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Inflation Watch: Is The $5 Bill The New $1 Bill?
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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Looking at getting a toyota coaster when my current job ends, I will do the conversion to a mobile home myself and reco the engine etc, lots of info on the web for this, solar panels and deep cell batteries for power overnight probably, ton of space on the roof for that and a hot solar water system, looks like it is cheaper for me to cruise around Australia and have a nice holiday for 12 months staying a few days in each location than it is to stay in one place, main cost diesel, being mobile I might even pick up a little work in various locations.
" 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."
Back in the early 70s we used to cut school to go see the Giants. I remember seeing Willy McCovey hit the ball OUT of Candlestick.... Over the left field wall out into the parking lot!
Anyway, the "cheap seats" were $5. Nobody would come to the day games mid-week (and security didn't give a sh*t), so we would just walk down and sit directly behind home plate ---- front rowwwww!
Cost to take "Cal-train" was <$5.
Ballpark food was reasonable, also.
After the game, we would take the train up to the city to continue our adventure, shopping and sight-seeing.
I seem to recall the whole day cost ~$35-40, including transportation, food, entertainment, etc.
I wasn't really seeing it (much) until about 2 months ago. Since then, shit is off the hook, even fucking chicken. Everything (that I buy) at the grocery store has gone up @ 20% in that time. And, I'm in the bread-belt. Restaurants, too.
You pay to fuck chicken?
Try $6.25/lb chicken at the Montpelier, VT farmers market. Best one in N.E. by the way. Also the best chicken you've ever had. Average chicken goes for around $22.
@ No Debt -
New tires on my Toyota - 13 inch wheels - only cost @ $100 each.
Why is stuff soooo costly in Europe?
My 1985 Toyota cost $1000 here a couple years ago. Arizona sold me "Historical" plates as you can see in the photo here. Scroll down past the hot babe.
Kindness Generates KindnessTercel User here ! (don't need no stinkin car debt)
13in Tires : 69$ each in Canada.
No A/C and 38MPG I like it !
I have a 99 Tacoma on 33s. Toyo AT Open country like new. Wonder if I should break down and buy the BFGs I want now...30,000 miles from now they will be alot pricier.
That is one very hot babe! Car? License plates? I didn't see any. But I did see a really nice pair of legs.
BTW - Let me know when you have those new Ron Paul bumper stickers printed up!
"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".
Doesnt that mean its not actually suppressed, but rather right on track?
Probably. The $100 bill is the nwe $20 bill.
"A Mars Bar (Snickers, Milky Way) cost a nickel in the Sixties.
Minimum wage was $1.25.
So today Min wage should be the equivalent of 25 candy bars."
Elizabeth Warren came to the same conclusion. She wanted something like $22 per hour. Her number is probably correct, but she doesn't realize how much damage that would do to the economy. The economy could actually support those reasonably good wages back then because Americans were net exporters. If the average guy is making the equivalent of 100k working at a steel mill, it's entirely possible for a local economy to pay 40k to its lowest workers. Today, not so much. Having a service economy with a trade deficit means capital is leaving the country. The ability to support good wages is gone. There's no steel mill. If the average guy's wage dropped from 100k to 50k, then it shouldn't surprise anyone when the lowest workers drop down to starvation wages. Industry will eventually come back to America, but only after wages drop so low that American labor is cheaper than Chinese labor.
I remember nickel candy bars. Then Nixon took us off of the gold standard and immediately, that candy bar cost 7 cents, quickly rising to 10, then 12, then more cents. My 25 cent allowance, which bought me a chocolate bar everyday on the way home from school suddenly only bought me two per week.
Banksters, Fed Members, and politicians...hang them all! They won't be missed.
Twenty five cents bought me a comic book and an ice cream cone....with change back. 1963.
grekko I remember nickel candy bars. Then Nixon took us off of the gold standard and immediately, that candy bar cost 7 cents, quickly rising to 10, then 12, then more cents. My 25 cent allowance, which bought me a chocolate bar everyday on the way home from school suddenly only bought me two per week.
Banksters, Fed Members, and politicians...hang them all! They won't be missed.
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Yea, actually they would be and if you don't understand that, you really need to think hard. Banking has been around for thousands of years. You wouldn't have international commerce without it. You might think one country can trade certain assets such as energy to another country to buy grains, but a medium of exchange is needed. Thus we have banking and currency.
To bad someone didn't teach you and me that saving that 25 cents and investing it instead of buying candy would have yielded a better present financial situation personally. Then you wouldn't be bitching, would you?
