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.