Animal Spirits: Inflation Truthers – A Wealth of Common Sense

Open social media on any given day and you’ll find at least one person insisting,
“Real inflation is way higher than they say.” These are the so-called
inflation trutherspeople convinced the official numbers are cooked,
out of touch, or just plain wrong. When Ben Carlson and Michael Batnick tackled
this on their Animal Spirits podcast episode “Inflation Truthers,” they weren’t
just debating data; they were wrestling with vibes, psychology, and how humans
actually experience prices in the real world.

In this article, we’ll unpack what inflation truthers believe, why official
inflation measures like CPI might feel disconnected from your grocery bill, and
how the team at A Wealth of Common Sense approaches the topic with,
well, common sense. We’ll also explore the psychology of inflation, why feelings
about prices can diverge from the data, and what this all means for your money
and your long-term investment plan.

What Does “Inflation Truther” Actually Mean?

An inflation truther isn’t a formal economic category; it’s more of a
tongue-in-cheek label. It describes people who insist official inflation numbers
dramatically understate the true rise in the cost of living. In their view,
government statistics underplay what’s really happening in grocery aisles, at
the gas pump, in rent payments, and on restaurant menus.

On the Animal Spirits episode, Carlson and Batnick talk about this group as
a cousin of gold bugs and perma-bearsthose who are always convinced the system
is on the brink of collapse, no matter what the data says. Inflation truthers
often latch onto anecdotes (“My rent is up 30%! Eggs doubled!”) and extrapolate
those experiences into a universal claim: “Inflation has to be 10–20%, not
whatever the government says.”

How Official Inflation Measures Actually Work

Before labeling the Consumer Price Index (CPI) a hoax, it helps to understand
how it’s constructed. CPI tracks the prices of a “basket” of goods and services
that households typically buythings like food, housing, transportation,
healthcare, apparel, and entertainment. Statisticians at the Bureau of Labor
Statistics (BLS) gather thousands of price quotes each month and then weight
them according to how much of the average budget they represent.

CPI isn’t perfect, but it’s not random either. For example, rents and owners’
equivalent rent (a proxy for the cost of homeownership) are among the biggest
components. Medical care, transportation, and food all get significant weight.
Economists also use related measures like PCE inflation (Personal Consumption
Expenditures), which the Federal Reserve tends to prefer when setting policy.

The “Hedonic Adjustments” Conspiracy Theory

One favorite talking point of inflation truthers is hedonic
adjustmentsthe idea that economists tweak prices downward because
products are “better” now. Suppose a phone costs $50 more than last year but is
faster, has a better camera, and more storage. Statisticians may treat part of
that price increase as paying for improved quality, not pure inflation.

Critics argue this conveniently hides real inflation: “I don’t care if the TV is
smarter; it’s still more expensive!” Supporters counter that ignoring quality
would overstate inflation because you’re getting more value per dollar. The
truth is somewhere in between: hedonic adjustments can make sense for tech
gadgets, but they feel disconnected when you’re staring at the same box of
cereal that now costs $2 more with less inside.

Shrinkflation, Skimpflation, and Why Your Cart Feels Lighter

Another reason inflation feels worse than the official number is
shrinkflationwhen package sizes quietly shrink while prices
stay the same or go up. There’s also skimpflation, where
quality drops: slower service, fewer staff, cheaper ingredients for the same
menu price. Some of these changes are captured in inflation data; others slip
through the cracks, adding to the perception that “they’re lying to us” about
how bad inflation really is.

Why Inflation Feels Worse Than the Numbers Say

Ben Carlson has written extensively on the psychology of inflation and why
people can feel miserable about prices even when wages are rising and the
overall economy looks solid on paper. He points out that in recent years, wage
growth for many workersespecially lower-income householdshas actually outpaced
inflation, and economic growth has been stronger than in the 2010s.

Yet sentiment surveys still show consumers are grumpy. Researchers at Berkeley
and international institutions like the IMF have noted a persistent
“sentiment gap”: people feel worse about the economy than what traditional
indicators would predict. Part of that is simple math: even when inflation
slows, prices don’t fallthey just rise more slowly. That means the elevated
prices we saw after 2021 are still with us; they’re just not accelerating as
fast.

Think about it this way: if eggs go from $2 to $4, that’s brutal. If they go
from $4 to $4.12 the next year, inflation is technically low, but nobody is
celebrating “only” paying double what they used to.

