In justifying the massive money printing operations of the Fed, Bernanke used inflation data to bolster his case that the Fed’s actions are both prudent and worth continuing.
Here’s what he said:
Recent data show consumer price inflation continuing to trend downward. For the 12 months ending in November, prices for personal consumption expenditures rose 1.0 percent, and inflation excluding the relatively volatile food and energy components–which tends to be a better gauge of underlying inflation trends–was only 0.8 percent, down from 1.7 percent a year earlier and from about 2-1/2 percent in 2007, the year before the recession began.
(Source)
That certainly makes inflation sound like a non-issue. The problem, of course, is that the Fed relies on BLS data for its official reading of inflation.
Inflation is actually very different from what the BLS claims it is; something that purchasers of college tuition, pharmaceuticals, or health insurance know all too well.
To give the BLS some credit, they must try and estimate a single rate of inflation that applies to everyone equally, and this is a completely impossible task. An octogenarian living in Seattle on a meager pension and lots of prescription medications will have a very different inflationary experience than an 18-year-old living in a tent for the summer in Michigan.
But even after spotting the BLS some slack, there are some enormous and glaring errors in their methods that render the official inflation measure hopelessly inaccurate.
During the good times when everything is more
by rhare 
