Pizzaflation and the US Dollar collapse

globalintelhub's picture

Sometimes the best economic analysis comes anecdotally.  Why not explain the most important economic issue of our day with America's favorite food: PIZZA.  As we explain in our book Splitting Pennies - Understanding Forex, the real reason of inflation is because of monetary policy, not supply and demand.  For a basic primer on Inflation, you can checkout this book "What you should know about Inflation." 

In case you didn't know, facts about Pizza

Pizza is actually America's favorite food.  The Atlantic covered a DOA report that showed the cheesy stats:

Like football, pop music, and democracy itself, pizza follows in the long American tradition of things that began overseas before the United States imported, violently altered, and eventually defined the institution. Although the first pizza shops didn't open in the U.S. until the early 20th century, hundreds of years after the original Neapolitan pies, we now spend $37 billion a year on pizza, accounting for a third of the global market. The obsession deepens. On any given day, about 13 percent of Americans eat pizza, according to a new report from the Department of Agriculture. One in six guys between the ages of two and 39 ate it for breakfast, lunch, or dinner today. In part due to this obsession, per capita consumption of cheese is up 41 percent since 1995. Drawn from the report, here are seven facts about Americans and pizza, presented free of moralizing comments about whether or not it is healthy or sensible for the American diet to consist so overwhelming of bread adorned with tomato-cheesey gloop.

Pizza, is actually an AMERICAN food, brought to America by the Italians.  Pizza was invented in Italy, but in Italy, Pizza is completely different, and not very popular.  In fact, Pizza is most popular in America.  It's more American than Apple Pie.  Check it out:

In 1905, a slice of pizza cost five cents. During the Depression, when families did not have much money, pizza became popular with everyone in the United States. Families were eating different types of pizza on the east and west coasts. A thick-crust pizza was called double-crust pizza or west coast pizza. When they had a large exhibit about pizza at the Texas State Fair, more people inquired about this food than any other.The first recipe for pizza appeared in a fundraising cookbook published in Boston in 1936. The recipe, for Neapolitan pizza, was made by hand. Dough had to be hand-stretched by pizzaiolos and housewives until it was half an inch thick. The pizza had cheese, tomatoes, grated parmesan cheese, and olive oil. Surprisingly, the dough was not made by hand, but cooks were told to buy it at a good Italian bake shop.However, pizza was mostly limited to Italian immigrant communities until after World War II, when American soldiers returning from Italy still wanted their pies. Popularity spread, and various American styles developed. Pizzeria Uno is credited with the invention of the Chicago deep dish pizza in 1943. This is known as tomato pie and was baked in rectangular pans in bakeries. Its crust was extra thick and it had seasoned tomato puree and was dusted with Romano cheese before it went into the oven. Some eventually had meat and thick cheese, and it was so thick, it often had to be eaten with a knife and fork.

The American Dollar is collapsing

From five cents a slice to $20 a Pizza.  What happened?  During this time, the US Dollar went down by more than 95%.  Let's take a look at one of America's favorite Pizzas, Numero Uno Pizza.  For those of you who have not had the pleasure to live in the greater Los Angeles area, where Numero Uno has had 95% name recognition, Numero Uno Pizza is a household name.  Interestingly, Numero Uno was founded in Los Angeles right around the time Nixon created Forex; 1970.  We've obtained an old Numero Uno menu (we think though, it's from the 80s) that shows prices from that time:

Wow!  .85 House Wine, less than $5 for a Carafe!  

Now take a look at prices we've lifted from current NU store sites, such as Numero Uno Palmdale:

The most popular NU pizza is the S5 "Slaughterhouse 5" which currently stands at $16.95.  We confirmed with the manager of Palmdale location that indeed; prices are due for a rate hike in January.

From $10.85 to $16.95 isn't too bad, Pizzaflation is not nearly as bad as inflation in other markets, most notably, real estate, groceries, coffee, and other items.  Using an inflation calculator, $1 in 1970 is about $6.21 today.  If the menu is from 1985, the S5 should be $24.29.  Other NU stores have it priced at $19.99.  In any case, for older folk, $20 is a lot to pay for a Pizza, in their mind.  But that's only because of memory, of times past.  Inflation is a slow subtle tax.  From a 'real dollar' perspective, Numero Uno Pizza is cheap.

