Killer Inflation

You can’t hide your lyin’ eyes

And your smile is a thin disguise

I thought by now you’d realize

There ain’t no way to hide your lyin’ eyes 

                    Eagles 1975 

I knew they were lying but I couldn't prove it.  I just knew it.  For years now, especially the last few, the government has been telling us that inflation is low and totally in control.  Typically their numbers are coming in at 1 to 2%. 

My eyes were telling me the opposite.  With the possible exception of tech, I could not think of one product or service that I used that was only going up 2%.  I asked friends and family, and no one else could either.  My credit card bill was skyrocketing.  My health insurance premiums were going up 20% a year with no health problems, when the government was telling me that they were barely going up at all.  The price of gas doubled since Obama took over and every product uses fuel, whether in manufacturing, transportation, etc.  Yet I was supposed to believe that miraculously prices were barely moving when gas was rising rapidly.

          So I knew it was a lie, but I didn't have any real proof.  Typically when I write about finance I like to have evidence to back me up.  One friend, a strong Obama supporter, told me that I was a conspiracy theorist for saying that the consumer price index numbers were bogus.

          And then the brilliant Peter Schiff decided to actually do the research.  If you don't want to take the time to watch the full video here, the short version is that inflation is going up about 7 to 10% a year, minimum.  This was not rocket science; he simply went back in time and measured the price of items then compared to now.  Some of the numbers are shocking, not because prices have gone up so much, but because they have gone up so much when the government was telling us the opposite.

          A few takeaways from the numbers: First, this puts tremendous financial pressure on most people.  If you're not getting substantial raises every year, you’re falling behind.  If you're fortunate enough to have some money to invest, you better make sure you’re making at least 10% a year on them, or you're losing money.  Conservative investing no longer does the trick; you have to go for homers and not singles. 

          Most troubling is that people on a fixed income, like the elderly, are just getting destroyed.  Their cost-of-living increases are based on the phony government inflation numbers, so they’re barely getting any more money at the same time that prices are going through the roof.

          As Schiff noted in the video, more people are noticing and becoming concerned.  I think, though, that the reason that you're not seeing rioting in the streets (coming soon to a theater near you) is that inflation is an insidious, hard-to-see tax.  You go out to dinner and your meal is $9 instead of $8, and you barely notice.  Your $2 Starbucks is now $2.30, but you don't care because 30 cents isn’t going to break you.  We don't stop to think that all these little price increases are actually big price increases of over 10%.  At the end of the year that means you have 10% less money, and at the end of 5 years it's gotten really ugly.

          I feel like I need to say something happy to end this somewhat depressing blog.....hold on.....thinking.....at least the Starbucks keeps me awake so I can write my blogs.....that's not good enough.....forget it, there's nothing good to say about inflation.

Have a good night everyone.

 JR    

 

--------------------------------------------------------------------------

P.S.  If you like my blogs, put your e-mail address at the top right and they'll be e-mailed to you as soon as they're posted.  If you don't like my blogs, we need to have a long talk.  Thanks.

Rise of the Phoenix

Got no place to go
But there's a girl waiting for me down in Mexico
She's got a bottle of tequila, a bottle of gin
And if I bring a little music I can fit right in

Oh, well happy New Year's baby
We could probably fix it if we clean it up all day
Or we could simply pack our bags
And catch a plane to Barcelona 'cause this city's a drag

            Counting Crows 2004

Phoenix is on my mind tonight.  I recently got back from a family vacation from there and the Grand Canyon.  First, the good:

-The people are extremely friendly, more so than in Atlanta.  Even the folks behind the cash registers are nice;

-The city is bizarrely clean.  I couldn't figure it out.  I just didn't see any trash, anywhere.  It's as if they instituted the death penalty for littering.  And now the bad:

-It is by far the ugliest major city I have ever seen.  The town is colorless.  It's a desert, so everything looks like it's about to shrivel up and die.  You see a lot of cactus, and very little grass.  In place of where the grass would normally be, like in medians, it's all gravel.  For some reason it reminded me of an ashtray;

-Within 10 minutes of being there I asked my wife for moisturizer.  I had always laughed at people who talked about “dry heat".  I just assumed they were like local newscasters, bantering about without really anything to say.  I was wrong.  Although the temperature was great for December (mainly in the 60’s), you just immediately dry out.  It's hard to describe; you don't sweat.  I couldn’t live there year-round.  And the miscellaneous:

-The demographics were unlike any city I've ever seen.  Atlanta is black and white, with sizable and growing Hispanic and Asian minorities.  Phoenix is Hispanic and white; I didn't see more than 10 African-Americans the whole time I was there.  After spending about a week there, and walking through the Super Target with large, bilingual Spanish and English signs, I realized something about the immigration debate (which apparently will be a major topic for Obama’s second term); it's irrelevant.

          I always think that immigration reform is really code word for “we don't want any more Hispanics in the US”.  Look, I'm for a very strong, tight, US border, but deep down I think that's how most people view the immigration debate.  I just can't see people getting so worked up if, for example, it was 12 million Jews or Asians who were illegal ("They're stealing all the accounting jobs! THIS MUST STOP!”). 

          In any event, when you're in Phoenix you realize that, well, it's too late folks.  Whether you’re happy about it or not, the amount of Hispanics in America will continue to grow.  They are the biggest minority group in the country already, with the highest birthrate.  It may make some people feel good to talk tough about deporting the illegal ones.  But it's irrelevant.  The horse has left the barn.

          -Did you know that the Grand Canyon is freezing in the winter? I didn't.  Don't make the same mistake I did.  It lives up to the hype, but it's challenging finding the right time to go.  I've been told it clears 100° in the summer. 

          -Uno is a fantastic game.  It's really a complex adult card game masquerading as a kid’s game.  Although it doesn't have the level of complexity and strategy as no limit poker, which I know a little bit about, it requires many of the same skills to be good.  My wife and I played a bunch on vacation, and still occasionally play (I'm guessing my single friends are cringing when they hear I took a vacation and played kids’ card games.  You know what I did on New Year's Eve?  The same thing I do almost every night of the year.  Enjoy your singlehood while it lasts).

Have a good night everyone.

JR