Schiff, Lyster and Yahoo! talk inflation

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New York Times columnist and economist Paul Krugman is among those who recently took aim at Schiff for his inflation predictions, saying people in Schiff’s camp need to rethink their approaches to modeling the economy. Schiff in turn has responded in an article and video post, attacking the CPI as “meaningless.”

“It is sheer propaganda,” Schiff tells The Daily Ticker. “Prices are rising at a much more rapid rate than the CPI would suggest.”

Schiff points to changes in methodologies for calculating CPI as one problem. The index reports on price movements and consumer choices and substitutions. Schiff looked at Bureau of Labor Statistics price changes for 20 goods and services between 1970 to 1980 and again between 2002 and 2012, decades that Schiff says were both periods of large deficits and loose monetary policy.

Schiff found that his basket of goods increased 61% faster than CPI for the period between 2002 and 2012. In contrast, his basket rose just 5% faster than CPI from 1970 to 1980.

“How can you believe these statistics when the numbers are so flawed?” Schiff asks in response to his research on CPI. “I don’t care what the government is telling me. If the government weatherman tells me it’s a sunny day and I can see it’s pouring rain, I’m not gonna believe the government, I’m gonna go outside with an umbrella.”
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