Let's understand the second component of inflation that's less obvious - the deterioration of QUALITY.  You can get a Pizza today for $5 - but it's a bunch of crap.  Like any product, you get what you pay for.  This part of inflation, the decline in quality, is less obvious but more damaging.  Every year, products get a little worse and worse.

The real cause of Pizzaflation

Real analysts must always seek the CAUSALITY  

Inflation happens only for one reason:  Central Bank prints more currency.  More currency, chasing the same or fewer goods and assets, makes the price go up.  It's really simple!  QE (Quantitative Easing) has been rampant in recent years.  Fortunately for consumers, most inflation has happened in financial markets, real estate, and other markets.

This phenomenon has been covered well in "The Burrito Index:"

In our household, we measure inflation with the "Burrito Index": How much has the cost of a regular burrito at our favorite taco truck gone up?

Since we keep detailed records of expenses (a necessity if you’re a self-employed free-lance writer), I can track the real-world inflation of the Burrito Index with great accuracy: the cost of a regular burrito from our local taco truck has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.That’s a $160% increase since 2001; 15 years in which the official inflation rate reports that what $1 bought in 2001 can supposedly be bought with $1.35 today.

If the Burrito Index had tracked official inflation, the burrito at our truck should cost $3.38—up only 35% from 2001. Compare that to today's actual cost of $6.50—almost double what it “should cost” according to official inflation calculations.

Since 2001, the real-world burrito index is 4.5 times greater than the official rate of inflation—not a trivial difference.

Between 2010 and now, the Burrito Index has logged a 30% increase, more than triple the officially registered 10% drop in purchasing power over the same time.

Those interested can check the official inflation rate (going back to 1913) with the BLS Inflation calculator by clicking here.

My Burrito Index is a rough-and-ready index of real-world inflation. To insure its measure isn’t an outlying aberration, we also need to track the real-world costs of big-ticket items such as college tuition and healthcare insurance, as well as local government-provided services. When we do, we observe results of similar magnitude.

The takeaway? Our money is losing its purchasing power much faster than the government would like us to believe.

It's important for consumers to understand, Pizzaflation is not caused by Pizza makers.  Numero Uno actually is doing a great job keeping prices low, because their food cost, rent, and other costs, are all exploding parabolic.

Los Angeles has the highest rent burden in America:

Overall, rents in Los Angeles have doubled since the 1970s:

But of course, that's not counting other various fees, taxes, increased regulatory costs, increased insurances due to higher crime rates, and other factors.  Pizzaflation has hit Los Angeles hard, creating a 'double whammy' for businesses like Numero Uno.  And with LA's median income flat since 1970, it makes one wonder who can afford a $20 Pizza.  But the remaining Numero Uno stores are mostly packed and have great reviews, so it seems that it takes something really Magic to survive the pressure of the Fed.

To learn more about how the Fed decreases the value of the US Dollar via Quantitative Easing, checkout Splitting Pennies - Understanding Forex - your pocket guide to make you a Forex genius!  

The good news, Forex is artificial so you can learn about it online.  It's all digital.  If you want the best Pizza you've ever had in your life - you'll have to drive all the way to Palmdale, California and visit Numero Uno Palmdale.

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Miffed Microbiologist's picture

Judging by the average girth of Americans I'm reasonably confident pizza is a staple rather than an unaffordable treat.

Miffed;-)

grunk's picture

"I invented pizza."

- Al Gore

steelrules's picture

$26 bucks +tax for a large loaded pizza in my neighbourhood, add $5 and get a second. A 12 pak of Bud is $21. + tax but this is Canada where we're used to taking it up the ass.

roadhazard's picture

Food is cheaper right now, eating out or at home.

dizzyfingers's picture

The price of pizzas isn't just the pie, it's rent, help, heat, light, boxes... I feel real lucky that our little go-to hole-in-the-wall still puts a nice little deep-dish-cheese-and-pepperoni-with-excellent-tomato-sauce-and-great-crust on the table for just under $3 per slice. I count tip as the price of admission.

If you love what you're eating and can't make it yourself or get it anywhere else, isn't the expertise of the producers re best sauce, crust, cheese, and pepperoni worth the price?

