Saturday, May 19, 2007

The New American Dime




Here are two coins, an old silver dime and the new Presidential dollar coin. Just for a laugh, which one is worth more? Answer, the silver dime is worth about 9 cents more.

To be a millionaire in the ‘1960’s meant something. In today’s world, a millionaire is a piker with 100K in 1964 dollars. Inflation makes people think that they are getting richer. People are making more money and their house and other investments have appreciated. What could be better?

Inflation is the hidden tax. Government spends a little more each year than they take in, probably about 3%. Over a 20 year period, the decimal point moves over one space to the right (i.e. $1,000,000 becomes $100,000). This worked pretty much OK until they passed Social Security.

When you contrast the silver dime with the new dollar, a new problem becomes visible, inflation taxation vs COLA (cost of living allowance) linked retirement benefits. What is different now, is that most of these retirement items that everyone depends on, were locked into the dime that was made of silver. So now benefits have to pay at the old dollar rate, inflation adjusted. As long as the dollar could inflate without COLA's, there was no problem. Once Congress linked the cost of living into retirement benefits, it created a monster that would bite them in the ass with every COLA increase.

Let's add to this, the health care package for seniors. Imagine, at the age of 55, your health insurance cost is $300 per month. What a relief that at age 65 it will be free. I am still talking BUBBLES and this is bigger than all of the rest. This bubble is not going away. Give it another 15 years before it's visible. The real question to ask; "Is it possible to believe that we, the people (the government) are really going to pay for what, we the people, (as individuals) could not pay?

Well, this kind of gives you an idea of where we are headed. They have super sized the dime and called it a dollar. So size does matter to your Congressman, doesn't everybody deserve a bigger dollar?

The government claims the inflation rate is under 3%, that keeps the COLA's low but kind of ruins their credibility. The real rate is probably closer to 12%, that's if you buy gas, milk, meat and beer. (Who can afford to buy all four at the same time?)

9 comments:

Anonymous said...

"The real rate is probably closer to 12%, that's if you buy gas, milk, meat and beer. (Who can afford to buy all four at the same time?)"

After many, many years of being able to grocery shop while paying some, but not a lot of, attention to sale prices, my wife now follows weekly sale ads like a hawk, waiting for "BOGOs" and other discounts, and comparing the content of house brands to the big names. For the rest of my life, my income is unlikely to rise more than 2-3% per year, so I can clearly see a gradual and persistent decline in the quality of what we can purchase. Good thing I love rice. Too bad she doesn't.
Chip

Jim in San Marcos said...

Hi Chip

My wife and I do the same thing. I hit Ralph's on the weekends at 8:30 in the morning for meat and bakery markdowns. Our dinner menu is determined by what's being marked down.

I freeze the mark down meat and it's usually quite tasty barbecued.

I usually don't buy steak because of the price, but today, 4 Rib Eye's were marked down from $12.99 a pound to $2.99, so I bought them. Total $9 --can't imagine someone paying $36 full retail for three pounds of steak.

I still got nailed when I bought water, 12 gallons at 75 cents a gallon. Last year it was 49 cents a gallon. Kalifornia water isn't fit to drink!

My paycheck is like picking up a hand full of sand, it's not in your hand long. So I know what you are feeling.

The 2-1/2% declared inflation rate by the government has a definite credibility gap. I guess those people don't buy groceries or gas

Take care

Numpty McHoon said...

I think I've worked out why the MSM has been so, well, mainstream: it always gives the positive spin on things.

The people behind the scenes who decide on what is fit to air would never question the methodolgies of calculating CPI. What would that accomplish? It might just get them fired.

Besides, bad news is bad for the economy.

Shhh! You don't want to wake the sleeping giant.

Of course being an ostrich isn't probably going to be very good for us Americans in the long term either.

I think blogs like yours Jim are becoming indispensible. Where bullshit talks, I and others walk.

I haven't (for more than one minute) watched a network evening news broadcast, or a cable news stream such as CNN or Fox (I like to call ir Faux News), in several years.

Not because they depress me, but because I'm sick of their avoidance of telling it straight.

I'm sick of hearing the official, sanitized version.

I don't think I am alone in this respect.

--

Took your tip about selecting identity too, btw.

--

MSM=Pravda?

Jim in San Marcos said...

Hi Numpty

Cute name. Thanks for the pat on the back, it feels good.

I think that the news media deals strictly in facts, where bloggers deal more with data that can't really be substantiated. So I would go easy on the news reporting.

If Greenspan says that COLA's are not right, that's news. If I say that in a blog--it only goes as far as the number of loyal readers.

