FedUpUSA

Shadow Inflation And Economic Slight Of Hand

 

A shadow inflation hits shoppers through economic sleight of hand:  Inflation and the hidden side of finances.

Anyone that shops realizes that the price of goods has only gone up.  Yet by how much is deceiving by economic chicanery.  The Federal Reserve has taken a baseball bat to the US dollar and the purchasing power of what Americans carry in their wallet.  Yet many Americans have been duped into thinking inflation has only been occurring at a moderate pace.  Those that already know about the insidious side of a crushing dollar are college students and those having to pay medical bills.  However shoppers at grocery stores are seeing the hidden cost of inflation through innovative ways of repacking items and giving you less while trying to convince you psychologically that you are still getting the same.  The cost of high fuel is being passed on through the supply chain channels and a lower dollar simply means you have less purchasing power.  How much less is a matter of how carefully you look at the label.

 

The shadow inflation through the US dollar

The Fed has been on a mission to crush the US dollar.  This isn’t some kind of hidden agenda.  It is right out in the open:

us dollar index chart 2012

The US dollar has lost 50 percent of its purchasing power since 1985.  What has made the pain much more real is that most Americans have seen a decline in their wages and their overall net worth.  The above is a logical extension of the Federal Reserve digitally creating money out of thin air.  Today debt equals money.  If you keep increasing money (aka debt) what do you think will happen?  The Fed balance sheet now stands above $2.8 trillion in questionable debt assets.  The decline in the US dollar is simply what occurs when you spend way more than you earn.  Our $15 trillion national debt is a testament to that.

Since the average household doesn’t have the ability to print money out of thin air or create debt instruments with a few keystrokes, they typically pick up the bill on this shell game.  There literally is no free lunch when it comes to inflation.  Take a look at this:

inflation in products

Nabisco’s offers a Fresh Stacks package that contains 15 percent fewer crackers than the previous package listed on the bottom.  If you got 15 percent less for basically the same price, would you not call this a price rise?  Of course the BLS measures a basket of goods and doesn’t really pick up these tiny changes.  Or take for example cans of tuna:

chicken of the sea

Chicken of the Sea now typically comes in 5-ounce cans versus the traditional 6-ounce cans.  This is over a 16 percent reduction for the same price.  You can understand why the average household even though they may spend the same or more at the grocery store is really getting a good amount less for their dollar.  Well of course, the US dollar has lost 50 percent of its purchasing power since 1985.

The supply chain is enormous and the rising cost of fuel is typically passed all the way down to the consumer.  Since the average American makes $25,000 a year and many are now frequenting dollar stores for their shopping, companies realize they can only hike prices up by so much.  Instead companies have been savvier about passing costs by reshaping their packaging.  So the cost of the item may remain but the true cost has actually gone up.

Read the rest at My Budget 360

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