“As developing countries increase their standard of living, they are following down the road of their capitalist pig cholesterol-loving neighbors, demanding more meat for human consumption", wrote one reader at Agora Financial .

“But it takes seven pounds of grain to make one pound of meat. So not only is more and more of the grain going into ethanol to feed SUVs, but also into cattle to feed more humans." Then the rising costs of fertilizers like potash might add even more cost to the grains that are used to fatten animals. 

“If people were vegetarian, there would be more grain around to feed more people. It may take decades, but eventually no one will eat meat.” Yes, if the government told the truth about inflation, maybe we would all loose our appetite and thus meat consumption might drop drastically.

According to an Associated Press report, "Outside of the volatile food and energy sectors, so-called core inflation showed a modest 0.1 percent rise in April, down from 0.2 percent in March, a performance that economists said should continue as the weakening economy and rising layoffs help keep the lid on price increases.

"The recent slowdown in the United States is definitely helping to contain inflation," said Rebecca Braeu, an economist at John Hancock Financial in Boston.

But analysts said many families are continuing to be squeezed.

"We are paying more to fill up our tank and buy a loaf of bread and a gallon of milk," said Mark Zandi, chief economist at Moody's Economy.com. "It's going to be tough to go to the grocery store this summer or drive to the beach."

Zandi said gasoline prices will also likely increase by a significant amount in May as pump prices reflect the recent run-up in crude oil prices, which remained above $124 per barrel on Wednesday."

The grocery industry has urged Congress to revise current requirements designed to divert corn production to be used to make ethanol, which they blamed for pushing food prices higher.

"It's clear that American families are facing unbearable pressure, pressure that Congress can help relieve by revisiting and revising the mandated diversion of corn to ethanol production," said Scott Faber, vice president for federal affairs for the Grocery Manufacturers Association.

The Fed, fighting against a severe credit crunch and spreading economic weakness, has cut interest rates seven times since last September to keep the country from falling into a recession. 

But last month it signaled it might  pause with the rate cuts, with some Fed officials expressing worries that further reductions in interest rates could trigger unwanted inflation. The central bank is expected to keep rates unchanged when officials next meet June 24-25.

So far this year,  the government says that overall inflation is rising at an annual rate of 3 percent, down from a 4.1 percent increase for all of 2007. Core inflation, excluding energy and food, is up at an annual rate of 1.8 percent in the first four months of this year, compared with a 2.4 percent increase for all of 2007.

Yet "real world inflation", what you and I experience every time we fill up the gas tank or buy a loaf of bread, feels more like 7 to 12%.

So which inflation "reality" should we working people believe? Don't forget that workers' wages are not keeping up with the cost of living and not deteriorating "buying power" of our paper currency.

A separate Labor Department report showed average weekly earnings for nonsupervisory workers dropped by 1 percent in April compared with a year ago, after adjusting for inflation. It was the seventh straight month that inflation-adjusted wages were down compared with a year ago.

Yes, 7 straight months in a row of falling wages, and that is calculated using the government's inflation figures, not the "real-world" numbers.

In many areas of the country rent pricing is also going higher. As more people loose their homes due to defaults and foreclosures, the number of renters increase dramatically. It will take awhile before the number of affordable rental homes and apartments goes higher, so based on a supply vs. demand situation, there are more renters chasing the same number of rental units. That is leading to rising rents.

The extra-loose monetary policies of the Federal Reserve and the Central Banks, including tax rebates and bail-out programs for lenders and brokerage firms lends itself to more inflation to come. Now is the time to remember what the historical "hedges" against inflation have always been. I'll give us a hint, one begins with the letter "g" and the other with the letter "s" and this time it won't be different. Make no mistake, inflation is about to get worse before it gets better.

As technical analyst Ian McAvity recently wrote, "With the 4% reported inflation rates (that contain more understating fudge factors than a Hershey Bar factory) there is a negative return on hig-grade [debt] paper. Historically that is extremely bullish for gold".

Visit the website of John Williams, www.shadowstats.com for a serious look at how bad the reported inflation data has become. Let's make sure we aren't the victims of such high level "fudging".