Have You Heard of the Chained Consumer Price Index? Time to Learn as Social Security Benefits May be Altered

Some interesting leakage on on a proposal to slow the growth of social security benefits as part of the debt ceiling negotiations.  It appears the idea being floated is to use an inflation gauge that is counts even less of real inflation than the consumer price index (CPI).  For those of us who already think the CPI (which has been adjusted in myriad ways since the 1980s) undercounts inflation – a move to an even more skimp way to count inflation would be incredibly bemusing if not for the fact it is going to impose serious hardship on those at the lower end of the economic scale.  Of course in our political system, those are the folk who do not have a lobbyist group nor offer much in terms of monetary contributions to campaign funds, so their interest are not really relevant to the powers that be.

Frankly I had never heard of the ‘chained consumer price index‘ until yesterday.  If you have not – it’s probably time to learn.  By using this measure the politicos can ‘cut’ social security benefits, without actually technically using the word ‘cut’.  Genius.

Larger picture – the U.S. plan to deal with the massive deficits is to devalue the dollar … which will create ever more inflation.  Which can be under reported even further using such snazzy measures as the ‘chained consumer price index’.  Which will allow the powers that be to claim there is little to no inflation (hence you get no COLA inflation) as they devalue the country’s currency to pay off our debt.  I love it when a plan comes together.

Did I mention it’s genius?

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

Follow Mark on Twitter @fundmyfund.

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