Pizza is...you know...not like anything else! It's the penultimate special-treat category. Really good ones are hard to find.

DemandSider's picture

If a country buys more than it sells the world and runs huge trade deficits for over 4 decades, the only possible way it can grow it's GDP is with debt. This is why the banks that run this country like our over valued currency.

Hope Copy's picture

Chicago deep dish pizza
http://pizzeria.unotogo.com/zgrid/themes/7/portal/index.jsp

Numero Uno®     $9.99, $18.79, $23.79, $27.79       
Our first choice for the most delectable pizza! Extra cheese, an abundance of fresh sausage, just the right amount of pepperoni and fresh mushrooms, onions and green peppers.

Ajax_USB_Port_Repair_Service_'s picture

The price of REAL mozzarella is controlled be the 'goodfellas'.

nsurf9's picture

The uptake - you are trusting these crooks with you money and they are stealing us blind. The private bankers who've hijacked our currency have stolen better than 95% of its value for their's and their cronies' own use by way of inflation and dilution of the money.

TheVillageIdiot's picture

not just that - they used the stolen equity (for lack of a better word) to make available more enduring assets (like gold) that will not 'depreciate' in a normalized manner - thereby driving up the cost indexes of these assetsfor others to acquire them.

didthatreallyhappen's picture

25 cents a slice when I was Junior High

rlouis's picture

In 1996 I got 3 bids to replace a roof: $6,800 $7,900 and $10,000. I didn't do the roof then, but did it this month, and I had almost the almost exact same roof as bid before - same house.  One bid was $29,000 and one was $34,000, one other contractor didn't even give a written estimate.

On the last day of the job, I bought the crew pizza - two large pizzas cost $62.93.

I don't have a comparable price for the pizza, but the inflation rate for the roof works out to 6.25% annually.

 

 

DC Beastie Boy's picture

Someone famously paid for a pizza with 10,000 Bitcoins when they were worth pennies. 

That's a $6 million dollar pizza, talk about inflation!

spqrusa's picture

That's deflation... Bitcoin gets more valuable over time not less valuable.

Kat Daddy's picture

All we are allowed to hear on the MSM is price inflation due to greedy capitalists. Never anything about the intentional debasement of the currency by the monetary authorities.  There is a little bit on the Financial News channels about competitive devaluation by various countries to increase exports, those vile curruncy manipulators like China.  Even the US must reduce the value of the dollar to boost exports.  It seems to me that if the US economy is consumer based, that is, 70% is expenditures for goods and services by Americans, manufacuring is not so much, and a weak dollar will reduce personal consumtion for imported goods and start a recession.  If course we have been at stall speed with 2% GDP and 2% inflation for years. And whatever we are told is disinformation.  The competitive devaluation story is just cover for the fact that the ONE BANK is working diligently to devalue all currencies through the BIS and G20 at a rate constant with each other so that no alarms are triggered on the FOREX. One day, at this rate, all fiat currencies go to zero puchasing power. Before that happens, we will have a global economic event that will cause a collapse of the bond and stock markets, creating the opportunity to freeze all assets and set the stage for the introduction a the global currency.  END THE FED!  STOP THE GLOBLISTS! DEATH TO THE NWO!

cowdiddly's picture

The article starts out with a false claim, "We all love piezzzzza". Trash food. Pizza as a meal is pretty much to me when you don't have anything else decent to eat. Or, your boss is making you work late and tries to throw you a couple of boxes of cardboard saucers  out there to act like he is doing you a favor.

NO THANKS

Ill take a bone- in country ham steak and red eye gravy, maybe some grits,  fresh cathead biscuits with real maple syrup and butter with some farm fresh eggs over easy on the side and I'll show you how to plow until sundown babe.

piiizza Pfffffffft. I would be hungry by noon and probably have the shits to boot.

bpj's picture

Like the french say, "hunger is the best sauce". So goes with pizza, if you really are hungry it's hard to beat a good pizza for gratification, same for a bowl of chili, and a Big Mac. Ask any kid.

Jerky Miester's picture

Hey cowdiddy.

I'm a southern collar green, butter bean, cornbread eating bubba that grew up on all that fine cuisine you speak of but you can't speak ill of the Pizzeria Uno and Upper Crust Chicago Deep Dish pizzas! 

