Is Real Inflation Higher Than They Say?

by Donnie Dauria October 21, 2026

The government just changed the way it measures inflation. The change came only weeks before the Federal Reserve meets on October 27 and 28 to decide on interest rates. Some experts say it is routine. Others say it may be part of a bigger pattern. Here is what it could mean for your savings, and for gold and silver.

US Inflation - Gold and Silver

The Government Has Changed the Inflation Math… Again

The Federal Reserve, or “the Fed,” watches one inflation report more than any other. It is called PCE. This fall, the government changed how PCE measures some prices. Economists expected the change to make inflation look a little lower, according to a Wall Street Journal report.

Why does the timing matter? The Fed uses this report to decide whether to raise interest rates. A lower inflation number may make the case for higher rates look weaker.

This is not the first time. Since the 1980s, the government has changed how it measures inflation many times. It changed how it counts housing, how it handles shoppers switching to cheaper items, and how it counts products that get better over time.

Featured MetalStacks .9999 Handmade Kilo Chain – 24 Inch – 1000 Grams (PSV 1000) Shop

Two Ways to See It

The government’s view: The math keeps getting better. A former head of the Bureau of Labor Statistics told Marketplace that these measures are updated every year as the economy changes. The bureau says critics often overstate how much the changes matter.

The critics’ view: The changes may hide the cost of government spending. Critics say the changes have tended to make inflation look smaller. Some go further. They say the country owes so much that it may not be able to afford high interest rates. More on that below.

Trump Has Said Inflation Can Help Pay the Debt

In a Time magazine interview published October 1, President Trump said:

“Certain levels of inflation will also pay off that debt very rapidly. Very rapidly.”

Back in 2016, before he was elected, he told CNN:

“You never have to default because you print the money.”

The White House has pushed back. Kevin Hassett, the president’s top economic adviser, was asked if the plan was to “inflate our way out of debt.” He told Bloomberg, “No, absolutely not.”

How it works: Say you borrowed $100, and then prices doubled. You still owe $100, but that $100 now buys only half as much. Your debt got smaller in real terms. The same can happen with government debt.

Why the Government May Need Low Rates

The U.S. national debt topped $40 trillion for the first time in August. Interest on that debt is now one of the biggest bills the government pays.

In the budget year that ended in September, the government paid about $1.36 trillion in interest, according to Treasury data reported by Fortune. That works out to about 3.5% on average. Only Social Security and Medicare cost more, after subtracting interest the government pays to itself.

Now picture rates going up. If the average rate on the debt rose to just 6%, the yearly interest bill could climb to about $2.3 trillion once the debt rolls over, by our rough math. That would add about $1 trillion a year. The government already spends about $2 trillion a year more than it takes in.

This is why some critics say the government may have no real choice. They argue it may need to keep interest rates low, even if inflation runs high. And in their view, lower inflation numbers may make low rates easier to defend.

The Problem: Fast Inflation Would Have to Be Big

President Trump’s term ends in January 2029. By our rough math, cutting the debt’s real value by a quarter before then would take inflation of about 14% a year.

Double-digit inflation has hurt the country before. In 1980, inflation hit about 14%. The Fed pushed rates up sharply, and two recessions followed, according to the Fed’s history website. So some critics point to a quieter path.

Certified Coins 1oz MS70 Silver Coins (PCGS/NGC) Shop

The Quieter Path

Critics describe three pieces that may fit together:

Borrow mostly short-term. The Fed has a big influence on short-term interest rates. About 98.5% of new U.S. borrowing comes due in 10 years or less, based on Treasury figures for October 2025 through June 2026:

Type of debt	Comes due in	Share of new borrowing
T-bills	1 year or less	About 86%
T-bills and all T-notes	10 years or less	About 98.5%
T-bonds	20 to 30 years	About 1.5%

Keep rates below inflation. If the interest the government pays stays below the real pace of rising prices, the debt slowly shrinks in real terms.
Report lower inflation. Lower numbers may make it easier to keep rates lower.