What it really boils down to is this, the news can't give you an idea of what may happen, but a blogg can. There's the difference.

We can give you a "Heads Up," or a head start on what you need to do next. All the media is going to do is report it after it happens.

Numpty McHoon said...

Hi Jim-

True, in a best case scenario, the facts get reported.

Bill Moyers did a fascinating report in the first episode of his new series on PBS, about the collusion or willful neglect (pick your poison) by the fourth estate regarding the war. This aired about a month ago, iirc.

There was a very telling episode which perturbs me still, weeks later.

The scene was a press conference by Bushit. I don't recall the event, but it was either just after the invasion, or the announcement telling Hussein this planet ain't big enough for the both of us.

After speaking, Bushit acted like he was ready to field questions.

But Bushit was fumbling around with some papers at the podium (which wasn't shown on the nightly news, I suspect).

He must have been looking at a seating chart or something, trying to call on his favored scribes (whose names he must have forgotten).

He mumbled something like "Now, who was it I was supposed to call on?"

?

He then called out a name. The assembled mass of reporters seemed to say in unison "who?"

A pregnant, uncomfortable moment passed. Was the reporter even present? Maybe crammed in among others in the back?

She was.

How did he even know she was there?

When she finally got near a microphone, she said, I think, "Yes Mr. President."

Bushit actually looked perturbed. He had to prod her- "did you have a question for me?"

I mean, she hadn't even raised her hand. Others had, but were ignored.

Heh, Bushit never even looked around the room, he had his eyes planted on the podium, fumbling with his 'script.'

Clearly she was a plant. Clearly, he still refused to answer questions at a "press conference" that might be too hard for him to answer. Clearly, the press was content to go along to get along.

Anyway, the hard question she asked (in essence): "How has your faith helped you in these trying times."

"_______________________."{1}

My wife noticed me groaning audibly.

For shills in the press gallery, see Jeff Gannon.

--
1. That's me being speechless.

Lindsey said...

Jim,

You have made a couple of interesting points about inflation, SS, and, wages, but you have sold yourself short on what you know here in the comments, and you have not properly acknowledged one flaw in your case.

In response to numbty you wrote:

I think that the news media deals strictly in facts, where bloggers deal more with data that can't really be substantiated,

The data you speak of certainly can be substantiated, and it has, visit John Williams Shadow Government Statistics site.

He explains and details how the calculation of official government statistics has been changed over time and calculates things like inflation using original metrics.

You are also correct in saying that the government, because of the COLA link of SS has a real incentive to minimize inflation. Don't be shy about asserting things you know to be true, mainstream media not only does not have a monopoly on the truth, they have shown they really don't care much for it.

As long as you have the facts and data to support your argument, don't be afraid to make it. If the facts ever change, a sensible person changes their mind, and I hope that's what you will do, but at the moment, you are right and they are wrong.

Now, having correctly pointed out that the government is now officially underreporting inflation, it follows that SS is not maintaining its 1964 dime's worth of value. As is quite evident, SS recipients, like most wage earners, are losing ground. Whether you think that's a good or bad idea, that's the case.

Thanks for your observations.

Lindsey said...

I'm sorry, I need to make another point.

Please don't buy into the false media link between SS and Medicare. They are two separate programs and two separate problems, one insignificant and the other immense.

There is very little wrong with SS, and a very minor adjustment keeps that system solvent so far out into the future that it is not worth considering.

Medicare is another situation entirely. The crisis there is real and the system needs to be scrapped and re-established. It is part of the overall mess we have made of health care in this country, and as it exists is indeed unsustainable.
Fortunately, there are regulatory solutions that will work better than financial ones, we just have to muster the will to implement them.

Jim in San Marcos said...

Hi Linsey

I guess what I meant about newspapers, they don't really cover what the bloggs cover. To get in a newspaper, it’s a shooting, a car crash etc. It’s reporting on what people are doing. You take a picture, get the; who, what, why, when, and where, followed with a quote or two and you have a story. To a newspaper, a blogg is editorial comment. It may or may not get published depending on the views of the newspaper's editor.

A while back one of the newspapers did a bleeding heart story about a woman who was about to loose her house in foreclosure. One of the bloggs pointed out that she had 5 other houses in foreclosure. Needless to say the blogger was mad at the newspaper for not going forward with the new information. I can understand the editor’s call, he already has egg on his face and stepping further into the mess wasn’t going to do much. I had a good laugh.

I agree with your thinking about social security being sound. But if you group Social Security, SSI, Medicare and Medicaid all together, it doesn't look good.

Thanks for your comments.

Anonymous said...

Having government report inflation is like having the wolf guard the hen house.