You're Being Lied To. Here's Why...

Low inflation is merely a lie propagated by those who benefit from it: The Fed, which seeks to manipulate interest rates and maintain the illusion that prices are stable (even when they're not). Wall Street which leverages the Fed's free money into monster gains by blowing up bubbles in stocks and housing. And the federal government, which is propped up by a $30 trillion debt pile. Low inflation is merely a lie propagated by those who benefit from it: The Fed, which seeks to manipulate interest rates and maintain the illusion that prices are stable (even when they're not). Wall Street which leverages the Fed's free money into monster gains by blowing up bubbles in stocks and housing. And the federal government, which is propped up by a $30 trillion debt pile. [Outsider Club logo] You're Being Lied To. Here's Why... [Jason Simpkins Photo] By [Jason Simpkins]( Written Apr 09, 2021 For more than a year now, I've been arguing that the rate of inflation isn't what the government or the Fed says it is. [It's actually much higher](. And I'm not the only one who thinks so. As we get further and further into the "recovery" more and [more data is coming to light to prove my point](. However, it's not enough just to accept that we're being lied to. It's just as important to talk about why we're being lied to. What is the incentive for the government, the Fed, and even Wall Street to downplay inflation? And how are they able to get way with it? That's what I'm going to tell you today. “God Chips” Are Our Future Specifically, I’m talking about microchips. It’s not a sexy story but a necessary one that you need to know about. You see, with the advancement of artificial intelligence, 5G, and pretty much everything around us, there’s never been more of an overload on our computing system. It’s crucial that microchips keep up with all these cutting-edge technologies. Thankfully, microchip developments are already underway so technology like AI can work faster and more efficiently. There’s one company I’m looking at right now that’s leading the pack. The best part is this game-changing company is holding 14,000 patents for this technology, and it’s currently preparing for mass production. This can turn a mere $500 investment into a fortune. [Click here to get the details...]( Cooking the Books First, let's talk about the Consumer Price Index — the key measure used to gauge inflation. This is the big number that gets printed in all the newspapers, and crucially, that the Fed relies on to justify its monetary policy. Unfortunately, it's rife with distortion. For one thing, there is a tremendous lag in the CPI's reporting. After all, this is a survey in which individuals and families are asked to report on their expenses. Those results are then synthesized. But that takes time. So when the Bureau of Labor Statistics actually gets around to adjusting its CPI basket, the data it's collected is already a few years old. For example, CPI data in 2016 and 2017 was based on data collected from the Consumer Expenditure Surveys for 2013 and 2014. That's problematic enough in normal times, but it's been made worse by the pandemic, which has suddenly and drastically altered Americans' spending habits and inhibited more thorough forms of data collection. Indeed, the February CPI report came with a disclaimer that read: Data collection by personal visit for the Consumer Price Index (CPI) program has been suspended since March 16, 2020. When possible, data normally collected by personal visit were collected either online or by phone. Additionally, data collection in February was affected by the temporary closing or limited operations of certain types of establishments. These factors resulted in an increase in the number of prices considered temporarily unavailable and imputed. So even for an inaccurate indicator, it's now even less accurate than normal. But that's not all. Much of the CPI is actually fundamentally distorted by design. Housing is the best example of that. You see, actual home prices aren't even in the CPI basket. That's because the Bureau of Labor Statistics (BLS) considers them investments rather than consumables. And the same is true for any spending to improve houses and other housing units. That's not great. But what's even dumber is that the government uses a stand-in measure, which is to ask homeowners the following question: "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?” How stupid is that? The #1 Gold Stock of the Decade This firm is potentially sitting on the richest undeveloped gold mine on Earth. It trades for around $4 a share right now. But soon it could be trading for $40 or more. [Click here]( for details. We're basically outsourcing home price information to a hypothetical rental appraisal of random homeowners. The end result is that while the Case-Shiller Home Price index tells us home prices rose more than 10% in 2020, the owned-home rent-equivalent costs calculated in the CPI have risen just 2%. Another good example is health care costs, which have soared outrageously for decades now... [Rising Healthcare Costs 2] You'd think this