Inflation pain is worse than the CPI indicates, but you already knew that
We all intuitively know that prices are rising faster than the Consumer Price Index (CPI) indicates. We feel the pain every time we go to the grocery store or gas station. But just how much is price inflation impacting us here on Main Street? I started pondering this question the other day when I ran across a graph tracking the price of a can of Campbells Tomato Soup since 1895. Youll notice an interesting phenomenon. The cost of a can of soup remained relatively stable until around 1973, when it suddenly started to climb more rapidly. And what happened in the early 1970s? In 1971, President Richard Nixon severed the dollars last connection with the gold standard, making it a purely free-floating fiat currency. When he announced the closing of the gold window, Nixon said, “Let me lay to rest the bugaboo of what is called devaluation,” and promised, “Your dollar will be worth just as much as it is today.” Well, Campbells begs to differ. Since that fateful day, the U.S. government, supported by the Federal Reserve, has aggressively devalued the dollar by printing more and more of them. This would have been impossible with the monetary discipline imposed by a gold standard (which is exactly









