Official inflation is the most convenient lie of modern economics, perhaps even more sophisticated than the belief in endless economic growth on a finite planet. When central banks proudly report "controlled inflation" of 2-4%, they conceal an inconvenient truth: for millennials and Generation Z, the real devaluation of their purchasing power can exceed official figures by two or even three times. And for boomers? Their personal inflation is often lower than what's announced. A unified consumer price index (CPI) isn't just a technical inaccuracy; it's an economic tool for generational discrimination disguised as objective statistics.
Not All Baskets Are Created Equal: The Economic World Through Generational Eyes
Imagine a millennial whose budget consists of 40-50% rent payments, student loan repayments, and healthcare expenses—precisely those categories where inflation is traditionally higher than average indicators. For them, official inflation of 3% is a fairy tale told by economists who have never stood in line for social housing.
Boomers with their paid-off mortgages and solid pension plans live in a parallel economic universe. Their main expenditures are on durable goods, leisure, and premium medical services. And Gen Z? They're critical of spending on digital services, education, and sustainable consumption—categories with completely different price dynamics.
"Measuring average inflation across an economy is like measuring the average temperature in a hospital, including both the morgue and the maternity ward," as aptly noted by one nameless economist-dissident.
Statistical Illusion Robbing the Young
The root of the problem lies in the methodology for calculating the CPI, that sacred grail of monetary policy. Historically established weights of various categories in the index reflect the consumption of an "average household"—a statistical phantom that exists only in economic models. In reality, the difference between the expenditure structure of a 25-year-old professional renting an apartment in a metropolis and a 65-year-old retiree who owns their home in the suburbs is colossal.
Now for the most interesting part: when the central bank "defeats inflation," whose inflation is it defeating? The answer is simple—the one that is most politically advantageous. Creating a unified CPI isn't a technocratic decision but the highest form of economic populism, allowing manipulation of public perception of the economy.
Consider housing, which for millennials often consumes up to 50% of income. In most versions of the CPI, it's either undervalued or represented through "equivalent rental value of owned housing"—an abstract concept useless to those paying actual rent. Convenient, isn't it?
The Three-Dimensional Matrix of Inequality
The differences in real inflation between generations aren't just substantial—they change the entire picture of economic inequality. When we talk about a difference of 3-5 percentage points, we're talking about a fundamental redistribution of wealth between generations, masquerading as neutral monetary policy.
For boomers with their assets and fixed pensions, low inflation is a blessing. For millennials with their debts, it's the death of hopes for financial independence. And for Gen Z, high inflation in education already defines their future as a "generation of eternal renters"—of both intellectual property and housing.
Fiscal and monetary policies have become an invisible mechanism for redistributing wealth from the young to the elderly. This isn't a conspiracy theory—it's simple arithmetic of compounding the difference between real and official inflation over decades.
Who Stands at the Printing Press?
When the Central Bank sets inflation targets, it isn't just performing a technical function—it's making a political choice. A choice in favor of those whose voice is heard louder in the corridors of power. And let's honestly admit: this is not the voice of twenty-five-year-old startuppers or thirty-year-old single parents.
The composition of central bank boards in most developed countries is self-sufficient proof. The average age of board members of the Federal Reserve, ECB, or Bank of Russia is substantially closer to the age of an average boomer than a millennial. Not surprisingly, their perception of "normal inflation" relies on their own experience and social circle.
"But central banks are independent!" an orthodox economist will exclaim. Yes, independent—from voters under forty whose economic interests are systematically underrepresented in calculations and models.
Revolution in Measuring Welfare or Status Quo?
A logical question arises: is a differentiated approach to inflation possible? Technically—absolutely. Modern computing power allows calculating dozens of personalized indices in real time. Statistical services already collect sufficiently detailed data about the consumption structure of various demographic groups.
However, technical possibility doesn't imply political will. Acknowledging the existence of multiple inflations undermines the very foundation of modern monetary policy—the idea that a central bank can and should control a single indicator relevant to the entire economy.
Moreover, a differentiated approach to inflation will inevitably expose the ugly truth: the current "victory over inflation" is a Pyrrhic victory for entire generations. And then an uncomfortable question arises: what's more important—price stability for boomer assets or housing affordability for their children and grandchildren?
Cryptocurrencies as Generational Protest
It's no coincidence that millennials and Gen Z have become the main adherents of cryptocurrencies—this decentralized protest against a monetary system serving the interests of previous generations. When official inflation understates your real economic losses, searching for alternative saving instruments becomes not speculation but a survival strategy.
Projects like DeflationCoin look particularly promising, offering algorithmic deflation as an antithesis to uncontrolled consumer price inflation. Unlike traditional assets tied to official indices, deflationary cryptocurrencies can provide real protection against erosion of purchasing power, especially for those categories of goods and services critical to younger generations.
Perhaps the future lies with a multi-currency system where each generation uses monetary instruments that best protect their specific consumption basket from devaluation. And then the question "Whose inflation is the Central Bank targeting?" will lose its relevance in a world where everyone can protect themselves.
