The other side is over here manipulating the cost of living adjustments. And so there are 10,000 people retiring per day from the boomer cohort. It really sounds like they are getting squeezed from both ends. They are getting treated just very badly in this story.
Ed Butowsky: Without any question. It is a double negative play. Rates are low, your costs are going up. I call it modern day stagflation. You know stagflation is probably the most devastating economic situation you can be in because in order to cure one leg, which is slow economic growth, another leg is high unemployment, which we have. And then also rising costs. You have to then implement something to fix one part of it that hurts the other legs of it.
Modern day stagflation, I call it that because we are in a period where we are not reporting the numbers accurately, which is the great work that you are bringing to the people's attention. Because of that, people don’t realize we are in stagflation but we are. The government numbers on jobs—I am just going to throw this out there. One of the things that gets me about that one statistic is they report numbers based on what is projected, Chris, but not what is needed. I started figuring out what is it that we do need, because when people – when we report these numbers, the numbers should all be reported based on what is needed. And what we need is 44% of the revenue from the US government comes from federal income taxes. So let’s assign half of the $500 billion deficit to Federal income taxes. I will make it easy. Let’s say that $250 billion that we are short needs to come from new jobs. Well, each new job, give it a $50,000 income and give it a 25% tax. That means each new job represents $12,500 new dollars to the government. So how many $12,500 new jobs do we need? We need 20 million, which comes out to be 1.6 million net full time jobs a month for 12 months.
This last report we had 242,000 jobs supposedly, that 88% of them were part time. So we need 1.6 million full time new jobs a month and last month we got 29,040. Now that is a – like you just heard it. You are in this. Anybody listening is like wait a second. Wow. Because all the news reports were "what a great job; we beat the forecasted number." And I just want to throw up every time I see this.
Chris Martenson: Yeah. It is really far from reality. It feels like, at this point, to me that it is more about image management and perception management, which makes it seem all just a little bit fake and false. And we have had the best statistical recovery that money can buy, at least thin air money. I am really curious at what do you – how do you work with your clients and what can somebody do who is caught in this vice right now?
Ed Butowsky: Find a way to supplement your income. I volunteer at a church once a month and I speak to families about debt and about the markets and so on. These people are not wealthy people and they all suffer from the same thing, not being able to make ends meet. And I tell all of them that—the majority of them are middle income families that have salary increases based on the CPI. And I said, best thing you can do is go find another job to supplement what you are doing. The way to cure this – you can only cut so much out of your life and then you will be cutting more and more and before you I know it, you will have very little. You can do that or you can become a revenue producer and go make more money. And you can do that outside of your salary job. I love multi level marketing, but truth is that is what they have to do, otherwise they will just sit back and their lives will get much tougher every single year.
Chris Martenson: And this is absolutely the trend that has been in play for a long time. People say "hey what happened to that one income family from the 70s?" Well it got inflated away is what happened. It is not possible to really make do with minimum wage in a lot of the country, which is adjusted slowly and sort of in alignment with the CPI. But that tension that we are feeling in the country now is that it is literally impossible now to make do on a minimum wage salary. By the way, minimum wage for my family, if I was earning minimum wage, is almost enough to cover my health insurance costs if I had to buy it outright. And I know there are like programs that would supplement this and that but just that one item, if I wasn’t getting subsidized on it, would consume 100% of my income. That was not true when my father was raising a family.
Ed Butowsky: You can call it the minimum wage, which is a different discussion, which is an appropriate one but different, but think about the person who makes $100,000 a year. Their taxes, right away they are at $50,000 so now you divide that... So what do we have? Somewhere about $4,400-$4,500 a month. That is very, very difficult to raise a family of two on. Let’s just say you have a mortgage, call it $2,000, what do you have left? That’s the point. So you are right.
That is why now more and more people have two people working. You made an excellent point there that is one of the reasons why we have more and more people who are two working people in a family. I need to point that out to my wife. I really do, because I never even thought about it quite the way you put it. That is exactly right. We have a lot of families where people – the man and the wife – husband and wife are both working and yeah that is going to be a good conversation tonight. So thank you.
Chris Martenson: Be sure to let me know how that goes and if it goes well I will talk to my wife about that. We will see if we can start a movement of sorts. But this is very real and joking aside, we are damaging ourselves is how I look at it, and that annoys me a little bit. I admit I get a little emotional about this. It is really, you know, there is white lies, fibbing, but this is really self harm, and I don’t know anybody really talking about this on the political campaign trail. By the way, I am not one of those people looking to politics to really solve anything. As you mentioned – first you have to recognize the problem. First thing you have to do is admit you have that problem and then you can begin to figure out how to address it. It still feels to me like both parties in this country are very comfortable with the "lying to ourselves" stage of this and I am very interested in figuring out how to go about really revealing this to people. Either anecdotally or more broadly, how do people respond to this in your practice, if you could, when you are advising them and you show them the reality?
