The way they measure CPI has changed dramatically from earlier in the century until today. The most dramatic changes occurred in the early 1980's. The net effect of this is that reported CPI is LOWER than it would have been otherwise.
If you were to use a consistent method of calculating CPI throughout the century, you would find that we have OVERSHOT the trendline to the downside.
Seth Klarman (Baupost) recently noted that if the old way of calculating CPI was used, it would show upwards of 10% inflation...reported is ~2%.
If this "old way" of calculating CPI was used in this graph from 1980 onward (where the big changes occurred in CPI methods), the graph would look dramatically different.
The way they measure CPI has changed dramatically from earlier in the century until today. The most dramatic changes occurred in the early 1980's.
When Social Security benefits were first indexed for inflation in 1975, the government didn't appreciate the long-term ramifications until a few years later. When you see the graph which begins in 1975, it skyrockets in 1979 and 1980, both years of double digit inflation. They realized they had an out of control tiger by the tail and needed to do something quickly, which they did. I understand that if the COLA's were still figured the same way they were in the mid-70's, Social Security checks would be 50% higher today.
the so called bulls aka bubble deniers on Pnet dont believe in home prices being flat across the past decades. Therefore they ignore peak prices in 1989 did fall back to 1975 or if you like early 80s prices plus inflation by mid 90s.
I don't think it's a matter of conspiracy; I think it's a matter of malcompetent handling. They even acknowledge that consumer substitution behavior makes their index pretty flawed when making historical comparisons.
2% is definitely bogus, however they reach that number. Anybody that eats, uses gas, turns on the lights, wears clothes, etc. knows they are paying noticeably more for everything--whether the above counts as inflation or just dollar devaluation.
Look up the Boskin Commission and then tell me that the BLS hasn't changed how the math is done. It may not be extreme, but 0.5%-1.0% over 20 years starts to add up when you are trying to discern long-term trends.