Another scam to add to the list (thanks 41 caddy for starting the discussion) is the way your government calculates inflation - rigged so that they don't have to increase the payouts on social security or pensions
But you can't kid a kidder. We all see prices skyrocketing, and people on fixed incomes falling behind - way behind. Especially when they get their new property tax bills. They could sell their home, cash out, and rent, but if they don't they gotta come up with the new cash. Refi?
Thanks to China (oh, wait, I mean WalMart) inflation on corn and beans is deflation. But we'll need a lot of corn and beans to make up for healthcare, or oil, or electricity, or taxes.
Statistics lie on the true cost of living
Take inflation. It's true that measured inflation is very low, but look at all that's left out.
In the case of health care, the government's consumer price index tracks the cost of medical services. But it is less precise about tracking who pays for them. If your employer's health plan is increasing your share of premiums and cutting the company's contribution or if the plan is increasing out-of-pocket charges or reducing what drugs it will cover, this shift is accounted for indirectly, after a lag of two years. But it hits your pocketbook immediately. And if rising medical costs deter you from seeing the doctor, that doesn't show up in the index at all.
Or consider housing. There are parts of the country where housing prices have been declining for a decade because few people want to move there. Statistically, these declines get averaged with astronomical housing costs in major metropolitan areas to show only modest average housing inflation. Around big cities, prices have plateaued at very high levels that are plainly outstripping incomes.
Try telling a young person in Greater Boston or New York or LA that there's no serious housing inflation or that rents have not increased faster than earnings.
The inflation numbers also fail to capture pocketbook realities for retired Americans. A low official inflation rate plays a cruel trick on seniors. For starters, it means that cost-of-living adjustments in Security Security checks are mere pocket change. One new prescription can more than eat up this year's Social Security increase
February 27, 2006
House prices doubled. Gas prices doubled. Real estate taxes doubled. Health insurance costs doubled. Yet no inflation?
Posted by blogger at 2/27/2006