zerohedge | Statistics have become very misleading: in
particular we are being badly misled into believing that the US is
teetering on the edge of price deflation, because the US official rate
of inflation is barely positive, a level that US bonds and therefore all
other financial markets have priced in without accepting it is actually
significantly higher.
There are two possible approaches to assessing the true rate of price inflation.
You can either reverse all the tweaks government statisticians have
implemented over the decades to reduce the apparent rate, or you can
collect a statistically significant sample of price data independently
and turn that into an index. John Williams of Shadowstats.com is well
known for his work on the former approach, but until recently I was
unaware that anyone was attempting the latter. That is until Simon Hunt
of Simon Hunt Strategic Services drew my attention to the Chapwood Index, which deserves wider publicity.
This is from the website: "The Chapwood Index reflects the true
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." It is, therefore,
statistically significant, and it consistently shows price inflation to
be much higher than that indicated by the Consumer Price Index (CPI).
