Stunning Chart: The Real Rate of Inflation and How to Protect Yourself

by | Oct 27, 2010 | Emergency Preparedness | 23 comments

Do you LOVE America?


    The CPI, or Consumer Price Index, is the official measure of inflation in the United States. The government utilizes the CPI as a way to make adjustments to interest rates for things like TIPS (Treasury Inflation Protected Securities) bonds and entitlement payouts like Social Security. According to the Bureau of Labor and Statistics, the CPI for the month of August was 1.1%, which means that prices were up just 1.1% over the previous year. According to Federal Reserve chairman Ben Bernanke, this is proof positive that there is no inflation to be had, and that we are, in fact, in a deflationary spiral.

    This explains why those purchasing TIPS bonds to preserve their wealth via inflation protected interest adjustments in recent weeks were actually getting near negative interest rates – in some cases buying TIPS was an immediate loser in terms of capital gains. It may also explain why, for two years running, the U.S. government has failed to make upward adjustments to social security checks.

    On its face, viewing the government’s official numbers, the uninformed observer would assume that inflation really is under control, and that the immediate threat, as touted by mainstream economist is deflation. This has been used to justify what has been referred to Quantitative Easing 2, or QE2, leading to ever more money printing by The Fed.

    As with all things “official,” however, the CPI lacks appropriate weighting for critical goods – essential goods – like food and energy.

    The following chart from Casey Research shows just how skewed the “official” CPI figures are.

    Hint: It’s as big a lie, if not bigger, than the unemployment numbers!


    While you may be able to get a great deal on debt-based assets like a house or a car, it’s obvious that the real cost of living, as measured in critically essential goods like food and energy, is skyrocketing – just as wages, credit availability and jobs are plummeting.

    In April of 2010 we wrote about the possibility of significant food prices increases by 2011, estimating that at current rates the price of food by April of 2011 may rise 20% – 30%. Admittedly, we may have been wrong.

    It’s may be much worse than we originally anticipated.

    If the US dollar continues to be debased by Federal Reserve and Treasury Department intervention, we can expect hyperinflationary price increases much sooner than we think.

    The hyperinflations of the Weimar Republic and Zimbabwe started in similar fashion.

    The first few years saw price increases of anywhere from 10% to 35% on foodstuffs. Within five years however, they were experiencing significant price jumps and overall instability with their currencies, topping off with inflation rates well above 100,000% per year. It is a truly terrifying proposition.

    What is the best way to protect yourself against such price instability?

    Ideally, you’d want to be invested in hard assets – things that will actually be worth something when paper money is not.

    A number of ideas come to mind, and should be able to fit most any budget:

    • Gold (physical bullion preferable)
    • Silver (physical bullion or 90% junk silver for those on tight budgets)
    • Stored dry goods such as wheat, corn, rice, beans, oils & fats, sugar, salt, coffee, tobacco
    • Tools
    • Guns, ammunition
    • Skills (developing skills that will be tradeable for other goods is just like having cash in your pocket. Can you sew, or grow food, or machine tools, or weld?)

    For those who have not yet taken steps to protect themselves against the possibility of inflation – hyperinflation – take another look at the chart above. Historically, for the last 100 years, the US dollar has lost over 95% of its value. Do you think The Fed or US government will implement policies that aim to change this trend?

    For more information about hyperinflation and what you can do, we recommend the following articles:

    What is money when the system collapses?

    Hyperinflationary Depression – No Way of Avoiding Financial Armageddon


    It Took 22 Years to Get to This Point

    Gold has been the right asset with which to save your funds in this millennium that began 23 years ago.

    Free Exclusive Report
    The inevitable Breakout – The two w’s

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      1. There’s something funny about the natural gas item.  There has been about a 25% loss y-o-y in the NYMEX contract.
        That low price makes natural gas the cheapest investment now of all of the assets charted.  Buy some shares of GAS.TO at $2.60 or UNG for $5.45 instead of taking the spouse out to eat tonight.

      2. Doesn’t it seem coincidental in a way that the time most boomer’s are retiring that this is the time that there’s NO inflation, and hence NO COLA?

        While Uncle Ben at the fed keeps rates at 0 for an extended period which also effects retirees that actually saved any money to use as a supplement to SS. 

        All to push anbody with any funds into the BS market.    (makes the CNBC booya boy happy as shit)

        I think all this crap was calculated out back when……….because it was known the “too big to fail” had already broke the country.

      3. Yes, & you will not own the shares, pay taxes (increasing) & not hold the stock certificate.  Commodities?  Bank holidays soon?

      4. I knew that TIPS would come back to bite the owner.  Read that also this week Mac.  Great job on reporting up to date!

      5. Never fear!  The new Congress is going to fix everything!  We won’t need sites like this one anymore!   (do I need a sarc. tag?)

        What is the best way to protect yourself against such price instability?

        Mac,  you left out growing  Pot.   This could become the easiest cash crop to grow… I am sure it will be very trade-able…..just saying
        (not advocating that anyone do it)  lol

      6. When I was a teenager, I said I would never sew – that was boring!  Now, I am so glad that I have learned to sew and am quite good at it.  I can cook and do small repairs around the house as well.  These things may come in very handy, more handy than my law degree. 

      7. Obama……….destroyer of a nation. 

      8. People made comments about what Alex Jones said about how the Elites will stay in bunkers in the Denver air force base.  I heard Jones’s interview and what Jessie Ventura said as well.   Misleading information and misled the sheeple. Alex Jones is just a SHILL.
        Infrastructure (airport, freeways…) are the FIRST ones they target to bring everything to an halt and create chaos (Ex: Lebanon, Vietnam wars..)
        The elites will be in bunkers which were built with shock absorbers inside a huge granite mountain. 
        A small nuke might not have a big impact unless it’s right on the target. 

