CFP asks “Is Your Wallet Screaming ‘Inflation’?”

Damn right it is!

Is Your Wallet Screaming “Inflation”?
By James Sharp  Thursday, March 3, 2011 – CFP

I would like to start off by stressing the fact that I am NOT an economist. I am a “working Joe” that gets up and goes to work every day – as I have for thirty-five years – in order to pay my bills and feed my family. I do not profess to be an expert. However, I do know what my wallet is telling me – and it isn’t telling me anything good.

I need not mention what we are seeing at the gas pump these days. The price of a gallon of gasoline has skyrocketed (in my home state of Florida) from just over $1.50 per gallon at the end of the Bush administration to close to $3.50 for that same gallon today.

Anybody that believes that inflation is really 1.63 percent (as told to us by the federal government’s Bureau of Labor Statistics in its Consumer Price Index summary) is not living in the real world. If you shop for groceries, gasoline, insurance, or basically, ANYTHING (computers and other electronic goods notwithstanding) on a regular basis, you have seen a steady rise in prices for a number of years.

There is a web site that offers an “inflation calculator”. This is very intriguing and allows one to determine the rate of inflation between any two dates from 1914 to the present. You can then enter that inflation rate and a dollar amount (such as the cost of goods or services) and determine what the inflated cost is. According to the information on this site, the inflation rate from January 2000 to today is 30.46 percent. This means that something that cost one dollar in 2000 costs $1.30 today.

I like to think of prices in terms of my “personal price index”. I do most of the grocery shopping in my family and I am keenly aware of the prices that I pay for the goods that I purchase regularly. Take, for instance, a popular national brand of orange juice that I was able to buy on sale (back in 2000) in half gallon cartons for three for $5.00. That same container of orange juice today will cost you $2.99 when you can find it on sale. But wait – the vendor recently reduced the package size from a half-gallon to 59 fluid ounces. This increase in price PLUS the decrease in package size yields a net increase in the per-ounce price from 2.61 cents to 5.07 cents, or 94 percent. And this has taken place since 2000.

Granted, many factors can enter into the price of orange juice including freezes in Florida. But this is a steady long-term increase – not a seasonal trend. And how many other products can you name which have seen similar increases in price along with a decrease in package size? Ice cream and coffee are two that immediately come to mind. Or have you purchased a bag of sugar lately? A four pound bag that used to be five? If not, you are in for a shock.  My 82-year-old mother told me just the other day that the yogurt that she has been purchasing for quite some time for $2.49 just increased in price to $2.79. This sounds like a twelve percent increase to me – in one fell swoop; not over an extended period of time.

We know that the Federal Reserve has been, for the past several months (and will continue doing through the third quarter of this year), increasing the money supply by a process euphemistically known as “quantitative easing”. The irony here is that they are not making it easier on the working people. Increasing the supply of money is the only real cause of inflation and this is precisely what the Fed is doing. The price of oil (as with the price of everything) is controlled by the laws of supply and demand. But with the Fed seemingly trying to destroy the dollar, investors are turning to commodities such as gold, silver, sugar, and OIL. Not only has oil seen a large run-up in price lately, but silver (from which, once upon a time, our coins were minted) has increased over twenty percent in the past month alone.

I believe that we are seeing people eager to spend their dollars while there is still at least some value left to them, albeit not much. Hence the demand, and increasing prices, for the aforementioned commodities. It is a vicious cycle. The more the Fed devalues the dollar through forced inflation, the more investors try to unload their dollars by purchasing tangible assets with real value.

We have all heard stories about Germany in the 1920’s and the inflation that that country experienced. Stories abound of people using wheelbarrows full of money to purchase loaves of bread. Such stories may seem absurd to a majority of Americans today. But think about it in the context of such inflation taking place over a period of many years. This is precisely what we have seen in this country. The dollar has lost over 95 percent of its value since 1900. This means that, what once sold for less than five cents now costs a dollar – two 50-cent rolls of pennies – or more. A forty cent loaf of bread of a few decades ago now costs upwards of three dollars. Hence it is not difficult to spend a wheelbarrow full of pennies on a single trip to the grocery store.

