Over the last 12 months, the purchasing power of your dollar has dropped at the fastest rate since 2011.
According to the latest data released by the Bureau of Labor and Statistics, the Consumer Price Index (CPI) jumped by 2.8% year-over-year in May. That follows on the heels of a 2.5% leap year-over-year in April.
In other words, prices are going up. Thats not good news for people who buy stuff.
Pundits and talking heads call a rising CPI inflation. But as Peter Schiff explained in his podcast last week, people often confuse rising prices with inflation. In fact, the CPI merely measures one effect of inflation.
Remember, a lot of people think that inflation is what happens to prices. Its not. Inflation is what happens to money. Thats where the word comes from. Inflate means to expand and prices dont expand. Prices go up, prices go down. What expands? The money supply. It expands during inflation, it contracts during deflation. A result of an expansion of the money supply inflation is that prices tend to rise.
And of course, the Federal Reserve drastically expanded the money supply in the wake of the 2008 financial crisis.
In simplest terms, the continual climb in CPI means you pay more for less. The purchasing power of the dollar fell 2.93% in May from a year ago, the fastest drop since November 2011.
This graph shows the persistent downward trajectory of the value of a dollar.
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