Interpreting economic and financial reality

Editor's note: The most salient point about the following partially republished material from the Brownstone Institute is that the Covid attack on civilization "amounted to a gigantic transfer of wealth to elites, the largest in history, followed by a destruction of wealth of the middle and lower classes." So while this is true, here is something else to consider: the oligarch class are swimming in money. Governments around the world, including Japan (creators of QE), are becoming increasingly authoritarian because the modern debt-based fiat monetary system depends on centralized control to survive. For thousands of years humanity has lived under systems where power flows to those closest to the creation of money, while ordinary people absorb the cost through inflation, debt, and declining purchasing power. Despite massive technological advances that should lower prices and improve living standards, inflation continues because productivity exists inside the same debt-driven financial structure. Governments are not preserving prosperity as much as protecting a monetary system that concentrates wealth and power at the top. The result is increasing surveillance, rising socialism and fascism, heavy regulation (regulation protects the oligarch class), and economic pressure designed to maintain a system that many now see as no longer serving the public.
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Since Lockdowns, a 12% GDP Loss; Half of US Dollar Purchasing Power Stolen

BY Jeffrey A Tucker | June 2, 2026

Many of us have had the intuition that the economic damage from 2020 - including industrial stoppages, monetary printing, supply-chain disruptions, extended school closures, and general population demoralization - was in fact far greater than official statistics indicate.

What follows will shore up this intuition, using new techniques and numbers from an innovative project called RealityIndex.co.

It's true that official data is bad enough, showing a 26% loss in purchasing power, slow growth in output, and only marginal improvements in real income. The labor participation rate and worker/population ratio never fully recovered and continue to fall.

Output has been lackluster. It's supposedly running 2.3% which is about half the postwar norm for US economic performance. It feels like a general downshift. Official data shows a brief recession in 2020 followed by gradual economic recovery overall.

But is this even true? In 2024, Brownstone Institute commissioned a study (by E.J. Antoni and Peter St. Onge) that concluded that we have never really entered recovery after 2022. We've been in a technical recession since that time. They got this with some limited adjustments of price data bumped up against output data. That study was met with brutal attacks, with every critic falling back on official data and doubting the supposed extremism of the conclusion.

That's where matters have stood even as reports pour in concerning broken labor markets, no raises for 1 in 4 professional-class workers, and sketchy Gross Domestic Product (GDP) data that seems barely above zero thanks mainly to medical-sector subsidies, government spending, and social services. Then there are the learning losses showing dramatic declines in test scores among affected students.

We are left with real questions. How can consumer sentiment be at historic lows given that the overall data seems to raise no loud alarms?

We are left with real questions. How can consumer sentiment be at historic lows given that the overall data seems to raise no loud alarms?

In the meantime, Artificial Intelligence has come along to make these complicated calculations possible, ones that seek to discern and delineate the huge gaps between official data and reality. The goal is to come up with real data concerning real prices, sans the many different methods that the Department of Labor uses to adjust price changes.

For example, housing prices are not measured directly but rather converted to owners' equivalent rent (OER). Medical service prices are adjusted for consumption, not premiums or final bills. When consumers substitute one good for another, that is also factored in. When the quality of a good or service improves, the statisticians apply what they called hedonic adjustments, which are invariably designed to minimize price increases and never run the other direction.

Where does this leave those of us who are looking for a plain index of prices? A veil has been put over that basic question and answer, such that we don't know for sure. This matters tremendously for issues like raises, examining cost of living increases, taxes, and pension payments. Everything is adjusted for inflation to convert it to real valuations but if we don't have a clear number, what are we to do?

This is why we should be thrilled about a new study/service called the Reality Index. You are free to browse the site yourself and examine every aspect of the method. Essentially, the site owner, an independent intellectual in Madrid, Tom Elliott, has deployed tools of AI to wholly reconstruct price indices in a way that is consistent with actual prices. His results are absolutely eye-popping. I've examined the method here in detail and found no fault.

The Wall Street Journal has also taken notice. This is good news and raises the possibility that we can finally get to the truth.

The core of the problem is a constantly changing methodology in official data. The formula was changed eight times over 35 years. All the changes seem technical and vaguely justifiable, once explained. Adding them all up, you get wild distortions in the data that the index is supposed to reveal. All these changes came home to roost in the great inflation of 2021-2024, which might be entering a second wave right now.

In 1983, owners' equivalent rent replaced basic housing prices. The new formula was based on an estimate of what homeowners would have to pay to rent their own homes. But in real life, people pay mortgages, property taxes, and home prices. When home prices and mortgage rates rise faster than rents, the new formula understates the housing inflation real households face.

In 1996, the Boskin Commission announced that the Consumer Price Index (CPI) was overstated because people substitute higher-priced goods for lower-priced goods which are too slow in being calculated. The agency made the correction to eliminate the bias in the fixed basket of goods. The problem is that every single adjustment ended up forcing the reported rate to be less than a plain addition of the same goods over time.

In 1998, there was a new fashion for hedonic adjustments. This stemmed from an observation that quality is always improving, especially in digital goods and computer functioning. The idea is that you might be paying the same or even more but you are getting more bang for your buck with quality shifts. You guessed it: hedonic adjustments drew the inflation rate lower. Notably, hedonic adjustments never run the other way, raising prices when quality decreases.

In 1999, a geometric mean formula replaced arithmetic mean for most CPI components. This was intended to capture substitution effects. This was the change that ended up disguising the increase in medical service costs. By looking at consumed services rather than actual prices, the inflation rate in this sector ended up burying inflationary trends. This highly technical adjustment completely ignored all the ways in which substitution is a behavioral adaptation to inflation, not a reduction in the inflation experienced.

In 2002, we got a continuation of this same method with new "chained CPI" which changes the basket weighting based on new purchasing patterns. Sure, if people buy less beef and more chicken, the household will experience inflation in a different way. But this ignores the manner in which the substitutions themselves are a response to higher prices. In 2017, the new calculation was applied to taxes causing people to pay more than they otherwise would have under the old method.

In 2018, the hedonic adjustment strategy was expanded to a huge new range of products including smartphones, residential telephone services, internet services, and cable and satellite television. In 2020, at the same time the composition of M1 was changed and not retrospectively applied such that the data is essentially useless. Following money supply data became more difficult. Then in 2024, the Bureau of Labor Statistics stopped looking at the actual cost of medical services and started only looking at claims, completing the consumption-only bias against actual posted prices. In 2025, a month went by with no data collection at all.

So what happens when we strip all this away and examine actual prices as reported by the Bureau of Labor Statistics, without all the many adjustments? We find that a basket of goods and services that cost $100 in 1980 costs $515 per the Reality Index in 2025. The official CPI reports only $391.

Please go to the Brownstone Institute to continue reading and to review the graphs.

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Editor's note: That is why there is no way out of this system. We are living in mass cognitive dissonance (Stockholm Syndrome). The only way this financial debt-based system can survive is the creation of new money. A perpetual debt machine. The oligarch class get first dibs on all new money creation and as it trickles down to the peasant slave class we are slammed with inflation. That is why there is continuous war: new debt on the Pentagon's almost $1 trillion "defense" budget. That is why CEO Kathy Warden of Northrop Grumman, whose total compensation package was reported at roughly $25.3–$25.4 million for 2025, doesn't feel the pain and the peasant slave class get blown to shit in wars while she eats steak and lobster every night washed down with expensive French wine.

Debt or Death – Economic Military Recruitment