Saturday, April 30, 2011

Inflation, the Silent Killer?

I’ve been talking to myself lately, and mulling around some Len Penzo stuff. He’s one financial blogger I follow regularly, always thought provoking. A while back he suggested inflation was the government’s way to tax individuals without showing the bruises. Current government obligations will be paid in post inflationary dollars while interest rates charged on their loans remain relatively low.

He mentioned in another post, if we took the 1970 criterion used to track inflation, costs are actually up 9.6% over last year. Yet according to government stats, the current CPI (Consumer Price Index), is 2.1% . It’s based on a newer “typical shopping basket” which skews results. Why is this important? The CPI is used to calculate our “inflation rate”. That rate determines social security benefits, other “entitlements”, and many times governs the “cost of living” salary increases in the private sector.

Another Len Penzo post included individual stats for commodity changes over the last year on coffee, wheat, cotton, sugar, gasoline, etc. It’s a more accurate indicator of present/future price increases as retail prices generally follow wholesale. I went to his source last week,, and found this info. Pork bellies, up 30.55% over a year ago, unleaded gasoline, up 31.79%, heating oil, up 44.26%, sugar, up 57.89%, wheat, up 60.50%, corn, up 103.38%, coffee, up 121.51%, feeder cattle, (where your hamburgers come from), up 18.%, cotton, up 124.63%. So kiddies, now you know why Mom is rationing your Sugar Gobs cereal.

According to the US Census Bureau, the average household income in 2009 was $49,777, down from $50,303, in 2008 and $50,233 in 2007. It was $48,201 in 2006. The 2010 stats aren’t in yet, but they won't be pretty.

To clarify, a household is defined as one or more persons living together. The current US average is 2.63 people, and slowly rising, as kids stay home longer and older folks move in with the kids. It’s crazy. We’re being squashed from three directions. All these stats together means less money per person to pay for more expensive goods.

So how do we handle it? We can gripe. We can worry. Panic even. We can demand our legislators act wisely, budget within incoming revenue. (No guarantee they will.) Write letters to the editor. Stockpile. Buy gold. We can scramble for alternative housing situations. Live in treehouses. Squat in abandoned buildings. Build tiny portable homes. Start communes. Go off grid. We can try other ways of obtaining needed goods. Borrow. Share ownership. Rent. Barter. Become freegans. Forage. We can tighten our belts across the board, scrimp and save. We can develop a “side hustle”. We can divert personal resources from wants to needs. We can put in a Victory garden and keep chickens.

We can do tons of things, but what if they don’t work? Have we considered God is getting our attention by hemming us in? The thing that owns our thoughts, has our worship. (I’m talking to myself here.) What if we focus on him and ask for wisdom? We may end up doing many of these same things, but at least our priorities will be right. While everything else is throwing temper tantrums for our loyalties, why not seek him? Could comfort be the real killer, the thing that has us by the tonsils? What if we take to heart the verses,”I can do all things through Christ who strengthens me” or “Your heavenly father knows you have need all these things, but seek first his kingdom and his righteousness and all these things shall be added unto you”. What if?

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