No matter what the government statistics say, you know what you’re paying ( a lot more) for a cart full of groceries versus what you paid last year. From Charles Hugh Smith at oftwominds.com:
If your earnings rose by 34% from January 2020 to October 2023, congratulations, the purchasing power of your labor kept pace with higher costs.
Official measures of inflation are a long-running tragi-comedy: comedic in the transparency of the distortions, and tragic in the consequences: what will you believe is true–the statistics or your lying eyes?
The basic gimmick of distortion is to underweight whatever is eating away at the purchasing power of earnings and highlight the trivial items that are getting cheaper due to declines in quality and globalization. So your rent went up by $200 a month, or $2,400 a year, but since TVs dropped $40 and toys dropped $20, inflation is only 3%. So stop feeling poorer, everything’s great! Inflation is dropping!
You see the problem: the scale of spending on essentials such as shelter, healthcare, childcare, etc. is far greater than the trivial “lower in price” items. If 95% of your essential spending is rising in cost, trivial declines in the 5% of discretionary spending do not offset the gargantuan declines in purchasing power.
The chart below reflects this distortion. Essential expenses that cost thousands of dollars annually consume far more of our earnings now, and these vast declines in the purchasing power of earnings are not offset by the occasional purchase of cheaper TVs.
The only accurate measure of increasing or decreasing costs is purchasing power: how many hours of work does it take to pay housing, taxes, college tuition, healthcare, childcare, etc., then and now. The official measures of inflation use gimmicks to distort the staggering drop in purchasing power by claiming the quality of stuff has increased by extraordinary leaps and bounds. So the fact that cars have rear cameras offsets the fact that it takes far more hours of labor to buy a car now than it did a few decades ago.
