In 1983, as part of its social security salvage, the government also re-adjusted how it computes inflation. Since that time (Surprise!), official inflation figures have been low. For the last 25 years, the government has been claiming that inflation is about 3% per year (sometimes more, sometimes less).

The “Rule of 72″ states that if you divide the government figures of 3% into 72, prices would have doubled in the last 25 years. Really? In 1980, you could buy a new stripped-down Honda Civic for under $4,000. Under the government’s figures, the price of a new, stripped-down Civic would have doubled to $8,000+ by now. Instead, stripped-down Civics are $16,000+. Therefore, inflation rates for the Honda Civic have averaged 6% per year since the early 1980s, not 3%. Notice how college tuition rates and health insurance rates year in and year out have also also increased by 6%?

Always double the government’s official CPI figures to get the true inflation rate. The government says 4% right now. Count on 8%–and it’s rising even by their own admission!!!