“Core” inflation is regular inflation with food and energy stripped out. Many believe food and energy prices have historically been misleadingly volatile, so removing them provides a better long-term measure of inflation. Investopedia says:
Core inflation is an inflationary measure that leaves out energy and food, focusing only on items that have fairly predictableprice movements.
The measure is useful because it shows how price changes affect your spending power over time.
The Federal Reserve prefers using the PCEindex over the CPI to track core inflation because it gives a steadier picture of long-term price trends.
Wikipedia says, “Core inflation is a type of inflation measure which seeks to represent the underlying long-run trend of aggregate price levels in the economy.
The problem is that the explanations are false.
“Core” inflation lumps food and energy together as though the evidence were similar for both. It isn’t. And the word “core” misleadingly implies that it is real or basic. It is not.
Energy prices really are extraordinarily volatile. But food prices, especially in recent decades, are not particularly unusual compared with many things that remain inside “core.”
A July 2026 St. Louis Fed analysis found that since 2001, food inflation’s variance was about 3.1 times headline PCE inflation. Compare that with durable goods at 3.0, clothing at 2.8, transportation at 4.0, and financial services at 4.6—all of which remain in core PCE.
Energy goods, by contrast, were 208.6 times headline variance.
A Fed paper notes that some excluded food categories aren’t especially volatile while some included categories—airfares, apparel, tobacco—are highly volatile. And a Kansas City Fed analysis says food-at-home inflation has become no more volatile than many nondurable goods that remain in core inflation.
So why exclude food and energy?
The practice came from the 1970s, when commodity prices were especially volatile. According to a Fed analysis, the original decision wasn’t mainly about statistical reasoning—it was shaped by that era’s experienceand offered a straightforward way to smooth out volatility.
In truth, it’s not really “core.” It doesn’t capture “real” inflation by simply removing anomalies, despite what the term might suggest.
So, why has the Fed adopted it?
Here is the real reason for the Fed’s preference for “core.” A Fed paper quotes former Vice Chair Alan Blinder arguing that
the real reason food and energy were removed was that their prices were largely beyond the central bank’s control.
WHAT!!? They only measure what they believe they can control?? The plan was: food and energy inflation largely results from things the Fed can’t fix with interest rates—oil shortages, crop failures, wars, weather, etc.—so just pretend they don’t exist. Exclude them and study the portion of inflation that monetary policy supposedly can influence — and give it the name, “core.”
They’re defining “core inflation” partly around the capabilities of the institution assigned to fight inflation, rather than around the cause of inflation itself. The Fed throws away some of the prices it has the least power to control—which may also be some of the prices most important in causing the inflation.
And then it raises interest rates.
Telling the Fed to control inflation is like going to an orthopedic surgeon when you have measles.
This bit of nuttiness comes on top of the fact that raising interest rates increases all business costs, which is a strange way to fight inflation.
Inflation is caused by shortagesof key goods and services — mostly food and energy — so to fight inflation the federal government needs to reduce those shortages without recessing the economy.
That is, the government needs to help increase the production, acquisition and distribution of the scarce items. Raising interest rates might reduce demand, but when it does, that is recessive. Causing a recession to cure inflation surely is the daffiest economics imaginable.
But hey, interest rates are the Fed’s only tool. And to a hammer, every problem is a nail.
SUMMARY
The Fed’s only tool: interest rates. What can interest rates influence most readily? Demand. What can’t they readily produce? Oil, food, houses, doctors, semiconductors. What gets removed from the famous “core” measure? Two enormously important categories whose prices often reflect supply conditions.
Then Congress hears “core inflation remains elevated” and waits for the Fed to fix it, when it is Congress that has the power and the responsibility to reduce shortages.
The Fed fighting shortage-caused inflation with interest rates is like going to an orthopedic surgeon when you have measles. The orthopedic surgeon may be an excellent doctor. His instruments may work perfectly. He’s simply the wrong specialist for the disease.
And then imagine the orthopedist saying: “I can’t do much about the rash or fever, so I’ll exclude those from my measurements. But since your bones are fine, your core measles is OK.”
And that is how the world’s most powerful nation is led.
When you go to USAFACTS, you expect …uh…facts. So, it’s a bit off-putting when you get factual but misleading data and even more misleading explanations.
Social Security trust fundshave run at a deficit every year since 2021, a reversal after decades of surpluses.
As regular readers of this blog know:
A federal trust fund is an accounting mechanism used by the federal government to track earmarked receipts (money designated for a specific purpose or program) and corresponding expenditures.
The largest and best-known trust funds finance Social Security, portions of Medicare, highways and mass transit, and pensions for government employees.