Goddamn that is some fine Italian-style oral orgy fun ... especially with a pitcher of PBR to wash it down with. 

cowdiddly's picture

not much on pizza of any type. But I will take one o those cold frosty PBRs. Not accepting one of those is like being Un-American.

Kidbuck's picture

Sorry, but the vast majority do love pizza. Only perverts and metrosexuals don't like pizza.

However, opening statement of article was dead wrong It is a simple supply and demand problem: The supply and demand for fiat bucks.

shovelhead's picture

If you can't make a far better pizza at home than buying one then you're either too lazy or retarded.

CoastalCowboy's picture

Around here food inflation seems to be picking up a bigger head of steam.  I used to be able to get a delivery pizza in the $12-$14 dollar range two years ago now we're running like $17 to $19 range delivered.  I actually can make a decent homemade pizza, but it's a pain in the ass.  Avocados have really gone up the past year like 50 to 60% YOY.  Pretty much every vegetable or fruit has had steep price increases the past five years.  I will say my monthly food budget has doubled over the past 5 years, and I eat at restaurants maybe 10% of the times I used to compared to then.

I look for manager's specials on meat in stores and freeze.  Even those are getting harder to find because my stores are not stocking as much meat.  The screwed up thing is that my former favorite local steak restaurant has both jacked up prices and started using way lower grades of beef.  I can actually get a better steak at Publix or Kroger now.

BarkingCat's picture

Another article written by a bloviating dumbass who fails at even basic research.

Pizza was invented in Greece not Italy.

 

Before you write another article I will give you another hint - pasta is not an Italian invention either.

globalintelhub's picture

Pizza, was created by the Italians, not the Greeks.  You can read Helstosky, Carol (2008). Pizza: A Global History. London: Reaktion. pp. 21–22. ISBN 1-86189-391-4.  But you're probably not the reading type - you just like to make cheap comments.  Congradulations on your use of the word 'bloviating' - such eloquence from a child.  

TheVillageIdiot's picture

congradulations on misspelling congratulations moron

Dr. Bonzo's picture

Pizza, was created by the Italians, not the Greeks.

Yeah, and the Italians got string pasta from China, but good luck finding an Italian who will bleat about how their carbonara or beef spaghetti is founded on noodles ripped-off from China. Or.... in the ghastly ramblings of a SJW...a... cultural appropriation.

So.... what is it about Americans that we're always so quick to self-flaglation. Neopolitan is nothing but an oven-fresh flatbread with some tomato sauce and mozzarella smeared across it. It borders on being a sandwich.

Pizza is American. It's red white and fucking blue.

Basta.

stacking12321's picture

hahaha, daaaaaaaaaaaaamn!

barking cat just got his ass handed to him.

but that's what happens to people who suffer from big-mouth, small-brain syndrome.

HerrDoktor's picture

yes, and sex was invented in Greece as well.  The Italians introduced sex to women.

Caleb Abell's picture

And muhammed introduced sex to goats.

TRM's picture

Would you believe Egypt? Yep. There are depictions of flat, circular bread with toppings in hiroglyphics. The Ptolemy dynasty was Greek and that is how it got to Greece. 

baldknobber's picture

The Great Eagle took all them thar furren foods stirred them with the feather of freedom and made them taste great. Eyetalian, Mexcan, Chinese you name we made it better. Did you know they don't even have Cashew Chicken in China????   Heathens

mary mary's picture

Or California-style sushi? (with avocado)

kivod's picture

maybe true but you can't really put overcooked noodles and penne al dente on the same level .....

BarkingCat's picture

Maybe you are comparing American shit to the real Chinese food.

I have a news flash for you - there is no such thing as General Tso's Chicken in China.

Chinese cooks coming to the US have to be retrained to make the shit that Americans think is Chinese food.....and most of it comes from cans anyway.

Kidbuck's picture

If Chinese food is so good in China, why are they mostly all runts?

silverer's picture

I like how there is a "cash shortage" in Europe. That's because you need more of the worthless crap to buy pizza. That's what happens when you use a printing press to try to create real productivity. Never happened, never will.

baldknobber's picture

Ahh Pizza memories. Years ago in my twenties, single,fresh on my own , working weekends and nights. Get off work around midnight sat go through pizza drive through, buy one get next size smaller free. Get the extra large supreme, go home drink beer and watch movies on the vcr. Get up at noon on Sunday and eat the large while watching football,,, good times.

