Because you will not believe your eyes
--The Tubes
Interesting chart showing the disposable income. Over the past decade, real income has basically gone nowhere for the median household.
'Real' income means that it has been corrected for changes in the CPI. For example, if your salary increases by 5% but the prices of goods and services also increase 5%, then your 'real' income in terms of purchasing power has not changed.
There is a fair amount of evidence that the goverment is under reporting the CPI and has been for many years. Some estimates suggest that if we compared apples to apples with older methodology, the CPI is increasing at triple the currently reported rates.
If that it true, then what is the real trend in real disposable income over the past decade?
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So, why hasn't CPI — what the BLS calls "the most widely used measure of inflation" — risen as fast as the mountain of money the Fed has created? The government doesn't want it to. As the BLS website explains; "The index affects the income of almost 80 million people as a result of statutory action: 47.8 million Social Security beneficiaries, about 4.1 million military and Federal Civil Service retirees and survivors, and about 22.4 million food stamp recipients." And that's not all; the cost of school lunches is affected by CPI, as well as contracts in the private sector involving rents, royalties, child support payments and alimony are tied to changes in the CPI. The government clearly has a vested interest in suppressing CPI.
~Doug French
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