What the Animal Spirits Episode Argues

On the “Inflation Truthers” episode, Carlson and Batnick push back on the idea
that inflation is being massively understated. They acknowledge that certain
categorieslike housing, healthcare, and educationhave become painfully
expensive over long stretches of time. But they also highlight:

• The role of technology and globalization in lowering prices for many goods.
• The fact that some goods and services have gotten dramatically better for the
  same or slightly higher prices (think phones, TVs, software).
• That incomes, stimulus checks, and asset prices (stocks, real estate) boosted
  household balance sheets during and after the pandemic for many people.

In other words, they’re not denying that life feels more expensive; they’re
pushing back on the narrative that the government is fudging the numbers on a
gigantic scale. The message from A Wealth of Common Sense is that
reality is messy: different households experience different inflation rates,
depending on their mix of spending, debt, and assets.

Personal Inflation vs. Official Inflation

One powerful concept that helps bridge the gap between “CPI is 3%” and “My life
feels 15% more expensive” is the idea of a personal inflation rate.
Financial planners and economists sometimes suggest tracking your own spending
year over year and comparing it with your income growth.

For example, some bank and wealth-management research explains that traditional
inflation measures may understate the increases consumers experience, especially
if housing and interest costs are a bigger share of their budget than the
“average” household. They encourage people to look at their own data: how much
more are you paying in total for groceries, housing, transportation, and debt
payments compared to a year or two ago?

This is very much in line with the Animal Spirits philosophy. Rather than
obsessing over whether CPI is off by 1–2 percentage points, focus on:

• How fast your income is growing.
• How much your important expenses are changing.
• Whether your savings and investment plan still works under these conditions.

Where Inflation Truthers Have a Point

Inflation truthers aren’t completely wrong. They’re picking up on some
real issues:

• Housing costs can be dramatically higher than official metrics
  suggest, especially in high-cost cities and for renters whose leases reset
  every year.
• Interest costs on credit cards, personal loans, and mortgages
  have surged with higher interest rates, which official inflation measures
  treat differently from consumer prices.
• Quality erosionthe skimpflation problemis hard to capture:
  worse service, more fees, fewer perks for the same price.
• Human psychology is wired to notice price increases more than
  wage gains. A raise hits your paycheck a few times a month; higher prices hit
  every time you tap your card at the store.

Add in constant negative headlines, viral posts about $8 cereal, and political
arguments, and it’s no surprise that people feel like inflation is out of
control even when the data shows it cooling.

A Wealth of Common Sense: How to Respond Instead of Panic

The core message of A Wealth of Common Sense has always been that the
world is uncertain, markets are volatile, and yet a simple, long-term plan can
still work. Inflation is just one of the many variables you have to deal with as
an investor and household CFO.

Rather than joining the inflation-truther doom chorus, consider these
common-sense steps:

• Own productive assets. Stocks, real estate, and other
  productive assets have historically outpaced inflation over long periods,
  even when short-term spikes are painful.
• Match time horizons. Cash is for short-term needs; long-term
  money belongs in growth assets that can outrun inflation.
• Adjust savings rates, not just complaints. If your personal
  inflation rate is higher than expected, you may need to increase how much you
  save or trim discretionary spending.
• Use the data, but don’t worship it. CPI and other
  measurements are tools; your own budget and goals are the actual steering
  wheel.

Inflation, Narratives, and Animal Spirits

The phrase “animal spirits,” borrowed from Keynes, refers to the human emotions,
stories, and herd behavior that drive economic decisions. Inflation isn’t just a
number; it’s a narrative. If people believe prices are out of control, they may
change how they spend, save, and investeven if the data is slowly improving.

This is where the Animal Spirits podcast shines: it doesn’t just recite stats;
it tries to interpret the story people are telling themselves. Inflation
truthers are, in a sense, telling a story about mistrustof institutions,
policymakers, and experts. You don’t have to buy their entire narrative to
appreciate that feelings around inflation are a big part of how the
economy behaves.

For investors, the lesson is simple: don’t confuse vibes with a plan. A healthy
respect for inflation is wise; a worldview built around assuming everything is
rigged is usually a dead endand often a great way to miss long-term
opportunities in markets.

How to “Debate” an Inflation Truther Without Losing Your Mind

So what do you do when a friend insists that “real” inflation is 20% and the
only safe asset is canned beans in a bunker?

• Start with empathy. If their rent or childcare costs have
  exploded, their frustration is real, even if their inflation estimate is
  exaggerated.
• Explain the difference between levels and rates. A lower
  inflation rate doesn’t mean prices are falling, just that they’re rising more
  slowly from an already-higher base.
• Talk about personal inflation. Encourage them to calculate
  how their expenses have changed instead of arguing over a national
  average.
• Bring it back to action. You can’t control CPI, but you can
  control your saving, investing, and career decisions.

