Thursday, May 10, 2012
Random ruminations from your resident curmudgeon...
Every month, the Bureau of Labor Statistics release the Producer Price Index (PPI) and the Consumer Price Index (CPI) which measure inflation at the wholesale and retail level, respectively. If you listen to the reports of the data, you will hear either number reported "excluding food and energy costs". The rationale for this is that both of these costs are extremely volatile and can distort the reading of inflation in our economy. In some respects, this is true, because we all know that food and energy costs can swing quickly based on seasonal demands and the available supply. But here is what you should know. For most Americans, their largest personal expenditures after housing costs are for food and energy. Both of those expenditures comprise a significant amount of the personal household budgets of many Americans, and excluding the effects of rising prices in those areas does not paint a clear picture of the real cost of living for most of us. Here is a chart of the Food and Agriculture Organization's Food Price Index for the past 22 years:
While energy grabs our attention because of the pain at the pump we experience when we gas up our vehicles, food costs have consistently- and painfully- risen over the past decade. So when you feel the pinch in your monthly budget and are trying to figure out what is happening, remember that the information that we are getting from Washington is not accurate as to the actual cost of living and the increases- inflation- that we all feel. And that inflation is going to get worse.
If a leper gives you the finger, do you have to give it back?
About energy prices... We all know how painful it can be to fill up our vehicle. Three years ago, the average per gallon cost of gasoline was $1.78. Today, it averages $3.55 per gallon. This is problematic for us as consumers, because the rise in gasoline prices extracts more money from our wallets that could have been spent elsewhere in the economy. This increase in the cost of gasoline, as well as other sources of energy, are part of the administration's plan to foist green energy on American consumers. Those rising energy prices are a drag on the economy and make the recovery to good economic health more difficult for our country. There is another aspect to this situation that we should consider. Our nation's inept energy policy is a serious threat to our national security. The failure to develop the resources that are within our borders makes our country susceptible to the whims of foreign countries that often do not have our best interests at heart. Abundant and relatively cheap sources of energy are the foundation of our economy, and failure to develop our own sources of energy plays right into the hands of the countries that would love to see our nation get weaker. As citizens, we should demand that our government develop the abundant resources that our country has and stop foolishly attempting to force upon us inefficient and costly green energy projects that have no hope of meeting the energy needs of our country.
I finally got accepted into college. Unfortunately, it's a clown college.
The upcoming election poses stark choices for us as a nation. All of us can pick an issue, or issues, about which we are passionate, and we decide which candidate will get our vote (or votes if you are a Chicago Democrat) based on their position on the issues that motivate us. Consider this: the fundamental issue in this election is austerity. More specifically, are we as citizens going to force the government to be more austere and rein in spending? Or will we allow the government to force us into austerity by spending more at the federal level and extracting more of of incomes through higher taxes? The vote in November is about whether we as citizens will force the government to live within reasonable means or allow unlimited growth of government on the backs of the taxpayers. Our votes will determine the direction of government growth and therefore the direction of our economy and our standard of living. We already have a case study to see what happens when citizens vote for unfettered government growth. Watch the slow motion train wreck that is Greece to see what happens when citizens allow government to grow without restraint. As unhappy as the citizens of Greece are right now, it is going to get worse for them. Hopefully, our nation doesn't go down that same path.
I get a lot of sound advice from my wife. 99% sound, 1% advice.
And that, my friends, is my view.