Federal trust funds bear little resemblance to their private-sector counterparts, and therefore the name can be misleading.
A “trust fund” implies a secure source of funding. However, a federal trust fund is simply an accounting mechanism used to track inflows and outflows for specific programs.
In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries.
In federal trust funds, the federal government does not set aside the receipts or invest them in private assets.
Rather, the receipts are recorded as accounting credits in the trust funds, and then combined with other receipts that the Treasury collects and spends.
Further, the federal government owns the accounts and can, by changing the law, unilaterally alter the purposes of the accounts and raise or lower collections and expenditures. (Peter G. Peterson Foundation web site)
Not only are they not “trust funds” but they are not the source of funding for Social Security or any other federal program. Instead, the government presses whatever computer keys it pleases (according to the rules —laws–it has set for itself) and certain numbers appear wherever the government wants them to appear.
It’s almost comically arbitrary. Say we, the federal government, want $900 in this ABC account. By the laws we have passed, we’ll push the 9,0,0 keys and make the balance of the ABC account grow by 900. It’s totally, 100% arbitrary, according to the federal government’s own rules. That’s called “Monetary Sovereignty.”
So, when you see or hear someone worry about the size of the federal deficit, debt, the debt/GDP ratio, or the balance in any government account, be aware that the government can change those numbers at will. No taxes necessary.
You might ask, “What becomes of the tax dollars I send to the federal government?”
To answer that question, you first must understand that money is not a physical thing. It is not the paper printed by the Treasury and carried in your wallet. It is not gold or silver or diamonds. Money is nothing more than numbers in accounts.
When you deposit money into your checking or savings account, no physical thing goes into a big box labeled “Mr. Smith’s money.” When you pay your taxes, the government doesn’t store something physical in a big safe.
All that happens when you send in your tax check, is that the numbers in your checking account go down and the numbers in a government account go up. So, you literally have not sent anything. Numbers changed. Period.
To pay for things, the federal government sends instructions –via wire or paper check–to a supplier’s bank, instructing the bank to increase the numbers in the supplier’s checking account. Then to balance its books, that bank informs the Federal Reserve, which instructs your bank to lower the numbersin your checking account.
Because the federal government invented the dollar, and makes all the rules regarding dollars, it has the unlimited ability to instruct banks to do anything with any accounts: Increase balances, reduce balances, anything.
If the federal government wished, it could instruct the General Fund (the government’s checking account) to increase its balance by $100,000 trillion, at which time, federal taxes no longer need be collected.
No paper dollars needed for Monopoly. Just use numbers.
If it all sounds like hocus-pocus, think of the board game Monopoly. By rule, the Bank is not allowed to run short of Monopoly dollars. So, if that were to happen, the rules say to cut up some pieces of paper and use them. (I myself once played the game with no paper dollars. We just kept score on a sheet of paper with columns.)
If we wished, we could have started every player with $50, $500, $5,000 or anything else. Like the federal government, we were making the rules.
That is exactly how the federal government works. Being Monetarily Sovereign, it makes all the laws regarding money.
(State and local governments, businesses, you and I can’t do that. We don’t make the rules.)
Knowing the facts, think of how ridiculous the rest of the USAFACTS article is:
The Social Security Administration (SSA) projects that, absent congressional intervention, the combined trust fund reserves could be depleted by 2034.
At that point, revenue coming into the fund could cover about 83% of scheduled benefits.
The Old-Age and Survivors Insurance and Disability Insurance trust funds, which were worth a combined $2.56 trillion at the end of 2025, fund Social Security. Workers pay into Social Security trust funds through payroll taxes. Employers match these contributions.
Note the bolded words, “absent congressional intervention.” They mean that Congress and the President can change the numbers in any way they choose. The combined trust fund reserves could be doubled or tripled tomorrow, simply by Congress and the President voted for it.
Think of you standing in an elevator going down. Your problem is: if you do nothing, you’ll end up in the basement. So, you press the button labeled “3” and get off the elevator. Problem solved.
That is exactly the so-called “problem” stated by USAFACTS and many others. If Congress does nothing, the fake trust fund will run out of numbers. But, all Congress and the President need to do is press a button, add a few trillion to Social Security, and get off the elevator. No taxes needed. Just a vote.
Social Security covered 70.5 million people in December 2025, up 174% from 1970. The SSA paid retirees and dependents an average monthly benefit of $2,017 last December. Disabled workers and dependents received an average of $1,492. Survivors of deceased family members who had paid Social Security taxes received an average of $1,621.
The trust funds ran a surplus every year from 1982 to 2020. Since then, they’ve declined 11.9%, or $347.0 billion as benefit costs outgrew income money coming in. Last year, they took in $1.45 trillion and paid out $1.61 trillion.
