The Little Book of the Shrinking Dollar: What You Can Do to Protect Your Money Now

Chapter Six

Something’s Gotta Give

Maintain Your Standard of Living

Wages are falling—the real income of a typical American household is now below the level it was in 1997.

Since 2007, Americans’ collective net worth has lost $5.5 trillion. That’s an 8.6 percent drop that the Federal Reserve is willing to admit to. We’ve seen tallies closer to $7 trillion. What they don’t ’fess up to is the creeping ways they’ve stolen your wealth.

Take consumer prices. The Bureau of Labor Statistics loves to massage the numbers.

Take January 2012, the year-over-year increase still looks ugly—3 percent. That’s before all the geometric weighting, substitution, and hedonic adjustments.

Factor that out and report the number the way it was back in Jimmy Carter’s day—what John Williams at Shadowstats.com does—and the real annual increase is 11.1 percent.

The government has been calculating the consumer price index since 1913. Each year, it starts to play more games. Consider this kind of thing, which is pretty small potatoes: The government assumes you’ll switch from steak to ground beef and calls it even.

When you hear the reports, note what’s left out. That’s how the President in 2010 could claim the “lowest inflation rate in a decade”—he wasn’t counting food or oil prices.

Consider a mixed basket of goods in 1790 cost you a hundred bucks. In 1913, you’d have paid a little more, $108. By 2008, you’d have to have forked over $2,422 for an equivalent basket.

But here’s the real reason why you wouldn’t ...