Quite frankly I'm getting tired of people bitching about something they've known about. You know the problem, so why aren't you taking steps to solve it? But I do appreciate your half step forward. Maybe you will take the full step forward. For example, I currently and refuse to take on credit. Yup, I have no credit cards. I am invested in a small portion of PMs, even though I have stated PMs will go down in a deflationary period (which I believe we are heading in). I have paid off many debts. I am doing what I can to get out of the system. I have stock piled ammo and guns and food. Yes, I am a nutcase. But I ain't bitchin at the banksters, cause I ain't a bitch. Keep your candy.
Over 40 years with all the emphasis on supporting couples to breed the economic system adapted so if you are not a couple you live in poverty.The single person can no longer afford to live single because all the standing charges like buy a meal for one is 20 dollars but buy 2 for 25 dollars. Standing charge in there just for being there is 15 dollars and 5 dollars a meal.
Now go and examine energy, water, everything and start calculating the standing charges.You will find that on essentials the majority of what you pay is not for anything but the standing charge. Saved 25% water once, was not worth the effort as the standing charge does not save water and this same principle works for energy "ALL TO MAINTAIN THE SHAREHOLDER PAYOUT".
To radicallly change the system, all standing charges removed and you pay ONLY for what you use.
All by design. They don't want you to have discretionary income. They don't want you to be able to afford having children. They want you to labor to support the sluggards that reelect them. We need a revival. The character of Americans has slipped to such a low that they will gladly vote to sustain the status quo for a little bread and circuses. Never discount the fact that many of TPTB are deep ecologists. They believe that the worlds population needs to be decimated so that Eden can spring forth for them to enjoy, and a select few to tend.
I was in NZ last summer and this is what it is like there because basically everything but milk is imported. A couple of professionals were telling me you cannot save any money in NZ. No way to get ahead.
one third of the people work for the government.
When you consider local, state, federal, post office and the military, I bet we have a higher percentage than NZ.
$5 is worth 10 cents.
$50 is worth $1.
How can the median % change be less than every category? What other categories could there be?
Because the end of the chart was "1% at various education levels" it was up 12%, so the mean is now about -2.5%
I went to a NASCAR race in Charlotte, North Carolina last year and was floored that a regular .99 cents cup of tea from Bojangles cost SIX DOLLARS!!!!
I lived thru the 1970's and the inflation/stagflation. Prices just kept going up and we would get quarterly "cost of living" wage increases-which were always behind the inflation curve, but helped anyway.
There's a different thing going on now-manufacturers are maintaining stable prices (pretty much) but putting LESS product into their packages. I wonder why the cover-up this time?
I figure the current regime probably has something to do with it-don't want 0baMao to look like the looter he is. Same thing with QE4EVA-if the Fed wasn't pumping $$$$ into the economy we'd be in a deflationary depression (or more accurately reversion to reality.)
Just some observations.
Wonder if they'll have to bring back the $1000 bill? $10,000? Didn't Zimbabwe get to $1 trillion bill?
d edwards Prices just kept going up and we would get quarterly "cost of living" wage increases-which were always behind the inflation curve, but helped anyway.
There's a different thing going on now-manufacturers are maintaining stable prices (pretty much) but putting LESS product into their packages. I wonder why the cover-up this time?
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Lower profit margins. We no longer get cost of living wage increases. Thus the consumer has to start consuming less. To maintain margins, companies are changing packaging in tricky ways.
I don't know why this is so hard to understand. It's about time everyone got a clue that the way of life in the USSA is ending or over. Globalization means that everyone reverts to the average. Thus our higher standard of living must come down.
ednraleigh I went to a NASCAR race in Charlotte, North Carolina last year and was floored that a regular .99 cents cup of tea from Bojangles cost SIX DOLLARS!!!!
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Holy crap, $6!!!!!!!!
You talk like everyone goes to NASCAR and everyone is entitled too it. Damn those bankster, Joos, or whatever.
I've never been to a NASCAR event and I would bet the majority of the USSA has never had the "opportunity" to spend $6 at a NASCAR race. Boo hoo. Tears for you. Keeping up with the Jone's is a bitch, isn't it?
NASCAR was always for the modest income people. Then they tried to make it more amenable to the higher income people who found it boring and tacky. The relatively poor can't go and the rich stay away. A moral of some kind there.
I have come to the conclusion that while inflation appears tame and government claims it is low it is growing. The seeds have been planted, and the number of them is somewhat shocking. Inflation lurks beneath the surface and is hidden away in the dark corners of our future.
Want to know where the real cost of things is going, just look at the replacement cost from recent storms and natural disasters. More on this subject in the article below.
http://brucewilds.blogspot.com/2013/06/inflation-lurks-beneath-and-hidde...