would be evident in the CPI, but it isn't. That's because the CPI excludes medical costs paid through employer insurance premiums, along with any tax-funded medical care, including Medicare Part A and all of Medicaid. As a result, medical expenditures account for 18% of the overall economy, but just 9% of the CPI, and health care costs have risen at twice the rate the CPI shows. That, in a nutshell, is how you're being lied to and manipulated. Now let's talk about why... Why Lie? If a rube like me can do some digging and quickly deduce that the CPI is a sham, why don't the super-smart government scientists at the BLS just make some adjustments to better reflect actual inflation? Why don't the Ivy League analysts on Wall Street provide a more thorough measure to counterweight the government narrative? I'll tell you... For the government it comes down to this: Inflation is bad. The principle problem with it is that it undermines confidence in fiat currency. We all know paper money isn't really worth anything — it's backed by nothing more than the word of the government. Again, that's already a bit problematic. But it'd be an even bigger problem if the average American came to realize that their money is not only worthless, but in fact, growing increasingly worthless by the day. It really raises questions about the entire system. It's a political nightmare, too. As we've seen in previous instances of hyperinflation, the public generally gets pretty angry when prices soar, especially when their wages are stagnant (as they have been here for sometime). There are also more practical problems. As I've pointed out over the past few months, higher inflation means cheaper bonds (debt) and higher interest rates. And that's a real problem for the government, which is financed by debt. It's also a problem for corporations, hedge funds, and the wealthy who rapidly grow their fortunes by borrowing interest-free money, "investing" in things they otherwise wouldn't be able to afford, and then reaping the rewards of the asset prices they've ginned up (see: stocks, housing). I've already told you that housing prices rose 10% last year, and it only takes a passing glance to see that the market is positively on fire. Did This $3 Firm Just Make Tesla Obsolete? There will be 12 million electric cars on the road in five years. And believe it or not, [THIS]( strange liquid could power every single one. [gcs nene liquid]( Don't believe it? See the proof for yourself... [Click here.]( Stocks, meanwhile, have climbed 50% in the past year. That's partly because of the COVID recovery, sure. But it's also because institutional investors have been borrowing big to finance their stock purchases. As of late February, investors had borrowed a record $814 billion against their portfolios, according to data from the Financial Industry Regulatory Authority. That's up 49% from a year earlier, and the fastest annual increase since 2007, just before the 2008 financial crisis. And prior to that the last time investor borrowings had grown so rapidly was during the dot-com bubble in 1999. So we're clearly on real solid footing there. Thus we see the "K-shape" recovery that's so often been alluded to, in which the richest 10% of households captured 70% of wealth created in 2020, while the bottom half got just 4%. That K shape, incidentally, is mirrored by inflation, which has had a far greater impact on poorer people. [Inflation by Class] None of this is a coincidence. Inflation is real and it's higher than the government wants you to know. Low inflation is merely a lie propagated by those who benefit from it: The Fed, which seeks to manipulate interest rates and maintain the illusion that prices are stable (even when they're not). Wall Street, which leverages the Fed's free money into monster gains by blowing up bubbles in stocks and housing. And the federal government, which is propped up by a $30 trillion debt pile. That's the grim truth about how you're being lied to. Fight on, [Jason Simpkins Signature] Jason Simpkins [follow basic]([@OCSimpkins on Twitter]( Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of The Wealth Warrior, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's [page](. *Follow Outsider Club on [Facebook]( and [Twitter](. Browse Our Archives [The Meaning of Life, or How to Invest Without Going Crazy]( [Vanadium Investing 2021]( [Magic to Mundane: A Tech Investing Checklist]( [Focus on Commodities — Not Empty Promises]( [Gold Set to Post Large Quarterly Loss]( --------------------------------------------------------------- This email was sent to {EMAIL}. It is not our intention to send email to anyone who doesn't want it. If you're not sure why you've received this e-letter, or no longer wish to receive it, you may [unsubscribe here](, and view our privacy policy and information on how to manage your subscription. To ensure that you receive future issues of Outsider Club, please add newsletter@outsiderclub.com to your address book or whitelist within your spam settings. For customer service questions or issues, please contact us for assistance. 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