The surplus was worse than meaningless. Not only did it do nothing to fund Social Security, but it took money from the economy and thus reduced Gross Domestic Producet. The surplus, far from being prudent, was recessive.
The federal government has the power to stop collecting the FICA tax and simultaneously triple all Social Security benefits, and pay them to everyone, even babies, and still never run short of dollars.
One reason for the potential depletion? Shifting age demographics. The Social Security system is designed, among other purposes, to support retirees.
The model needs a balance between workers contributing to the trust funds and beneficiaries receiving them. These days, more people are reaching retirement age and living longer in retirement, while relatively fewer people are entering the workforce.
You have been led to believe the “Big Lie in Economics,” that your taxes fund federal spending. In truth, your federal taxes fund nothing. (State and local taxes do fund state and local government spending).
Your state and local taxes serve two (and as you’ll see, really three) primary purposes:
To help the federal government control the economy by taxing what the government wishes to discourage and by giving tax breaks to what the government wishes to reward.
To assure demand for the U.S. dollar by requiring that taxes be paid in dollars.
And as for that third purpose, it goes like this:
The very rich run America. “Rich” is a comparative. The man who has $1,000 is rich if everyone else has only $1, but he is poor if everyone else has $10,000. So, getting richer, which the rich love doing, requires widening the income/wealth/power Gap between the rich and those below them.
There are two ways the rich widen the Gap: Get more for themselves and make sure those below them get less.
So, they bribe the information sources — the politicians, the economists and the media — to tell you that the government can’t afford such benefits as: Social Security, Medicare, Medicaid, food stamps, school lunches –anything that will narrow the Gap.
They tell you that federal finances are like personal finances, and that like you, the government must “live within its means.” All lies.
The rich bribe the politicians via campaign contributions and lucrative employment in “think tanks. The rich bribe the economists via university endowments and direct payments. The rich bribe the media via advertising dollars and outright ownership. They all preach the same lies:
Lie: The federal debt is unsustainable.
Lie: The federal deficit is unsustainable.
Lie: The government, like a household or business, must live within its means
Lie: A federal surplus is more prudent than a federal deficit
Lie: Federal taxes fund federal spending.
Lue: Federal trust funds will run short of dollars
Lie: Federal spending causes inflation
Not one of the above is true, though all are widely believed because of propaganda by politicians, economists and the media.
The final lie, about inflation, is insidious, because misleading statistics can be used to back it up. After all, didn’t the infamous Zimbabwe inflation correspond to the issuance of billion-dollar paper currency? And didn’t the infamous German inflation correspond with people carrying paper currency wheelbarrows?
So, the cure for inflation is to cure the shortages, usually by government spending to produce, acquire, and distribute the scarce goods and services that caused the inflation. Often more spending, not less.
When you use USAFacts, you will get facts, but be careful of the inferences. Facts can be enlightening, but inferences can put you in the dark.
As they have no moral base, the tech companies always cave to power. Here is one of Google’s cowardly examples:
The “Gulf of America” as shown on Google Maps
So we wonder what the cowards at Google will do about this:
tt’s 2AM; I can’t sleep. So, screw everyone. Who can I insult now?
Trump Fires Off Deranged Threat to Ally in Morning Meltdown:The president has resurrected his beef with our northern neighbors. Leigh Kimmins. Reporter, Published Aug. 25 2026 7:09AM EDT
President Donald Trump has floated renaming one of the Great Lakes in a petty dig at Canada.
The 80-year-old started his Tuesday morning in cranky fashion, loading up Truth Social at 7 a.m. to tell the world he is still ticked off at our northern neighbors.
And he intends to act on it. “The United States is giving serious consideration to changing the name of Lake Ontario to Lake America in that we don’t expect to doing much business with Ontario any longer,” he said, ending with his regular sign-off, “Thank you for your attention to this matter! President DONALD J. TRUMP.”
The name “Ontario” comes from a Wendat (Huron) word meaning “great lake” or “beautiful water.” European missionaries began recording the name for Lake Ontario in the 1640s, and it gradually became the lake’s established name. The province later took its name from the lake when Ontario became a province of Canada in 1867.
But Trump is ready to rewrite history because of his escalating trade war with Canada. Trump said Monday that tariffs on Canadian cars, trucks and auto parts will double from 25 percent to 50 percent, starting Jan. 1.
But he loves North Korea, which has threatened us with its nuclear arsenal and intercontinental ballistic missiles. And he hates Ukraine, a nation fighting for freedom, because he loves communist dictator Putin.
Can America survive another 28 months, and will the damage ever be undone?
#Monetary Sovereignty - Mitchell 