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, CNN.money, 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?

Letting Go

My dad brought an ancient Gingko log into the backyard. It sprouted leaves every spring. Without any roots mind you, or branches, but somehow through capillary attraction it sucked up moisture from the soil and pushed forth a few fan shaped leaves. Dad never got around to carving it before he died, but it became one more thing the salvage guys carted out.

Tightwads by nature hold onto things. There’s even a technical term for it. Sunk cost fallacy. It’s the too small clothes kept in the hopes of losing enough weight. Odd bits of string. Scrap paper. Little stubby pencils that barely fit in the sharpener anymore. We invested capital in these things and by jingo we want our money’s worth.

Eventually it leads to clutter.

This may sound blasphemous. There comes a point when it’s not worth holding onto. Face facts. Granted, the pencil lead has a tad more life in, it but the eraser is shot. The new pencil erasers are drying up even before you get to use them. You won’t lose those 50 pounds. I’m sorry, it’s true, you won’t. And if you lived to be a hundred, you won’t need more scrap paper. Junk mail will always come to your mailbox, you’ll always have a fresh supply.

It has spiritual implications. We hold onto habits because they’re comfortable. We hold onto stuff as a buffer for the future. We don’t really believe God will provide when we need it, but have to stockpile to insure protection against every contingency.

The first step is to admit you have a problem. “Hello my name is______, and I’m a packrat”. The second is to realize you have sinned by seeking to control your world, and to admit you need God’s help to overcome fears and put sin to death.