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Inflation Watch: Is The $5 Bill The New $1 Bill?

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Events, food purchased away from home and live entertainment are increasingly unaffordable to the bottom 90%.

It's starting to feel like a $5 bill is the new $1 bill: everything that could be purchased with one or two dollars not that long ago is now $5 or even $10. A few days ago I was enjoying the Butte County Fair in California's farmbelt (the Central Valley), and it seemed like a rural county fair was a price baseline that was far enough away from the urban artifice of $100 meals at fancy bistros to reflect the statistically elusive real-world inflation.

Everything was $5, or close to it: the carnival rides for kids: $5. The games (ring toss, etc.): $5. Funnel cakes, cotton candy, etc.: $5.

Whatever wasn't $5 was $10: pulled pork sandwich, etc. There was almost no need for $1 bills, except at the admission booth: adults, $8/day, kids/seniors $4.

So let's add up the costs for a family of two adults and two kids. Let's say the kids each get four rides--that's 4 X $5 = $20 X 2 = $40. Each kid gets two food items: $5 X 2 = $10 X 2 = $20, and gets to play two games: $5 X 2 = $10 X 2 = $20.

That's $80. The parents get something to eat and maybe play a game or two: that another $40. The admission fee is $16 for adults and $8 for the kids, $24. Parking is $5.

The family spends about $150 at the county fair for a day. Add an extra kid or a few other purchases and the cost pushes up to $200.

This trend of $5 being the minimum purchase price and outings costing $200 is not unique to county fairs. Some friends attended a S.F. Giants baseball recently, and they were delighted to buy seats online for a discounted price of $64 each. Add in $25 parking (or $20 in BART train fare) and a few $10 cups of beers and $10 hotdogs, and it costs $200 for two people to attend a major-league baseball game (at least in a desirable locale with a winning team).

Now I readily confess to being frugal. Not making much money for extended periods of time tends to encourage frugality. Frugality is also only way most of us non-silver-spoon types can accumulate capital (savings) to invest in ourselves and our own enterprises.

$200 seems like a lot of money when I think of what else it can buy. $200 bought all the gasoline for our 2,000-mile camping trip last summer (our 1998 Honda Civic gets 40 miles to the gallon on the highway), and all the groceries for our household for a month (recall we have a garden, eat low on the food chain and shop almost exclusively at Costco and ethnic markets).

$200 will buy a new Skil 77 worm-drive Skilsaw ($149.99) or a new designer-label men's suit at a premium outlet (after being dragged to the outlet by foreign friends awhile back, I bought an excellent Calvin Klein suit for less than $200 that will last decades).

Meanwhile, earned income is declining when measured in purchasing power. The median household income in Butte County is about $43,000, and $54,000 nationally.

Courtesy of chartist extraordinaire Doug Short, here is a chart of the changes in median household income since June 2009:

How long can households afford $200 outings as their real (adjusted for purchasing power) incomes continues eroding?

We are constantly reassured that inflation near-zero--2% annually or less. On the ground, it seems that stuff manufactured in the global supply chain is still relatively cheap, as are energy and food, at least compared to what they cost elsewhere or could cost if supply chains get disrupted.

There are no limits on the cost of government services or government-controlled sectors such as healthcare. Our city garbage service fees just jumped from $356 quarterly to $453, a 27% increase. Note to Federal Reserve: 27% is not 2%.

Our monthly healthcare insurance (paid entirely by us, as we're self-employed) leaped $300 per month over the past few years, from $900/month to $1,200/month. These increases add up to thousands of dollars a year. That is not 2% inflation.

Clearly, healthcare, government services, events, food purchased away from home and live entertainment are increasingly unaffordable to the bottom 90%.

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Sat, 08/23/2014 - 17:57 | 5135207 trader1
trader1's picture

high click rate for a saturday evening ;-)

Sat, 08/23/2014 - 17:59 | 5135212 cossack55
cossack55's picture

Pre NFL

BTW, IMHO the $20 is the new silver dollar.

Sat, 08/23/2014 - 18:10 | 5135228 stacking12321
stacking12321's picture

no.

the silver dollar will retain its value, and probably increase quite a bit once the comex stranglehold is broken.

the $20 bill will just keep going down in value over time.

 

Sat, 08/23/2014 - 18:11 | 5135237 Skateboarder
Skateboarder's picture

This $20 silver era is a blessing for buyers. Gonna pick up an order today. Wish me luck on my boat journey home.