Ed Butowsky: By the way, I got to say I love what we are doing here in this interview. I think there is so much good that we are talking about. I hope a lot of people find a way to share this because the more people that talk about it, it might actually affect who they elect. I am actually a very political person, just so you know, and I lean far right on almost everything. And I have actually advised a couple of campaigns and shared some of this with them. The first way to start off is: Why do prices rise? Ask people, "why do they go up?" Especially right now when commodity prices are dropping to almost historic low levels. People kind of look and, "well the reason is, in a lot of cases it is cost for regulations, we know that. Obviously, cost for more taxes." Well why do you get more taxes? You get more taxes because you have more programs and spending programs and you have to pay for those. Well, not that you have to, because we can always borrow money, but that is the goal is to have a balanced budget. But you want to have expenditures that can be covered by taxes. Well then you have a slow economy because you have more taxes and because you have a slower economy you then tax more and it kind of just starts to have this rolling effect that you are actually creating a slower economy because of taxes. You don’t get the growth, you don’t get the jobs, and as a result of that you have to raise taxes again. That is why these prices are rising and we are already at a level that we can’t sustain.
I explained this to these people and you know what happens? They say "well can you break it down into 30 seconds?" And I promise you, three campaigns said that. I said "well why do we have to have 30 seconds? It is probably the most important thing you can talk about and why do you want to make it 30 seconds?" "No, no everything has to be 30 seconds." I was blown away because it wasn’t just one it was two other – three republican candidates everything was, “Can you break it down into 30 seconds?” I’m not kidding you.
Chris Martenson: And so here we are, it brings back that John Maynard Keynes quote of: Not one man in a million can diagnose inflation. Which is why it is the loved practice of politicians everywhere because you can really get away with deficit spending and it is very hard for people to detect that that is why their lives are progressively getting worse. If you are delivering something but you are taking it away that they don’t get it.
This is a really important conversation to have, and I want to have it before Venezuela-style inflation visits my country. Before we lose our standing in the world. Before we ruin our currency by just trying to print our way to prosperity, which has never worked, ever, in all of history. Maybe this time it is different. Maybe Janet Yellen is smarter than any Roman politician could ever dare dream, but I doubt it and those are my concerns. But this is really important, to start with this one simple recognition: You are not crazy if you feel like your inflationary experience is vastly different from what you are being told it is—the very definition of cognizant dissonance. Anybody listening, if it feels like it is worse than it is, that is the reality. Go with that.
And I loved, just by way of commentary, Larry Summers coming out saying, "hey we don’t need the hundred dollar bill—just druggies and criminals need it." In this whole war on cash they are trying to sort of get out of the gate. I am like "Larry you haven’t been shopping lately. $100 is what I use to buy a single bag of groceries now, if it has meat in it," right?
Ed Butowsky: Yeah. Here is the thing: They know this. I have actually called up the producers at one of the shows at FOX. I’m proud to say I get to appear from time to time on FOX and I know some of these producers. And there is a man I want to debate and it is Austan Goolsbee. The reason I want to debate him is he is a smart guy.
It is because of people like Goolsbee and people who share information that they know is not correct to keep this liberal agenda going in the country where we continue to spend so much more money and when we get a number that is the jobs number saying it is good when it is nowhere even close to being good. It is not even on the same planet as good.
Chris Martenson: Or what is necessary. Of course the jobs number is a whole other discussion but the over 55 crowd has taken a lion’s share of the jobs gains, not because they want to but because they need to, as you just described. But we are losing a generation here again. Much like Europe is losing—by the headlines Europe is going to say "our headline unemployment isn’t that bad," but the truth is that they are actually about to lose an entire generation of people who may make it to adulthood without having a job. That is not good. So playing with the statistics, you know, it helps make things look better, but it doesn’t help us have the right conversation, understand what we need to do, make priorities, basically act like adults. Things that any business person has to do I guess.
And I want to thank you so much for your time today. This is really good work that you are doing. I really hope that the index continues, that you can continue to have your wonderful volunteers perform this important service.
Anybody listening, you can find this at ChapwoodIndex.com. Any other way for people to track this and follow you?
Ed Butowsky: That is the best way. I don’t do much more than publish it every six months and then do some TV shows and radio shows to talk about it. It is just ironic that today was the day I released it from 2015 and I was on your show. I have got to tell you, you do a great job. It is a pleasure to be on your show. Thank you.
Chris Martenson: Thank you so much. I really appreciate your time today and I’d love to revisit this in six months perhaps.
Ed Butowsky: Look forward to it. Thank you.