Put together, critics say, inflation could possibly run hotter than reported while the debt quietly shrinks, without scary headlines. This is a theory, not a proven fact.

But didn’t the Fed just raise rates? Yes. In September, it raised its key rate to 3.75% to 4%. Critics say a small hike may be a distraction. The government’s own numbers showed prices up 3.7% in September, so savers earning the Fed’s rate are only about breaking even. If real inflation is higher than reported, rates may still be well below it.

This Has a Name: Financial Repression

Keeping interest rates below inflation to shrink government debt is called financial repression. Economists Carmen Reinhart and M. Belen Sbrancia wrote about it for the International Monetary Fund. They found the U.S. used it after World War II. They called it a “stealthier” tax, because it moves money from savers to the government without a vote on new taxes.

Here is what a gap between inflation and your interest rate can do to $10,000 over 10 years:

Inflation minus your interest rate	Buying power left after 10 years
2%	About $8,200
5%	About $6,000
7%	About $4,800

The winners are borrowers, and the biggest borrower on the planet is the U.S. government. The losers are savers.

Other Ways to Measure Inflation

Some groups track inflation their own way. Here are three, plus gold.

ShadowStats. It estimates inflation as if the government still used its 1980 or 1990 methods. In December 2024, official inflation was 2.6%. ShadowStats founder John Williams told Kitco his estimate was about 10.4%.
The Chapwood Index. It tracks the prices of 150 everyday items in the 50 largest U.S. cities, with no adjustments. Its 2025 report says the cost of living has risen about 10% to 14% a year in major cities over the long term.
The Prehn Hours of Work Index. It measures how many hours a person must work to buy the same things people save for, like a house, an ounce of gold, and a slice of the stock market. By August 2026, it took about 3.4 times as many hours as in 2000, according to the Prehn Institute.
Gold. Many gold investors see gold as a check on official inflation. As Williams put it, “If you see a soaring USD gold price and no big movement in the CPI, I’d question the CPI.”

What It Could Mean for Gold and Silver

The World Gold Council, the gold industry’s main research group, has said that negative interest rates support gold investment demand. So if rates stay below real inflation, that may help gold and silver over time.

In the short term, rate hikes can still weigh on metals. As of October 20, gold was about 26% below its January record. Silver was about 53% below its record.

Silver Bars 10 Oz Silver Bar (New/Varied Condition, Any Mint) Shop

The Other Side of the Story

Officials say the methods are sound. The Bureau of Labor Statistics says its methods rest on decades of research. And economists expected this fall’s change to lower inflation by only about 0.1 to 0.2 percentage points.
The trackers have critics. The Bureau of Labor Statistics says claims like ShadowStats’ are “not supported by evidence.” The Chapwood and Prehn figures come from their own reports and have not been checked by outside groups.
Gold is not a perfect gauge. It has fallen since January, even as everyday prices rose.
A White House staff member now denies any plan to inflate away the debt.

What to Watch Next

The Fed’s decision on October 28. Traders mostly expect the Fed to hold steady, according to Kitco.
The next PCE report on October 29. It comes out the day after the Fed decides.
Long-term interest rates. The Fed has less say over these. If investors worry about inflation, they may rise.
Gold and silver prices. They may show what investors really think about inflation.

We will keep an eye on all of it and share updates here.

Sources:

Metalstacks is a private club focused on the study and discussion of the precious metals industry. The views, opinions, and forecasts expressed herein are solely those of the author(s) and are not intended to be a recommendation to buy, sell, or hold any specific metal, security, or investment product. The authors and the Metalstacks Precious Metals Club are not registered financial advisors, brokers, or dealers. Always consult with a qualified financial, investment, tax, or legal professional before making any investment decisions. Your personal financial situation and goals are unique. Investing in precious metals and related assets involves significant risk. The value of investments can fluctuate, and you may lose some or all of your principal investment. Past performance of any asset, including gold and silver, is not indicative of future results. By reading this article, you acknowledge and agree that you are solely responsible for your own investment decisions.