        But a big nuke ….. well, you get the picture. Correct me, if I am wrong.

      9. These numbers are completely misleading, for example copper declined approx. 74% from a high in Sept. 2008 at $4.00 to $1.20 in Feb 2009. by Aug 2009 it reached $2.90 it’s now $3.78 back to where it was before the selloff. Wheat in 2008 was at 1380, it declined to 475, and the near month contract on wheat is now 703, still roughly 50% off its high in 2008. This is true for almost all the commodities except the precious metals.
        If you are going to make a case for this at least do your homework and put things in perspective. It’s this kind of misleading crap that our Government and the media put forth every day are you any different?

      10. R U talking about a crowd pleaser Jane?

      11. the real inflation rate is near zero. the evidence for this is that there has been no social security raises in the past two years. this is wonderful and aptly demonstrates that our wonderful  federal reserve banking system as well as bernanke, summers, rubin and geithner are amazingly effective in preserving the purchasing power of the almighty dollar.                                         

        gold and silver are junk metal relics and will just rust away while nice new crisp ten dollar bills will always be recognized by everybody under all conceivable circumstances as the exchange medium of choice all over the world. remember, the mighty dollar is the reserve currency for the entire world and is recognized throughout the entire world as the premium currency. 

      12. Using gold as a standard (like they used to) the dollar has dropped more than 95% in the last 40 years (not 100 years as discussed in this article) . Of far greater concern should be the fact that after rallying through the 1990s, the dollar has dropped 85% since 2001…  See Figure 6 at

        Just reading mushroom’s comments above, I’d like two of whatever he’s drinking (or is he just being incredibly sarcastic?)

      13. “ The bond forces dividends, which triggers an increasing forward demand for future increased money supply.  These dividends are not redeemed to the Treasury.  That’s why deflation is so destructive to the Fed:  The entire monetary system is built on the assumption of a perpetually *increasing* money supply.  Even a “constant” money supply would trigger system collapse.
        Further, these dividends and “profits” are “in the noise”.  In percentage and absolute terms, they don’t matter.  The power comes in the ability to front-run public announcement of Fed actions.  Do you know how big the Nov 3 action will be?  The Fed and its friends do.  Check out the perfect Fed Front-Running Records to see who are the Fed’s friends.
        That’s also why the Fed monetizes every Treasury auction.  It knows this money won’t ever be paid back (e.g., they are merely debasing the currency), but they don’t care.  It doesn’t matter.  The magic is being able to use “inside information” to front-run and manipulate all market activity.
        Remember, the Fed is the “head regulator” for the entire banking industry.  In addition to controlling the money supply and the price of money, they get to see *all* the numbers that nobody else gets to see.  They get to cut international currency swap deals without vote and without review.  They get to screw sovereigns anywhere on the planet whenever they want.  Now *that* is power.  The “profits” that theoretically are redeemed to the Treasury through accounting tricks mean nothing whatsoever.”

        This is NOT for mushrooms to understand … .
        I love to see that some ppl. also  fed you well, MUSHROOM !

      14. PS.
        Ever heard of Mr. Phill Gross ?????

      15. Bill Gross, I meant. Busy thinkin` how a
        lap-dog licks his b.lls, sorry for the typo ….

      16. DAMN!  WHAT A RUSH!  It says in the manuel that if there are butterflies around afterward, there’s no danger. 

      17. I don’t care where these multi-trillionaires are.  They seem like untouchable and unstoppable.  We must prepare for the society going into the darkness and chaos.  Yes, we are doomed, but the mega-rich might be in:
        -  The bunker in a solid rock mountain in Cheyenne, or

        -  A non-combat unsinkable carrier (costing multi-billions of $$$), which is fully loaded with “Aegis Defense System.”

        -  A non-combat fully equipped system.

        -  Undetectable submarine.
        Well, they sit inside one of these and monitor sheeple, how fun!
        Building a SAFER society, we must educate the mass.

      18. A metal or PVC hooped structure that is covered with plastic will extend your growing / holding season to most of the year even in colder regions. That would mean fresh greens and veggies to eat or share/sell, that don’t need to be canned or frozen or stored.  That is  better than cash in the bank.  And extra or culled greens become animal food or worm food. Worms provide supplemental protein to your small animals diets. More protein means faster growth or more eggs. 
        A rainwater recovery system will help decrease water bills or provide water if the power goes out (everyones water needs electricity to pump it).  Tanks can be burried or above ground where they won’t freeze.  Think food safe but cheap and sturdy.
        Precious metals are nice but get the basics in place first.   A bag or grain is great but not too interesting or nutritious without fresh foods.  Take a trial run. Turn off your power and water for 3 days and cook from your emergency rations. How does it go? What is missing?   This spring will you need generic allergy meds?  Buy them on sale now.  Will you need athletes food powder or cream. Ditto.  Think ahead about your day to day actions and what you use. Then think seasonally.  Do you have a can of cranberries or yams in the pantry?  Think of what you don’t produce. It’s the details that make things nicer. Save your money for taxes and get your pantry well stocked before you buy precious metals.

      19. Fear rules here.

      20. Just because the facts are scary doesnt mean this is fear mongering. It is what it is. is teaching people what they ultra rich already know. and yes, everyone should know what is imminent. being proactive will save your ass. the sheeple will still be sheeple. but it doesnt take a genius to see the writing on the wall.

      21. The real inflation is staggering. My wife makes most of our food from scratch and has noticed basic things like flour, sugar, beans, rice, etc. have sky rocketed in price. I am wondering why see 74% rise in the cost of wheat and yet silver in the 2011 has been flat. I am hedging my bets on hard assets such as silver and gold for safety. Toilet will literally have more value when TSHTF than the US dollar.

        Let’s lock and load up!


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