"Inflation" is defined by a rise in prices for a defined set of goods and services. As simple as that sounds, the study of inflation is somewhat helter-skelter. It’s nowhere near an exact science with economists split on the cause of rising prices. Some believe it is associated with the growth of demand exceeding the growth in supply. Others think it signals the oversupply of money.

Regardless of who’s right or wrong, inflation is for real and is currently being caused by both factors.

We definitely have an overabundance of money. This is made apparent by the ever-decreasing value of the American dollar in the foreign exchange markets. It’s not that the Canadian dollar or the Euro are getting stronger, it’s that our money is getting weaker. Our nation has too many dollars out there, whether in the form of current currency (real and ethereal) or "future" currency (US Treasury bonds) with very little to back it all.

As the value of our dollar has shrunk American consumers have seen sudden, extreme shifts in the purchasing prices for nearly everything they want or need because of demand. For the sake of this conversation, let’s focus on some needs. Fuels continue to rise out of control, with gasoline 38% more expensive than it was this time last year, propane 25% more and home heating oil 35% higher. Add to that money-drain the higher costs of food associated with the corn-consuming ethanol fiasco, perfectly exemplified by last week’s Thanksgiving dinner which was 11% more costly than it was in 2006. Taxes could fit into this equation as well, as the "consumer" has no choice but to pay them: for the past decade property taxes for school funding have risen by an average of 7% per year across New York while city and municipal taxes in that same period have gone up by 5% per annum.

These items all constitute "needs" and only represent a piece of the typical consumer’s market basket. Discretionary spending has been hit, too: Consumer goods and durable goods are all up thanks to the higher costs of inputs such as plastics, metals and shipping.

Our ability to buy decreases on what seems to be a weekly basis. Yet, the government would have us believe otherwise. Perhaps as confused (or sheltered) as some economists may be in regard to inflation, the Federal Reserve and the Bureau of Labor Statistics continue to deny its existence. Their preferred indicators of inflation (Personal Consumption Expenditures Index and Consumer Price Index, respectively) have it pegged at 2.5% and 3.7%. Those values are in stark contrast to reality and borderline comical.

The Federal Reserve’s PCE is flawed by design and an insult to the working class. It is undeniably a fictional statistic as it is based upon Core Inflation, which means it looks at everything except food and fuel (and taxes). This begs the question, how can a government accurately portray the buying power of its peoples if it chooses to ignore what makes up the majority of their market baskets? Many families can afford only food, fuel, and rent. By using a statistic like the PCE the federal government is saying these people can buy just as many items as they did last year. As my numbers proves – and as we all know - they cannot.

The BLS’s CPI is just as weak. The index is created from a random, quarterly sampling of 10,000 families, questioned in the form of interviews. They are asked about their spending habits and are not required to maintain journals. Because of that, it can be said without a doubt these families will in no way remember everything they bought or spent over the three-month period. And, these families are selected only from larger cities, so many of them will not have the gasoline expenditures that suburban and rural people have because they may rely on walking to work, public transportation or shorter commutes. Also, just as the PCE, this statistic ignores what’s spent on taxes.

As these statistics prove, economics is a strange science and one, especially in the hands of the government, fraught with weaknesses. The economists fail (or don’t want to) see that Americans are getting less bang for our bucks. As we spend more on gasoline, food, and government we have less to spend (or invest) on everything else and, even then, we have to cut back on life’s necessities in order to balance our budgets. Inflation is real (we can all feel it) and we don’t need number crunchers telling us it’s not.

As these statistics prove, economics is a strange science and one, especially in the hands of the government, fraught with weaknesses. The economists fail (or don’t want to) see that Americans are getting less bang for our bucks. As we spend more on gasoline, food, and government we have less to spend (or invest) on everything else and, even then, we have to cut back on life’s necessities in order to balance our budgets. Inflation is real (we can all feel it) and we don’t need number crunchers telling us it’s not.