What You Need to Know About Inflation

I have just spent the last little while trying to figure out how the government calculates inflation.  After a bit of reading I think, they use a combination of wild guesses and Ouija boards.

For instance if beef becomes too expensive,  people buy chicken instead, then the CPI starts using chicken prices, because that’s what people are buying.  Figuring it this way reduces inflation.  When beef gets to expensive we eat chicken, when chicken gets to expensive we eat baloney.  But there is no change in inflation.

A second major factor is that the  government includes quality as well as increases in figuring prices.  If a item costs 10% more, but it is 10% higher in quality, then there was no inflation.

For example, if the government adds a new additive to our gasoline that costs 30 cents a gallon, they have improved the quality of the gasoline so there is no inflation.  Some bureaucrat is the one who determines that the quality has improved.   Of cause, we pay more, but there is no inflation.

What brought this up is that my wife does most of the grocery shopping.  Well the other day I went to the store with her and took a look at the prices.  Talk about sticker shock.  My income is not going up and the government claims there is no inflation, but the prices continue to rise.

The way I see it the situation is only going to get worst.  So what can you do about it?  Look for things to put your money in that will hedge against inflation.  This can be land, gold, silver, food and other types of investments.  For those of us with less money it can be as simple as adding to our food storage.  Four dollars in the bank loses money ever month,  a can of corn beef that cost you four dollars this month, will be worth more next month.

Look for ways to protect yourself from inflation.

Howard

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