Sat, 08/23/2014 - 18:18 | 5135251 Supernova Born
Supernova Born's picture

A ten and a five in your wallet in 1967 had more purchasing power than a $100 does today.

If they don't increase the largest denomination of USD soon, cash will be as cumbersome to actually use for purchases of any significance as giant stone disks (but they don't want us using cash anyway).

Sat, 08/23/2014 - 19:37 | 5135447 0b1knob
0b1knob's picture

EBT is the new $1 dollar.   Usable at Pizza Hut and other fast food places.   

 

Sat, 08/23/2014 - 19:58 | 5135501 Manthong
Manthong's picture

Yes, and the dollar stores are the new five and dimes.

Sat, 08/23/2014 - 21:36 | 5135742 James_Cole
James_Cole's picture

Our monthly healthcare insurance (paid entirely by us, as we're self-employed) leaped $300 per month over the past few years, from $900/month to $1,200/month. 

1200$ a mo? Wow. So in sf if you're making 60k (med), taking home 4k/mo. Rent of what, 1600$? Left with 1200$, Car? Food? 

That's bleak, didn't realize healthcare was so expensive if self-employed. US still richest country in the world, citizens not getting much of that pie!

Sat, 08/23/2014 - 22:29 | 5135889 Manthong
Manthong's picture

In 1964 you could gas your car for less than 25 cents per gallon.. that’s one Washington 90% silver quarter dollar per gallon.

In 2014 you can still gas your car for one 90% silver Washington quarter dollar per gallon (after a stop at the coin store to swap them for FRN currency) even at todays suppressed silver prices.

Stick THAT in your rigged silver market price pipe and smoke it.

Sat, 08/23/2014 - 23:42 | 5136100 buyingsterling
buyingsterling's picture

We pay out the nose and our plan isn't acceptable to Mr. Obama, so we also get to pay a tax. 

Until government got involved in the 1960s, health care costs were rising in tanbem with inflation.

Sun, 08/24/2014 - 00:31 | 5136208 James_Cole
James_Cole's picture

Until government got involved in the 1960s, health care costs were rising in tanbem with inflation.

Yeah, except US&A is one of the few countries listed here which has not adopted a public healthcare model:

http://healthmodelinnovation.com/wp-content/uploads/2013/12/Healthcare-S...

I know y'all love wallowing in fantasyland bullshit but facts is facts. 

Sun, 08/24/2014 - 10:34 | 5136866 Parabox
Parabox's picture

Dont worry, we'll be there in ten years.  Mandated coverage structures, mandated "affordability", government controlled rate increases, and just wait until the 2018 cadillac tax effectively takes away the pre-tax payment advantages of group insurance.  It will be so bad the people will be begging for nationalization.  All by design.

Sun, 08/24/2014 - 10:53 | 5136908 jerry_theking_lawler
jerry_theking_lawler's picture

The fact is that healthcare should be paid for....not 'insured'.

Catostrpohic insurance for large expenditures....but if you wanna run to the doctor every time your have a runny nose...then you pay the full charges. Pretty simple system. But hey, I'm a dying breed of free-market capitalist.

Sun, 08/24/2014 - 15:16 | 5137560 James_Cole
James_Cole's picture

Pretty simple system. But hey, I'm a dying breed of free-market capitalist.

You're not a dying breed at all, people who believe in things for which there is zero evidence of ever existing is a growing demo. 

Mon, 08/25/2014 - 09:21 | 5140027 N2OJoe
N2OJoe's picture

Yourself being a prime example, and that's why I greened you.

Sun, 08/24/2014 - 01:07 | 5136258 mr. mirbach
mr. mirbach's picture

This video sums up the HealthCare issue in 2:15 - http://youtu.be/Q1cGZ-Xloec

Sat, 08/23/2014 - 20:31 | 5135591 Kirk2NCC1701
Kirk2NCC1701's picture

Just make sure you don't have a new C bill in your pocketses, wizard.

Or the All Seeing Eye of the Dark Lord will use it to track you, and have the Nazgul descent on you with a vengeance.

"One Coin To Rule Them All" - Rottenchild undead

Sat, 08/23/2014 - 19:24 | 5135421 cossack55
cossack55's picture

My point was that if $20 is worth $1 whats the big deal with a $5 being the new $1.  That was years ago.

BTW, paper (all forms, except in a 1000 sheet roll, sucks)

Sun, 08/24/2014 - 00:16 | 5136176 Bilderberg Member
Bilderberg Member's picture

I thought the $12 I paid for the burger and fries I got at tonight's Dolphins "pre-season" game was high but compared to the county fair it sounds like I got a good deal.

