The Myth of Inflation

Standard

For today’s post, I am going to take on one of today’s Shibboleth’s: Inflation.

So much of today’s economic life includes an assumption of inflation. The government tracks it, issues COLAs (Cost of Living Adjustments) based on it; banks and businesses and individuals factor it into their business plans and loans and retirement goals.

And yet, all these calculations are based on static factors that don’t really exist. Let me unpack some of the thoughts that I mean by that statement.

We have been told that our generation is the first to expect to be less well off than its parents. How are we less well off? Materially we have cell phones, computers, DVDs, the internet; there are more food options than ever. True, we have more government oversight and limitations, government intervention, but on the material front we have more, but the important distinction is we have more and DIFFERENT than our parents. Our standard of living has changed qualitatively as well as quantitatively.

And yet we are still being told that we are worse off. Why? One of the factors is inflation. Another is the job opportunities. We have less security and opportunity in our jobs. Yet with that we manage more physical affluence. It is a real conundrum.

Being better or worse off, either in the parental view, or in the question of standard of living and inflation, assumes a common standard against which both of these events can be measured. Yet that is exactly what we don’t have. The employment world we have is not the same world of the big corporate giants. Our job situations can’t be measured the same way when everything is so open now, so permeable and flexible. The same goes for inflation. Measuring the price of bread now and 10 years ago, or 20 doesn’t tell us anything: we don’t eat bread the same way, it isn’t the same part of our lives. Even tracking the price of gasoline doesn’t tell us anything.

I think this hit me quite forcefully when I saw a commercial for a new car the other day. I wasn’t really paying close attention, so I can’t even remember the make or model, but the price of the car did register: $12K.

The reason this pinged, is that I have only bought one new car in my life, back in May 1998. The Saturn SL I bought back then was $12,300 before taxes, etc. That was 18 years ago. And yet today I could buy a comparable car, for size, quality, mileage, etc. for $12K. In fact, this 2016 car has all sorts of internet-aged amenities as standard (in a standard-shift vehicle) . Where is the inflation here?

Now, I’m not saying that inflation exists, but inflation as we have been sold it doesn’t exist. It is an industry of governments, politicians and policy-makers to control the public and its attitudes. It also shows how all these industry-makers are static-thinkers themselves, and don’t recognize the realities of the world around them.

These industry makers can create great economic havoc, inflate the currency, but they really don’t have a clue about the qualitative difference. in our lives that negates and flows around much of the chaos that they doubtless will eventually create when they pull the current economic house down — or at least try to — to achieve their goals. But the reality of our lives will continue to flow around their fingers and elude them. It always does.

Life always creates black markets and smuggles its vitality around the attempts  of governments and do-gooders to tell people how to act against their own expressed self-interests.A lot of life plans, based upon these false assumptions, will be ruined and revised in the tumult, but new plans and opportunities will emerge. Every obstacle is also an opportunity.

 

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