Inflation in the United States has set a record in the last 40 years and the Federal Reserve will have to work hard to combat it. And, as expected, it is convenient for the government to show an inflation number below the true one, to defend its electoral chances. The same thing happens all over the world.
michael bury, the famous investor who profited from the fall in mortgages in 2008, considered that if they used the correct home prices (which have a weight of 30% in the index), the accumulated inflation of the last year would be 12% instead of the 8.5% reported. But other tricks are also used to cover up inflation, such as the adjustment for quality and the change of weights in the basket.
true inflation
Blockchain technology applied to the calculation of inflation offers a source of information that cannot be manipulated by anyone, since there is no central entity that calculates the index, but rather it is carried out in a decentralized manner in each of the nodes of the network.
Truflation company is building this new indicator that has these features. Although it uses the same calculation model as the US government CPI, the difference lies in two points.
1) Measure and report changes in inflation on a daily basis, using current data from sources like Zillow, Penn State, Nielsen, and more.
2) The calculation of the index is carried out at the same time in each node of the network, so there is no central entity that has the technical possibility of falsifying the inflation number.
About 40% of the data analyzed matches the basket of goods used by the US Bureau of Labor Statistics. The remaining 60% is replaced with data from other sources. All in real time with true prices.
The inflation recorded by Truflation is quite a few points above that reported by the US. Inflation “true” it is currently 13.5%, compared to the official 8.5%.
Why should we trust the inflation figure more decentralized? Simply because the Truflation data is inviolable and cannot be made up. It is updated live, and above all, in full view of everyone.
How do they get the data available online? Through Blockchain technology, using Chainlink, a decentralized network that connects smart contracts with real-world data. In short, it’s like a “octopus” that incorporates price updates from different sources. And it shows the information live, for everyone.
This Truflation index provides objective, decentralized and frequent inflation updates. Based on government data, the CPI is reconverted, better reflecting consumer habits and changes in real market prices.
Without a doubt, the advantages are immense. Truflation does not have a central entity, but is completely decentralized. No one can adjust prices as they please.
Additionally, the Truflation index provides daily updates instead of the monthly metrics reported by the government. In other words, there is no need to wait to see how the surveys did, which are not transparent and change their methodology frequently.
This new Chainlink-based network allows transparent access to data and calculation methods.
The appearance of Truflation will do the market a lot of good. Consumers will have an indication closer to reality and governments will not be able to “make up” the figures as much as they please.
To finish, I want to invite you to download for free a report that I prepared so that you can face the next crisis and have the tools to know how to beat the market. I think it will be very useful to you. You can download it in the following: Financial Letter.
Source: Ambito
