Friday, September 28, 2007

Inflation Nonsense

The best way to try and give readers an idea of the purpose of this blog, I would like to start with a post on inflation. Inflation is the gradual (sometimes not so gradual!) increase in the price of items and services. The government publishes numerous inflation numbers every month, and I urge you to begin to read that number on a regular basis. While there are many different reads on inflation, the purpose of this post is to highlight a major Disconnect between what is reported and what you see everyday. Now the last year has seen the CPI (a measure of inflation) hover around 1.8%-2.8%. That seems pretty low. Now think about how your costs in the following areas have fared in that same time period:
1. Gas
2. Food
3. Health care
4. Heating/Cooling bills
5. Real Estate Taxes

Chances are you will not recognize the wonderful 2% inflation in those areas! This is what I hope to discuss on this blog. Just today, one of my favorite blogs, The Big Picture, had a post on inflation absurdity
and I recommend reading that post.
Another excellent phrase that sums up what is going on today is what Todd Harrison over at likes to call "Inflation in things we need, and Deflation in things we want". As all the necessary costs skyrocket, things like TV's, cars, and computers go down in price. Thats helpful isnt it?

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