Sat, 08/23/2014 - 20:13 | 5135546 RafterManFMJ
RafterManFMJ's picture

Pseudo-food is cheap, and beer as well.

Phones can be free, and everyone seems to be able to afford cable.

Fill the gut with fake food and carbs, numb the mind with TV and GMO based beer.

But try to get something repaired or built - these costs cannot be hid nor the materials diluted.

3 estimates for a wood and chain link fence: 4400 4700 and 4900 dollars.

Awning for porch? 3200 prefab motorized or 4300 custom.

Porch redone and extended? 4500.

Everything you need to make you numb and dumb is cheap; but anything beyond that is rapidly climbing of of sight.

Sat, 08/23/2014 - 20:30 | 5135585 ObamaDepression
ObamaDepression's picture

Up arrow for accuracy for "Pseudo-food"

Sat, 08/23/2014 - 20:56 | 5135630 Wait What
Wait What's picture

"pseudo-beer" is cheap, indeed. but it's only in places like Ferguson that they drink the pop-brand lagers/malt liquors you can get for less than $5.

out in the normal world, i'm more surprised when I walk out of a pub with a bar tab < $50 (for somewhere around a 6 pack of premium ales) than when it's >$50, as I'm gearing myself up to tonight.

it's scary to think that even min. wages were sitting just above $3 when i was born, now up over 300%, nearing $10.

nah, no inflation anywhere. /s

Sun, 08/24/2014 - 02:23 | 5136338 Manthong
Manthong's picture

.

Sun, 08/24/2014 - 09:11 | 5136678 Agstacker
Agstacker's picture

I have a $20.00 bill from 1934, and if I go into a store today it is worth...$20.00.  Also, I like to read the part that has been removed from todays toilet paper currency, the part at the bottom that states "Will pay to the bearer on demand"

 

https://www.google.com/search?q=1934+20+dollar+bill&es_sm=93&source=lnms...

Sat, 08/23/2014 - 18:18 | 5135234 Supernova Born
Supernova Born's picture

Food prices are in a state of very obvious accelerating inflation.

Love how the central bankers keep finding new animal diseases, droughts and "natural occurrences" that are responsible when the real cause is simply out of control money printing.

Smaller sizes, lower quality, higher prices.

Sat, 08/23/2014 - 19:23 | 5135416 Buck Johnson
Buck Johnson's picture

Your right, we have accelerating inflation and I believe it will become hyperinflation.  I tell you when this happens it will implode the US and everybody will go nuts.

Sat, 08/23/2014 - 19:58 | 5135502 August
August's picture

Au contraire, when the US implodes, everyone will get a new grip on reality.

Unfortunately, this will not be fun for the whole family.

Sat, 08/23/2014 - 21:34 | 5135738 Bárðarbunga
Bárðarbunga's picture

Wife bought me a Party Size bag of Doritos (yeah, I'm a fat ass okay). Point is, this bag of chips is the same size that a "normal" bag used to be. Right now, if I can remember shit - a regular bag is like 9 oz. That's barely freakin' snack size anymore.

I'm not really sure of what the price of this Party Size bag amounted to - probably not much more than the regular size if one uses a store coupon; but holy crap. I'm not that old to remember what normal food (um, pseudo-food, sorry) used to look like in the cupboard. Now if you're clever you can cram in like six different bags of chips where three used to fit. Unfreakin believable.

Sun, 08/24/2014 - 14:27 | 5137445 Sages wife
Sages wife's picture

Just don't blow your top.  Oops, well there you go.

Sun, 08/24/2014 - 16:03 | 5137755 mophead
mophead's picture

When I used to post info on phoney diseases, droughts, shortages, and food contamination I'd get lots of thumbs down. Now it's thumbs up. Nice to see people are waking up.

Sat, 08/23/2014 - 20:44 | 5135611 Kirk2NCC1701
Kirk2NCC1701's picture

C'mon boys & girls, let's start with Basics and build from there:

ALL Fiat_Currency ("Money") are DEBT-NOTES.  In a monetary system of Fiat_Currency plus FRB, do you REALLY expect the value of that Debt_Note to be constant?  Well, do you, Serfs!?

There can be no broken camel backs w/o piling one straw after another on the camel. You then ease back from there, to determine max payload.  Get it Pay-Load?.  So it is with Serf_Notes:  Keep piling on this they squeal incessantly and are on verge of revolt.

