Inflation Reality 2000-2018

  • Employed US population 2007-2018 is down 1.29%
  • Reported Consumer Prices up 47.84%, actual prices up 68.20% to 135.60%
  • 2000-2018 total Federal Revenue increased by 63.54%
  • 2000 to 2018 Federal debt increased by 265.30%
  • Average Treasury yield prior to “Economic Stimulus” = 6.26%
  • Average Treasury Yield since “”Economic Stimulus” = 2.59%
  • Each Taxpayer’s portion of the national debt, $44,069 to $142,698
  • If rates normalize debt service cost would consume nearly 40% of total Federal Revenue.
Actual Median Income Gold Price Income in Gold 2000-2018
2000 $41,990 $280 150 ounces
2018 $59,039 $1,270 46 ounces
Decrease -69.03%
US Income & Population 2000 – 2018
Median Income Adjusted 0.01%
Median Income Actual 40.60%
Actual Income in Ounces of Gold -69.03%
Employed US Population -1.29%
Unemployment Rate -0.06%
Reported Consumer Prices (CPI) 47.70%
Growth in Federal Revenue  63.54%
US Population Growth 16.60%
Growth In Federal Debt 265.30%
Growth in Debt As A Percentage of GDP 83.60%
What Artificially low rates has cost savers 2009-2018 6.34 trillion
Increases To Consumers 2000-2018
Federal Debt Per Taxpayer 223.81%
Median Home Price 98.40%
Mortgage Debt Outstanding 99.60%
Median Rent 74.40%
Groceries 91.90%
Automobile (Honda Accord #1 Seller) 48.97%
All Consumer Energy Costs 89.60%
Consumer Gasoline Prices  115.30%
Heating Oil  151.20%
Consumer Electricity 68.20%
Personal Health Care 135.60%
Consumer Medical Care  89.10%
Tuition, school fees, childcare 132.30%
Water, Sewer Trash 108.80%
All Sectors; Debt Securities and Loans; 152.03%
BLS.GOV Inflation Calculator 47.84%
Average 100.22%
Spending & Debt 2000-2018
Gross Public Debt 247.46%
Federal Debt 265.29%
Interest Paid On The National Debt 21.05%
Total Annual Federal Spending 137.07%
Fed Annual Spending Per Capita 103.31%
Annual Healthcare Expenditures 246.23%
Annual Healthcare Per Capita  197.02%
Annual Defense Spending 142.19%
Annual Spending Welfare 142.18%
Annual Federal Pensions 141.74%
Annual on Social Security 120.51%
Federal Debt to GDP  83.60%
Total State Debt 118.18%
Total State Spending  131.58%
Total Local Debt  113.33%
Total Local Spending  83.83%
Local Annual Spending on Education 117.71%
Average 141.90%
Gross Domestic Product (GDP) 2000-2018
Non Adjusted Growth in US GDP 88.54%
Non Adjusted GDP to Federal Debt 87.13%
Adjusted GDP to Federal Debt  83.60%
Stocks 2000-2018
Nasdaq 100 98.40%
DOW 125.18%
S&P 105.15%
Average 109.58%
Commodities 2000-2018
Gold 356.18%
Silver 212.21%
Platinum 85.74%
Palladium 104.29%
Copper 267.86%
Median Home Price 98.40%
Crude Oil 145.63%
Wheat 125.21%
Corn 82.55%
Soybeans 102.46%
Cattle 61.76%
Cotton 67.82%
Lumber 71.39%
Average 137.04%
Non US Stock Indices
DAX (2001) 146.43%
Swiss Market Index 24.36%
CAC 40 -3.15%
Euro Stoxx 50 (2001) -24.09%
Average 35.89%

Looking at the hard numbers it’s evident that true US inflation is running much higher than reported inflation.

This under reporting might be acceptable if  median income was rising as quickly as true inflation but it’s not, Median Income from 2000 to 2018 was up a mere 0.0085% (adjusted) 40.60% (actual)  while reported inflation was up 47.70% and true inflation over 100%.

During “Economic Stimulus” quality of life for US citizens has deteriorated faster than any other period since the Great Depression.

Why does the BLS.GOV under report inflation?

By under reporting inflation the US Government has been able to suppress interest rates, with it debt service cost. Currently the average interest rate paid on US Government Debt is 2.52% or 3.74% below the 20 year average of 6.26% prior to “Economic Stimulus”.

Average Treasury rates prior to “Economic Stimulus” = 6.26%

Average Treasury rates since “Economic Stimulus” = 2.59%

Primary Governmental Motivation

If inflation was being reported accurately and rates normalized it would cost the US. Government an additional 790 billion annually in debt service cost.

Should rate normalization occur, annual debt service cost would be greater than 1.3 trillion, consuming nearly 40% of all tax receipts.

Projected budget deficits would increase from 850 billion in 2018 to over 1.6 trillion.

Secondary Governmental Motivation

Currently desperate depositors looking for higher interest income to survive have been sucked into Treasuries with longer dated maturities.  This has enabled the Federal Government to “fix” its debt for the longest period of time at the lowest rate on record.

As rates rise the liquidation price of these Treasuries will fall for example, if a 10 year is trading at 100.00 = liquidation value $100,000 with a yield of 3.00% should rates rise by 2.00% this Treasury will be discounted by $20,000 with its liquidation value falling from $100,000 at 3.00% to $80,000 at 5.00%. (10 year X 2.00% – $20,000)

My conclusion is the US and other countries will continue their inflation misrepresentations in an attempt to quietly monetize their debt. Their expectation is that incomes will eventually rise from inflation generating more tax revenue while at the same time the majority of Government debt is fixed greater than 6 years. End result increased tax revenue and discounted debt.

The upside is inflation misrepresentations, short-term rates rising, trade wars, and political tension with fuel major market moves in 2019 and beyond.

If you have questions send a message  or contact me

Peter Knight Advisor


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