Also when I received valuable life lesson. Was coming out of pizza joint one night, a guy walks up to the car and asked if I could spare some money to  buy something to eat. He was broke traveling and hadn't eaten in two days. I reached over in the passengers seat grabbed the extra pizza and handed it out the window. He took the pizza , looked at it for a minute, then said " What the fuck am I suppose to do with this"  threw it down on the street and walked off

Abbie Normal's picture

Similar to my story but a different outcome.  Was coming out of a pizza joint in the university district when a street kid approached asking for spare change.  Offered him our leftover pizza slices (almost 3/4 full) and all of a sudden, about a dozen of his buddies converged faster than a pack of alleycats.  And it wasn't even that great of a pizza.

pherron2's picture

I bought a pizza for around five bucks in Ulsan Korea, at a Pizza Hut. Opening the box, it smelled something like a dumpster. There were kernels of corn, sliced marishino cherries, green peas, and a number of other things I couldn't identify. Don't recall if there was cheese on it, I had to close the box as I was about to puke. Got back to my ship and made myself a nice turkey sandwich. I think Pizzaflation has hit Korea harder than in the U.S.

oldguyonBMXbike's picture

I thought pizza was invented in China?

I had a nice duck confit and arugula pizza last week.

 

Kprime's picture

what inflation?  My 5lb bag of flour has been on a long term diet and now only weighs 4 lbs.  I am surprised that pizza isn't costing less than it used to.

silverer's picture

Yeah, here's your slice, hold out your spoon.

SmittyinLA's picture

Worse, the Pizza has been debased, the bread filled with cellulose, cheese with vegetable oil, and the pepperoni, "meat" is more accurate, even the sauce has been loaded with crap and sugar.

DuneCreature's picture

No shit. I began noticing that starting maybe fifteen years ago.

It has gotten so bad you just about can't find pure ingredients to make your own at home anymore.

I do everything short of grinding my own flour. .. I would, but my research says Ass Wipes Inc (Rockefellers?) have bought out the good wheat strains and seed stock worldwide and have replaced it all with low nutritional tasteless shit varieties.

BTW, I am known locally as Pi-Zeus The God of Pizza.

Live Hard, Wood Fired Pizza Ovens Make The Best Pies, Die Free

~ DCv2.0

centerline's picture

Same here.  I avoid boxed crap.  Make stuff from scratch.  Healthier and tastes better.

Plus, in some ways it saves on waste.  For example, I freeze old chicken carcasses... when I have 4 or 5, I make a batch of chicken stock that uses veggies that are getting old.  Big vat of stock goes a long way in all sorts of meals.  And you wont find anything in the store that tastes as good.  Plus, I can control sodium content.

Kprime's picture

Exactly.  We started make all our own chicken stock about 4 years ago.  Celery, Onions, Carrots, chicken parts not used in other meals or chicken thigh quarters.  We make about 2 gallons per pass.  It is so delicious.  Nothing in the store tastes this good and we also control the salt.  Nothing like store bought chicken broth with 5000 grams of salt per serving.

Colonel Klink's picture

I just go by the Fed bullshit index.  The more bullshit I see them shoveling the more I know things are going to cost.  And they've been shoveling a metric shit ton lately.  Strap in boys!

mary mary's picture

Every time Janet Yellen, Ben Bernanke, or Alan Greenspan speaks, the price of milk goes up.

I Write Code's picture

Article is full of crap, I mean their basic point is probably true but they completely garble the story.  Real inflation is probably twice what BLS pretends, especially over the last five years.  Numero Uno is just an obscure franchise that abandoned any high-rent district long ago.  Best pizza I've ever had was "Greek" style in Massachusetts, heavy crust but round and traditional, and stacked with toppings until it was over an inch thick, and all the best ingredients.  OMG.  Must have been $6 for a small special, back in the 1970s, that might be $60 now - and entirely worth it.  Plus the proprietor would offer to give you a free shave and a haircut with the machete they used to cut it.