I guess that is why oil remains subdued despite all the world turmoil in the ME and PMs are generally down. /sarc
http://brucewilds.bullshit.com
I'll post a different view.
I remember that doing things like fairs (usually a state fair) was a big deal as a kid and you went once a year when the fair came near your area.
Now there are all sorts of various fairs. just in my area we have a state fair, ribfest, car shows, oyster festival, braise and brew festival, cork shuckin festival (wine), mardi gras, brewvival, african american festival, spring music jam festival, winestock festival, johns island festival, ballpark festival of beers, childrens day festival, lowcountry hoedown, , etc. That is about half of the events.
As a kid, I was lucky to go to one event (usually the state fair). Now everyone bitches if everyone of driving age doesn't have a car. And guess what, I no longer go to fairs. I would rather take a kid fishing and bring picnic food. Much more quality time and cheaper.
Perhaps Charles Hugh-Smith should look at the changing values that people have bought into (literally and figuratively).
Everyone is bitching about how prices have gone up for NASCAR, NFL, ML Baseball. Well, I got news for you toddlers. 90% of the population didn't go to these events in my days. They worked. Things like that were a big deal and you were lucky to go once a year.
So are you now a part of the "I deserve and entitled too group?". Price are up and I'm going to bitch because I deserve and am entitled to these things. Well as long as so many of you have that opinion, you force the demand up and create those high prices you bitch about. Get away from it and spend some time doing other things.
Pretty sure you didn't read the article. Nobody on ZH has such poor reading comprehension.
I always like an article which allows folks to tell their on demand inflation experiences. It proves that federal statistics are purposefully fraudelent. I also like the angle on the inflation in simply doing things. I like going to sporting events but they are out to get at least 100 dollars from me each time I go and most of them are on TV anyway. Why would I pay a major league baseball team 100-150 dollars to sit for four hours when I can have it on at home and eat and drink what I want? Plus, my chair is slightly more comfortable. I really only go now if the ticket is free and I eat well before or after the event.
Charles Hugh Smith:
With all due respect to yourself - and even Doug Short for his chart-creating expertise, you would be wise to visit a recent article of his (actually, it's a near repeat of what he has expressed in previous articles posted on Financial Sense over the past couple of years.) The most recent one being a month or two ago. Easy enough to look up in their archives. In 'short', Mr. Short expresses the view that inflation is 'nowhere near what it was when he was raising a family during the 1970's'...
Mr. Short expresses the view that while current government statistics regarding the economy may not be 'perfect', they nonetheless represent the data 'we have to work with', and are therefore, acceptable. Also, Mr. Short uses these frequent opportunities to poke fun at John Williams (Shadowstats) adjusted inflation calculations as 'statistically invalid'.
Don't bother mentioning to people like Mr. Short, the effects of volume reduction/price consistency in consumable products at your local grocery - i.e., 'trimming', and how that plays into the 'hidden' confiscatory effects of inflation.
Actually, to get this right we really should define 'inflation' vis-a-vis the everyday experiences of average Americans correctly - that being the EFFECTS of inflation via currency debasement, rather than directly tied to an increase in the supply of money & credit. In other words, the REAL WORLD, not the world of painting charts to justify your data...
Actually, I like inflation (not really, but hang with me). It forces one to make serious choices and often results in good outcomes.
Now, take donuts, and thank Go you're not a fat-assed cop (so many of these, it's embarrassing and a waste of tax dollars) who MUST eat donuts, because most donuts are very expensive. In my area, they average about 85 cents each. Thats a lot of money for some dough and sugar and cream whatever. I used to eat a lot of donuts before they became so expensive. Now, I can only bring myself to "splurge" on a couple maybe once a month, if that.
The result is that my money goes for better quality food, at better prices and I am healthier for it, thanks to INFLATION!
Yesterday, I bought a tire for my 1993 chevy van (bought for $1000 5 1/2 years ago - I admit, I only drive about 30 miles a week) at a used tire place where I always go, and they charged me $20 to change it and mount it. I will never probably buy new tires. They're so expensive.
Today, I went to a local grocery who had some excellent deals on some things, like Hillshire Farms brats, Buy 2 get 3 free. There are six to a pack and the per pack price was $4.97, so I bought five on the deal for a little less than $2 per pack. I figure that's not bad, but the shocker was at the counter - young black girl asked me if I was a bargain shopper. Now, mind you, I'm 60, but look 45, and I'm white, so maybe this gal was not used to white folks looking for bargains. I told her that one has to be these days. The (white) lady behind me in line chimed in with a similar comment. The young lady was somewhat taken back. Maybe she learned something.