According to government measures, inflation in the U.S. is all but non-existent. The officially endorsed Consumer Price Index (CPI) claims a mere 1.5% rise in prices over the 12 months ending last March. Food and energy, which are excluded from core inflation, rose 1.5% and fell 1.6% in the same release.

Suffice it to say Peter Schiff, founder of Euro Pacific Capital and author of The Real Crash, is skeptical of the data.

Citing The Economist's Big Mac index, Schiff says real inflation has been understated since the government started adjusting the way inflation was measured in the early 2000s. Since 2002 the Big Mac has risen in price at nearly three times the rate of overall inflation.

As Schiff sees it the discrepancy between the data points is "more anecdotal evidence that what we get from the government when it comes to inflation is not information but propaganda."

There's plenty of anecdotal evidence that inflation is running hotter than the government says, making it impossible to convince hawks that hyper-inflation isn't looming large. The problem with the theory is the unreliability of anecdotes.

There's a psychological instinct called confirmation bias that effectively disqualifies the anecdote as a measurement tool. Simply put, people with a strong opinion on a matter will seek and recall evidence supporting that belief. If you believe inflation is rampant but unreported, it's easy to find examples to support your case.

The unimaginable amount of money dumped into the system over the last five years should have triggered inflation of some sort. There are two explanations for why it hasn't. One is that the CPI is either a flawed tool or an outright fraud. The flawed part is obvious, but it's a huge leap to go from there to conspiracy.

Another explanation is that inflation exists in pockets, but that the real enemy is deflation. The Fed feels it knows what it can do if prices ramp out of control — simply hike rates. What the FOMC can't do is make people buy if they don't want to do it.

In big-picture America, corporate balance sheets are impossibly flush and rates are nearly zero. The Fed had hoped that making money cheap would lead to capital expenditures by corporate America. Instead companies are ignoring cheap money, tax incentives and ample available labor, in favor of buying back their own stock.

It's hard to create inflation without demand. The price of a Big Mac is rising and the CPI is flawed, but that doesn't mean the age of hyper-inflation is upon us. For that to be the case there would need to be demand. There are nascent signs of prices rising in autos and real estate but little to support the case that inflation is out of control — yet.