Gary North's REALITY CHECK
REPEAT AFTER ME:
"THERE IS NO DEFLATION"
August 19, 2002

"There has been no price deflation, except for three months, since 1967. Those three months were early months of the recovery phase of the worst post-World War II recession on record, in the same year that the stock market boom began (August, 1982)."

This is obvious whenever we go to a grocery store, or fill up your gas tank, or go to a movie, or buy a subscription to a newsletter that announces, "Deflation is imminent! Ten Things to Do Immediately." The subscription price is no lower this year than last year, and is more likely higher.
The most accurate indicator of American price changes, in my opinion, is the median consumer price index. It is published by the Cleveland Federal Reserve Bank. Unlike the Bureau of Labor Statistics, which is under constant political pressure from both parties to produce non- inflationary results because Social Security beneficiaries receive a cost of living adjustment, which costs the government extra billions a year, the Median CPI is published by a legally independent, non-governmental agency. The site says: One commonly used technique for measuring underlying or core inflation is to exclude certain prices in the computation of the index, based on the assumption that these prices are the ones with "high-noise" components. This is the rationale behind the commonly reported CPI excluding food and energy data. However, economists Michael Bryan and Stephen Cecchetti have found a measure that forecasts inflation better than either the CPI excluding food and energy or the all items CPI: a weighted median of the CPI. . . . . .

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