The basic methodology of the monetary inflation rate comes from an aggregate measure of all persons in a geo-political area. For the basis of policy making, the exhibited inflation would be different among the various wealth classes. In making policy based on a figure attributed to all yet not experienced by all has the obvious shortcoming that policies may be particularly hurtful to a class of people.

It is with the above realization that our policy makers begin to employ a different methodology and I propose the inflation rate that is most applicable for policy making is that experienced by those whom are just above the poverty level. One may mark a set point at the 25th percentile though depending on the extent of the wealth divide, the percentile target could migrate. The very wealthy can deal with whatever inflation is better than any other class as they are the ones possessing immense assets, whether in housing rentals or businesses. When one controls assets, inflation can be passed through to some extent, and even if cannot be passed through to the full extent, the losses incurred would surely not be ruinous as it would to those far on the opposing side of the wealth scale. I do say just above the poverty level because, at least in this country, those at or below the poverty level will often have some sheltering of inflation through free food programs, rent subsidies, telecommunication subsidies, health care subsidies, etcetera and therefore, whatever inflation this class faces is greatly subdued. However, just above the poverty level is the area that bridges the poor to the middle class and to have a healthy society and economy, the focus on maintaining and promoting a compressed wealth divide via making certain there is no heightened hindrance if one chose to apply him or herself that the middle class status would be entirely within reach. To impose a policy that severs this crucial bridge would be ruinous.

In this country, we should all be aware of the falling wages on a real basis for the lower strata of the wealth scale, the increased cost of living, the failure for government to raise social security payouts per experienced inflation (yet for some odd reason find it well within their means to provide for raises to government employees at far higher than their official inflation rate), and how since 2009 bank interest for savers has been hijacked. In having a measure of inflation for a targeted point in the wealth scale would thus be critical.

For those just above the poverty level, housing would be the number one expense followed by car expenses including car insurance and food, health care, utilities, clothing, and entertainment. The proportions of each of the categories would be far different between different wealth classes and even some of the aggregate measures presently utilized of the cost of yachts, vacationing, restaurants, diamonds, etc. would hardly apply to those whom are struggling financially. Whereas housing may be 50% of one’s wages at just above the poverty level and perhaps may be just 30% for the aggregate, it can easily be seen that housing inflation would be particularly deleterious to low wage earners. It is entirely possible that the broad measure for monetary inflation is at 8% and yet for those just above the poverty level, it could be 12%. To not accommodate this crucial class of persons in how they get trampled upon would be lack of leadership and would be allowing the destruction of society and the economy just like what is happening today.

It’s about time this country sets a model for inflation rate policies and the rest of the world could follow. We could still keep the aggregate inflation rate for other general purposes, but what really matters when it comes to any action made by government and while we still retain a central bank (hopefully will go away from the financial assault put upon us, with some getting hit far more than others), is the inflation rate that is experienced by those at the low end of the wealth scale just above the portion receiving a non-trivial amount of government assistance.