In my opinion, if it looks like a duck, waddles like a duck, and quacks like a duck – it’s a duck. Well, if it looks like inflation and feels like inflation, it IS inflation, regardless of what the government tries to tell us.

Fed chairman Ben Bernanke is whispering, “Don’t worry.”

But my wallet is screaming, “Inflation!”

Explore posts in the same categories: Economics, Economy

17 Comments on “CFP asks “Is Your Wallet Screaming ‘Inflation’?””

  1. tgusa Says:

    Have you noticed the hidden inflation? Portion sizes, not the cartons are getting smaller even as the prices go up, blame Carl W Goss, I think its his fault.

    • Yes I have! Go into a supermarket and check out the bacon. Companies have started packaging 12 oz versions of bacon so that they can fool the unwary consumer into buying it at a lower cost while still thinking they are picking up a pound of bacon.

      Very sneaky. One time, they even fooled me when I was in a rush and didn’t check out the weight on the package. Never again, though!


      • tgusa Says:

        More potatoes, less meat.

        • Can’t. I’m a firm adherent to the Atkins way of life and can’t say enough good things about it. I wouldn’t eat potatoes unless it was a survival situation, or something. In other words, In my mind, potatoes are right there alongside cannibalism.

          The other day, we didn’t have hardly any food in the house, so Mrs. Bulldog dug into our emergency supply of canned goods and nuked some Dinty Moore Beef Stew. To her dismay, I sat there picking out and feeding the dog every single little potato piece in the stew while I was eating it. It took me a good 1/2 hour to do so, but I’m pretty darn sure I eliminated about 20 or 30 fat inducing carbs by doing so.

          Yup, Mrs. Bulldog thinks I’m nuts or something when it comes to my zealot-like devotion to the Atkins style of eating—especially now that I’m at an appropriate weight for my height and age—but she’s the one who started me on Atkins over three years ago. And she, of all people, should know that I’m not very good at doing things half-assed.



          • tgusa Says:

            No, I meant, when people (not you) go to buy meat and potatoes, like Dinty Moore (or less in this case), they are getting more potato less meat.

            Man cannot live by bread alone, but potatoes will take you a long way. Onions too.

          • tgusa Says:

            We should get together because I usually pick the chunks of meat out of canned goods.

          • “I usually pick the chunks of meat out of canned goods”

            To eat or throw away? If you are throwing them out, send ’em my way! 🙂


          • tgusa Says:

            I used to feed them to my dog but he died. My cat is finicky and only likes dolphin free canned tuna.

          • tgusa Says:

            But I used to feed my dog lots of stuff that they say not to feed them and he lived about twice as long as a dog his size usually lives, he may have secretly been on the Atkins diet, I’ll never know.

          • Mmmmm…Dolphin…Yummy….

            I sure do miss dolphin meat in my tuna! Freakin’ environmentalists!


          • tgusa Says:

            Yeah, I once tried to feed him some canned dolphin that I told him was swordfish but the next day I found a beheaded rat on the ground below my fuel filler cap so I never did that again, typical lefty.

          • LOL! Yeah, our cats are rebelling by bringing us dead mice and moles because we’ve switched them to cat food formulated for a healthier urinary tract. Yup, cats are like that. Not like dogs at all. Dogs aren’t that finicky about what they eat. Heck, our Rhodesian Ridgeback likes to sneak into the laundry room and eat fresh cat poop out of the litter box! Yuck!


          • tgusa Says:

            I had a cat that lived to be twenty two and except for treats here and there all he ate was costco dry cat food. I rescued him from a pet store, I was buying goldfish for my salt water tank and he was getting big and no one would take him so the owner paid me to take him, I think it was fifteen bucks and free shots. Hey it was Christmas time and I’m sort of a sucker for that sort of stuff.

          • tgusa Says:

            I wouldn’t even have noticed except that he spoke to me as I passed by his cage.

          • I once had a calico cat that could actually speak. Not full on conversational speak, mind you, but a number of words and short phrases. It was cute, but in a kind of creepy way.

            Nothing like a cat screaming, “NO! No way! NO!” over and over again while getting checked out and immunized by the vet.




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