And if all else fails, you can always say, “I get it. Prices are brutal. But if
you really thought 20% inflation was permanent, you wouldn’t be holding cash,
you’d be buying assets that might actually keep up.”

Real-World Experiences with Inflation Truthers (Extended Reflections)

To really understand the tension between data and feelings, it helps to step
into a few everyday storiesexperiences that echo what the Animal Spirits crew
talks about and what readers of A Wealth of Common Sense often share in
comments and emails.

The Grocery-Cart Shock

Picture a family doing the same weekly grocery run they’ve done for years.
They’re buying the usual: milk, eggs, bread, some fresh produce, snacks for the
kids, a couple of frozen dinners. A few years ago, that cart might have been
$120. Now it’s closer to $170. They’re not ordering lobster and caviar; it’s the
same basic list. That $50 difference is incredibly salient. They see it every
week when the total flashes on the register, and it’s only gotten louder since
food prices spiked during and after the pandemic. Even if their wages have
grown, the pain point is concentrated in a place they can’t avoid. For them, the
conversation isn’t about 3% versus 4% CPI. It’s “Why does feeding my family feel
like a luxury now?”

The Landlord vs. Spreadsheet Reality

Now imagine a renter in a big city. Their landlord raises the rent 12% in one
year. Over two or three renewals, the rent is up 30% from where it started.
Meanwhile, they read a headline saying “Shelter Inflation Eases” or “Core
Inflation Trending Down.” That headline may be technically correct based on the
way shelter costs are averaged and smoothed in official data, but for this
person, it borders on comedy. They don’t experience housing costs averaged over
millions of leases; they experience the one lease that matters: their own. If
they start calling CPI a joke, it’s not because they’ve read technical papers on
hedonic adjustments; it’s because their budget feels like it’s on fire.

The Investor Trying to Stay Rational

Consider a long-term investor who listens to Animal Spirits, reads A Wealth of
Common Sense, and genuinely tries to ignore noise. They’ve seen inflation flare
up beforeduring the 2021–2022 spike and other episodesand they know that over
decades, diversified portfolios have historically outrun inflation. At the same
time, they’re not made of stone. Seeing headlines about higher prescription drug
costs, rising insurance premiums, and surprise jumps in everyday services makes
it harder to stay calm.

This investor has a constant internal dialogue: “Yes, prices are up. Yes, my
personal inflation might be higher than CPI. But abandoning stocks or piling
into cash because someone on social media swears inflation is 15% isn’t a plan.”
They lean on the same principles Carlson often emphasizesown productive assets,
diversify, and respect your time horizon. Their experience shows that you can
fully acknowledge inflation’s sting without adopting a full-blown truther
worldview.

The Advisor in the Middle

Finally, think about a financial advisor sitting across from clients who are
furious about rising costs. Some come in convinced that “the government is
lying,” waving charts from fringe websites. Others simply feel worn down by
higher prices and anxious about retirement. The advisor’s job isn’t to win a
Twitter argument about CPI; it’s to translate all of this noise into a coherent
plan.

That’s where the “wealth of common sense” approach becomes practical. The
advisor may say, “Let’s assume inflation is a bit higher than the official
number and stress test your plan. What happens if we plug in 3%, 4%, or 5%
long-term inflation instead of 2%? Do you still make it? What levers can we
adjustsavings rate, retirement age, spending flexibilityto keep you on track?”
Instead of dismissing their feelings, the advisor harnesses them to motivate
better decisions.

These real-world experiences underscore the central idea behind the Animal
Spirits episode: you don’t have to become an inflation truther to take inflation
seriously. Acknowledge that your personal inflation can differ from the average,
accept that official numbers are imperfect but useful, and then build a plan
robust enough to handle a range of outcomes. That’s not just macro theory
that’s everyday financial survival with a healthy dash of common sense.

Conclusion: Inflation Truth, Vibes, and Your Money

Inflation truthers tap into something real: life does feel more
expensive, and in many ways, it is. But jumping from “prices are high” to “all
the data is fake” doesn’t help you make better financial decisions. The Animal
Spirits conversation and the broader work at A Wealth of Common Sense
offer a more grounded approach: understand how inflation is measured, recognize
where it might miss parts of the story, and then focus on what you can control.

In the end, the most powerful “animal spirits” in your financial life aren’t the
people yelling about CPI on the internet; they’re your own behavior, discipline,
and optimism. Inflation is a challengebut with a sensible plan, diversified
investments, and a clear head, it doesn’t have to be a catastrophe.