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7 May, 2014 12:11

​Americans live on a statistical reservation

​Americans live on a statistical reservation

America's Bureau of Labor Statistics reports inflation in the US running at 1.5 percent.

This is dangerous nonsense. The 1.5 percent number depends on a misrepresentation of a key component: food. And it is this statistical hocus-pocus that is at the heart of wealth and income gaps (and revolutionary tendencies) in the US and around the world.

What percentage of your discretionary income is spent on food? If the answer is 40 percent or more then you are living on one of America's new statistically engineered reservations (i.e. open air prisons) or thinking about revolution, as we saw in Egypt and now Ukraine.

How does this statistical inflation mirage work?

Inflation numbers are presented by the government and the MSM in a way that implies homogeneity across all income and wealth brackets, but this is an illusion designed to mask pernicious financial engineering implemented to channel vast sums of money away from the many and into the pockets of a few financial engineers and bankers at the remaining TBTF (Too Big To Fail) banks on Wall St. and the City of London. "Financial engineering" is a highfalutin’ term, like calling garbage men “waste disposal engineers.” It is a term meant to deflect attention away from what are essentially government-sanctioned lies. Instead of reporting on the actual price movements of food in a representational way that indicate the true costs for the average person, the government's inflation “index” is rigged so that – and this is key – any accurate reading of food prices is excluded and therefore economic policies are conveniently flawed in ways that favor one class of Americans over another.

AFP Photo / Getty Images / Spencer Platt

Since food is the one essentially component in any household budget – by rigging the food price number in the index, by understating food's true costs, or simply omitting food costs from the index – government statisticians can claim that the overall trend in inflation is 1.5 percent, even though food prices are rising by close to 10 percent, and the overall inflation experienced by the average consumer is near 8 percent.

Misstating food inflation numbers helps the top 1 percent, since their monthly cost for food, as a percentage of their overall household budget, is less than 2 percent, so the true 10 percent rise in food cost inflation to them is negligible; whereas for the bottom 99 percent (and it gets worse the further down the socio-economic ladder you go), the same 10 percent food cost increase means a substantial loss in purchasing power and loss of wealth. And when you get down to the poorest of the poor, loss of life.

Rigging food prices by not including them in the official inflation index is a subtle form of gerrymandering at best. A closer examination of this government-backed charade looks more like statistical apartheid. The middle class and the poor are being squeezed out by rising rood costs that are not included in the government's calculations and since the government can't figure out where to put all these newly poor they create they imprison them (while the US represents about 5 percent of the world's population, it houses around 25 percent of the world's prisoners), or keep them in trailer park ghettos (the fastest growing real estate segment by private equity investors in America).

The added benefit for the 1 percent top-tier class of rigging inflation is to give them rhetorical (read: propaganda) cover to claim the economy is at risk of “deflation” and therefore interest rates should stay at record low rates (recently hitting 300-year lows in the UK and 240-year lows in America).

Low interest rates (controlled by central banks) lower the cost of borrowing for the purpose of making speculation cheaper and driving up the prices of so-called “assets” that comprise the bulk of the 1 percent’s wealth. (And when speculative bets go wrong, the same government that misstates the inflation number and controls the central banks, bail out the speculators too.)

Pretending food price inflation doesn't exist keeps the 99 percent poor and the 1 percent rich. But be careful. As we've seen recently, and throughout history (with the most famous example being France in 1889), when food prices eat into 40 percent of household budgets, the population revolts.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.