Meet your New Feudal Masters: same as your Old Feudal Masters.

Sat, 08/23/2014 - 18:15 | 5135244 Cattender
Cattender's picture

i have said for years now the $50 is the new $20... sad as it is.

Sat, 08/23/2014 - 20:30 | 5135584 Cacete de Ouro
Cacete de Ouro's picture

When the Big Mac hits 5 bucks, there will be a wtf moment from the masses. When it hits 10 bucks, then we will see the beginnings of super sized anarchy

Sat, 08/23/2014 - 21:38 | 5135745 stacking12321
stacking12321's picture

anarchy is not mindless mob violence and looting.

anarchy is just the absence of government (coercive force).

if we truly had anarchy, there would be no central bank printing endless currency and causing high inflation, prices would likely be stable, assuming the market would choose an honest store of value such as gold/silver, which i believe it would.

Sat, 08/23/2014 - 23:51 | 5136123 WSMassiv
WSMassiv's picture

True that!

Sun, 08/24/2014 - 02:04 | 5136357 COSMOS
COSMOS's picture

Nah they will add more cardboard to the patty to keep the price down (ie sawdust), and shrink the size.  Heck one day you just will only get the cardboard box with the lettuce and ketchup inside and that is all you will eat, that will be your new Big Mac

Sun, 08/24/2014 - 14:16 | 5137418 hot sauce technician
hot sauce technician's picture

But Chomsky said we need a central bank for regulating monetary supply.

Sat, 08/23/2014 - 22:21 | 5135862 HumanResourceProblem
HumanResourceProblem's picture

Who can afford to go out on the town any more?

Sun, 08/24/2014 - 01:59 | 5136350 SAT 800
SAT 800's picture

Yes. next question?

Sat, 08/23/2014 - 18:04 | 5135214 Sudden Debt
Sudden Debt's picture

In europe it's so bad that when I only have 50 euro's in my wallet, it means it's time to go to the bank.

And now, also stuff that was free a decade ago doesn't only cost money but is expensive.
To park in my city, it costs 14 euro's for 4 hours.
Not including the gas it takes to drive to town.

And now they want kilometer taxes also, next to my roadtax.
And diesel.... Yeah... They'll increase taxes 20% on top of the rest of that... For the environnement... Yeah... Sure...

My country is now short 6000 euro's per working person. They need to find that money by years end.
So not only does everything cost more due to inflation, they constantly look for other stuff to charge you.

And even that I pay a 55% tax on my salary, a 21% tax on the good I buy that will soon rise to 22% and 15% on what I save....
Not including all of that...
If I need a government service THEY ACTUALLY CHARGE ME.FOR THAT ALSO!!! IT'S NOT LIKE THAT IS FOR FREE!!!

FUCK THAT!!!

Sat, 08/23/2014 - 18:13 | 5135240 Skateboarder
Skateboarder's picture

That sounds like rape. Get the hell out of there man.

Sat, 08/23/2014 - 18:53 | 5135339 Flagit
Flagit's picture

...and go....where?

Sat, 08/23/2014 - 19:46 | 5135468 angel_of_joy
angel_of_joy's picture

Somewhere... else ?

Sat, 08/23/2014 - 21:00 | 5135653 Wait What
Wait What's picture

i'm thinking somewhere between Sibera-Mongolia might be the place to be. i've started to learn russian for just that possibility.

Sat, 08/23/2014 - 22:14 | 5135829 Manthong
Manthong's picture

And when you get all the way down there just try to steer clear of those molten lumps of Fukushima.

Sat, 08/23/2014 - 18:23 | 5135266 Dennisen
Dennisen's picture

Government
is the only institution
that can take a valuable commodity like paper,
and make it worthless
by applying ink.

Ludwig von Mises

Sun, 08/24/2014 - 14:35 | 5137474 Midas
Midas's picture

Ludwig sounds like a terrorist.

Sat, 08/23/2014 - 18:23 | 5135268 logicalman
logicalman's picture

Ditch the car, ride a bike.

Save a fortune, Get fit, Starve the beast.

3 birds for one stone.

By the way, I'm speaking as someone who does that, in North America, not Europe.

 

Sat, 08/23/2014 - 18:37 | 5135298 Sudden Debt
Sudden Debt's picture

I drive 150 kilomters a day for work :)
Sometimes more.

Do NOT follow this link or you will be banned from the site!