Video - The Potential Impact Of The Obama Budget On Average Americans
Spent a lot of time with my friends, Melissa Wilson and Mike Iscovitz, on local Fox26 News discussing Obama's proposed budget. We discussed a wide range of topics relating to Obama's proposal from the real impact of "Chained CPI" on retirees as well as those currently employed, the actions by the Bank of Japan on U.S. interest rates and why the University of Texas has invested so heavily into gold.
The one interesting aspect of "Chained CPI" is that its formula automatically lowers the rate of inflation as measured by the government. Here is the question:
"If something is measured in order to provide information on which decisions can be made - what good is that information if it has been tampered with in order to give a different result?"
For example: There are a group of students that all take a test. The students caveat is that the students can only graduate if the average of all of the test scores equals a "B." However, the University receives more money the longer these students remain in the class and do not graduate. Therefore, the University issues a new rule which says that instead of using a simple average of the test scores to determine the class grade in the future only the bottom 2/3rds of the scores will be counted. Obviously, this automatically lowers the overall class grades and keeps the class from graduating.
While this example is a bit extreme this is the impact of "chained CPI." The calculation of the consumer price index (CPI) is to allow individuals and businesses to plan for the future by adjusting for higher costs of goods and services in the future. However, by artificially suppressing the calculation of that inflation it leads to false results of what is really occurring within the economy. This is why the average American is so frustrated by government reports the inflation is tame while food, gasoline and energy costs have soared consuming more of their budgets.
While "chained CPI" is good for the government, as it lowers the payout amounts of welfare and social benefits, it is bad for both retirees and the average working American. For retirees they will receive less in retirement benefits and workers will see smaller annual cost of living adjustments. The problem for them is that the real costs of living are rising at a far faster pace.
The end result, as discussed below, is not good for you or the economy.
What Is Chained CPI And The Impact On Average Americans
The Impact Of Obama's Budget On The Economy
Obama's Budget, Bank of Japan and U.T.'s Gold