Skip to comments.The incredible shrinking dollar
Posted on 01/19/2011 9:57:08 AM PST by FromLori
Spending power erodes, and Fed may do more damage
Guess what? Your pocket has been picked.
I dont mean your wallet, or even its contents. What I am referring to is the buying power of the money it contains.
The consumer price index (CPI) tells the story. As you know, it measures the change in prices of a fixed basket of goods and services that the typical household supposedly purchases every month.
The recent trend of the CPI does not reveal much to worry about. In 2010, consumer prices rose a relatively benign 1.5%.
However, there is more to this story. For one thing, prices in the month of December alone rose a whopping 0.5%. That was the biggest monthly rise since June 2009.
And the fact that most of the rise was traceable to an 8.5% jump in energy should not ameliorate our concerns, since we all use energy just like we all consume food.
Besides food and energy, other items in the consumers basket went up as well, including health care, apparel and airline fares. Few items fell.
Longer term, the bucks buying power has been shrinking for years indeed, for decades.
In just about every year, the value of the dollar has gotten smaller, the only difference being the rate of shrinkage. In some years it was faster, while in others it was slower.
This was brought into bold relief by a study released the other day by the American Institute for Economic Research (AIER). It tracked consumer prices over the 20-year period 1990-2010.
During the past decade alone, AIER calculates that the dollar has lost a thumping 20% of its purchasing power. Since 1990, the overall loss is nearly 30%.
(Excerpt) Read more at marketwatch.com ...
The last two times we have been to the grocery store we have had to pull out the receipt in the car because we could not believe that little amount of products for so much money.
It’s terrible how about the shrinking packages all the formerly 16 oz. cans are now 15 oz., tuna fish is now only 5-1/2 oz. A lot of my recipes that I have used for decades now have to be revamped or I have to buy 2 and all this at a time when we get next to nothing on our savings thanks to the Fed!
I marvel at these numbers when I examine my coins and get a knot in my stomach when I think of all the money I still have in worthless CD's.
I would hang onto those coins!
What I find interesting is the way individual prices have been going up. I often find that the price of an item goes from $25 to $30 in a single jump, instead of inching up from $25 to $26. Most recently, my favorite shampoo went from $.97 to $1.57 overnight. (I buy cheap shampoo for what’s left of my hair...)
I cry BS on our lying government! They've been manipulating every index in existence to disguise the effects of their treason. Prices on everything are exploding because the dollar is worthless.
And all of this is because of the treason committed every day by those bungholes in DC.
I agree BS! During the carter years they took Food and Energy costs out of the CPI what kind of crap is that the two most important things we need daily.
The “headline” CPI - the All Items Consumer Price Index for All Urban Consumers (CPI-U) — INCLUDES FOOD AND ENERGY.
Food and energy components were NOT taken out of CPI-U during the Carter years, or any other years.
However, a separate indicator that excludes food and energy components is also calculated. This is often referred to as “core inflation” and it is the primary indicator used by the Federal Reserve for setting monetary policy. Investors are interested in this number because they must always predict what the Fed is going to do.
The Bureau of Labor Statistics also calculates an index for all items consumed by urban wage earners and clerical workers, CPI-W, which closely tracks CPI-U and also includes food and energy. CPI-W is used to escalate social security, Federal pension, and other welfare benefits. Inflation-indexed securities are indexed to CPI-U. The core inflation rate is NOT used for this purpose.
If you doubt this, see http://www.bls.gov/cpi/cpiqa.htm.
The CPI-U has been low the past two years because energy prices fell sharply after the $150 spike in crude prices and housing costs have busted since the financial meltdown.
There were changes during the Reagan Administration that are subjects of legimate criticism. The first is the “chain-weighting” of the various CPI components to reflect the fact that consumers buy less of a good when prices go up and more of a good when prices go down. The chain-weighted inflation rate is generally lower than fixed-weight inflation rate. The second is the “rental equivalence” basis for evaluating inflation of housing costs. The “rental equivalence” method can work either way, but lately has significantly reduced the the calculation of CPI-U.
I should have said taken out of reporting they do not count the cost of food or energy when reporting on inflation it was changed during Carters years.
Inflation in foodstuffs is really starting to escalate. I find the same thing as you in that department. Canned goods which used to inch up 2-5c at a time now have increases in the 10-15c range. In between pauses, the packages shrink.
Time to revisit devaluation. No one believes Geithner and his pronouncements last fall ... http://www.reuters.com/article/2010/10/18/us-usa-dollar-geithner-idUSTRE69H4VO20101018
In Nov 2010 Geithner says ... well, I won’t “intentionally” devalue the dollar (but it may happen just the same) ... http://latimesblogs.latimes.com/money_co/2010/11/geithner-greenspan-fed-qe2-dollar.html
Nobody believes this guy, who has been trained to keep secrets and lie very effectively:
- GM Chapter 11 (http://www.thetruthaboutcars.com/2009/06/geithner-lies-beijing-laughs/ )
- AIG (http://www.businessinsider.com/did-geithner-lie-2009-3 )
- New World Currency (http://narrolibertas.wordpress.com/2009/03/27/03252009-lou-dobbs-tim-geitner-lies-flip-flops-on-new-world-currency/ )
Plus, you cannot spring a devaluation if everyone is expecting it shortly. Hence, now is the best time for him to spring it ... right in the middle of Mid East chaos and US financial chaos. A new reserve currency must surely be around the corner.
Your post #23 at http://freerepublic.com/focus/f-news/2666477/posts deserves a PING ... their goal is to collapse the dollar
One way or another
Speaking of collapsing the dollar one could easily come to the conclusion that the middle east going up in flames was intentional since obama was warned about food inflation but rather then stop spending the fed is monetizing our debt and at the same time that continued printing is also being named as a cause of the inflation.