How Is Inflation Measured.....
I can't speak for the rest of the world although all the things I mention here are certainly similar around the world at the moment. In Canada inflation has been unleashed in many different formats. It is going to be similar in the US in the not too distant future.
The very first thing that comes to mind is one cent. It no longer exists here in Canada. It was removed from circulation about three years ago. Now this might not seem like a big deal at first glance. However when we do the real math it does have a profound impact in how goods and services are calculated and what it means.
For example if you go to a store and you buy products, you get a total at the end. Usually it is in dollars and cents. Say 35.78 or 35.77. Well what the stores now do when a total like this comes up is to round off the amount if you are paying in cash. So it would be 35.75 if it were up to 35.77 in total or 35.80 if the total was 35.78. Anyway you slice it there is a loss unless you are paying by credit or debit which is a direct charge from your bank. Either the retailer losses out or the customer losses out. It might not seem like a big deal quibbling over a few cents but what about millions of consumers paying in similar fashion or retailers accepting cash. It literally means a loss of purchasing power and whats worse if you pay in cash you literally lose money. Does anyone stop to think of the loss?
Not likely because most people don't even look at their credit card to see if there are any mistakes, overcharges or fraud. For example there are hackers out there that will steal your credit card information and take 1-3 dollars for say a million cards. No one notices so the fraud simply continues month after month.
In the case I was describing with the cent it is fraud by devaluation. In other words money does not buy what it used to. I say this because no one thinks that the money printing has done anything to harm the average fellow.
Well it has. In a huge way.
Here in Canada the average price of a home is 536,000. Not long ago (say about ten years) that same home was only 225,000.
A 2x6 piece of lumber went from being 4.36 ten years ago to being over 8 dollars now. That is approximately a 100% rise in price. No inflation?
What about a steak? Everyone loves to eat a nice steak right. Well it went from around 3.00 or less about ten years ago to now well over 10 dollars for the same steak.
Gas is the same, heating oil, hydro, and many other staples.
Yes technology is driving down the prices of certain things in certain areas but NOT the areas that most people use. Farm land is ridiculous now.
The cent is the best example I can use because now it no longer exists as if it never had any value. It did at one time and in 1975 if you strung 10 of them together you could buy a loaf of bread. Maybe 1975 seems like a long time. It isn't. It simply represents what has happened to your money over time.
There was this thought of mine back when I was younger maybe in the early 80's that if you had a million dollars you would put it in the bank and simply live nicely off the interest for the rest of your life. Do you remember that thought? I do. However back then a hundred thousand was a lot of money.
Now, what is a million dollars?
How long will that carry you?
Not too long with low interest rates and the cost of living going up and up. The 80% don't really know and in truth they might gripe about the government, taxes and their job but I don't really think they get what has happened.
You can suppress free market value and you can rig the markets. However one way or another it comes back to bite you in the ass. Like life itself. It finds a way to manifest.
For the average fellow it is hard to get ahead in this kind of environment that only favors the ultra wealthy or credit worthy. With so little value there is no way for him to get leverage and when he does there is a good chance that his risk will not pay out. So if you are wondering how bad it really is measure food and start noting when they remove certain money from circulation because it has no value. Cheers!
The very first thing that comes to mind is one cent. It no longer exists here in Canada. It was removed from circulation about three years ago. Now this might not seem like a big deal at first glance. However when we do the real math it does have a profound impact in how goods and services are calculated and what it means.
For example if you go to a store and you buy products, you get a total at the end. Usually it is in dollars and cents. Say 35.78 or 35.77. Well what the stores now do when a total like this comes up is to round off the amount if you are paying in cash. So it would be 35.75 if it were up to 35.77 in total or 35.80 if the total was 35.78. Anyway you slice it there is a loss unless you are paying by credit or debit which is a direct charge from your bank. Either the retailer losses out or the customer losses out. It might not seem like a big deal quibbling over a few cents but what about millions of consumers paying in similar fashion or retailers accepting cash. It literally means a loss of purchasing power and whats worse if you pay in cash you literally lose money. Does anyone stop to think of the loss?
Not likely because most people don't even look at their credit card to see if there are any mistakes, overcharges or fraud. For example there are hackers out there that will steal your credit card information and take 1-3 dollars for say a million cards. No one notices so the fraud simply continues month after month.
In the case I was describing with the cent it is fraud by devaluation. In other words money does not buy what it used to. I say this because no one thinks that the money printing has done anything to harm the average fellow.
Well it has. In a huge way.
Here in Canada the average price of a home is 536,000. Not long ago (say about ten years) that same home was only 225,000.
A 2x6 piece of lumber went from being 4.36 ten years ago to being over 8 dollars now. That is approximately a 100% rise in price. No inflation?
What about a steak? Everyone loves to eat a nice steak right. Well it went from around 3.00 or less about ten years ago to now well over 10 dollars for the same steak.
Gas is the same, heating oil, hydro, and many other staples.
Yes technology is driving down the prices of certain things in certain areas but NOT the areas that most people use. Farm land is ridiculous now.
The cent is the best example I can use because now it no longer exists as if it never had any value. It did at one time and in 1975 if you strung 10 of them together you could buy a loaf of bread. Maybe 1975 seems like a long time. It isn't. It simply represents what has happened to your money over time.
There was this thought of mine back when I was younger maybe in the early 80's that if you had a million dollars you would put it in the bank and simply live nicely off the interest for the rest of your life. Do you remember that thought? I do. However back then a hundred thousand was a lot of money.
Now, what is a million dollars?
How long will that carry you?
Not too long with low interest rates and the cost of living going up and up. The 80% don't really know and in truth they might gripe about the government, taxes and their job but I don't really think they get what has happened.
You can suppress free market value and you can rig the markets. However one way or another it comes back to bite you in the ass. Like life itself. It finds a way to manifest.
For the average fellow it is hard to get ahead in this kind of environment that only favors the ultra wealthy or credit worthy. With so little value there is no way for him to get leverage and when he does there is a good chance that his risk will not pay out. So if you are wondering how bad it really is measure food and start noting when they remove certain money from circulation because it has no value. Cheers!
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