Getting A Handle On Inflation

by Rob Kirby | February 13, 2008

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Isn’t it amazing how officialdom preaches to us that inflation is under control – generally running in the 2 – 3 % range per year.

Isn’t it also amazing how the mainstream press [mostly print and television] gives unlimited amounts of face-time and exposure to a long list of ‘experts’ who espouse these views?

Equally amazing is how pundits in the contrarian’s community have painstakingly documented how the most widely reported inflation data has had systematic adjustments made to it so as to corrupt it beyond belief.

An alternative measure of inflation with a long history which is tabulated by private sources – beyond the direct influence of officialdom – is the CRB Index.

The CRB index [short for Commodities Research Bureau]. From their homepage on the web:

Since 1934, Commodity Research Bureau (CRB) has been the world's leading commodities and futures research, data, and analysis firm.

CRB delivers information on the futures markets to interested parties via a number of data products, email and print publications, fundamental services and B2B products. It also is home of the CRB Price Index, a global benchmark for measuring commodity price movement and developed by one of CRB's founders, Bill Jiler.

Now let’s take a look at how the CRB Index has performed over the past couple of years: 

Anyone can clearly see that the CRB’s take on inflation differs wildly from the view espoused by officialdom – having risen from sub-300 to 450 [50 % increase] in 25 months.

So, despite cat-calls in the mainstream media regarding how cheap it has become to buy a plasma-tv – it sure looks like inflation over the past couple of years has been perhaps running as high as 25 % per year. If we look at a few charts of things [over the same time-frame] that people really need to buy – to live – it does support the contention: 

Isn’t it also amazing when we look at another chart of M3 Money Supply [tabulated privately since the Federal Reserve stopped reporting] how money growth has ‘ballooned’ from the same date? This clearly illustrates how broad money growth has fueled the inflation depicted in the CRB’s data: 

No wonder the Federal Reserve prefers not to report M3 Money Supply data and to report inflation ex-food and energy, ehhh? Perhaps they should begin reporting accurate monetary aggregates and inflation data ex-plasma tvs and hedonic adjustments.

Copyright © 2008 Rob Kirby
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Rob Kirby | Kirby Analytics | Toronto, Ontario, Canada | Email | Website

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