A Major League Existential Question

Are we all suffering from Governmental Theft?

I might mention that I'm a graduate economist. Whereas I will comment on nearly everything on this unassuming little blog, includiing stuff I know absolutely nothing about, my education and 50 years of business experience therefore enables me to deduce that we're being screwed.  By our Gubmint.  Yours and mine.  Screwed.  Here's how...

I wrote a check for a 1962 Chevrolet Impala Super Sport, 4-speed, 409 cube, 409 horsepower with Posi-trac, while the Beach Boys record was on the charts, on my 19th birthday (the result of playing a really good game of pool).  It cost me $2,929.00.  Just short of $3,000 dollars.  Only.

That was 63 years ago.  

The same car is not avaiable today.  Our Gubmint has legislated it out of existance.  But its closest repacement today costs more than $70,000.  The reason it has increased in cost, but arguably not in value, is inflation.  That's the result of "Too many dollars chasing too few goods."  That's the classic definition of inflation.  And it results from us having to compete with our Fedrul Gubmint for the things we have to buy to live and work.

Our clothes.  Our gasoline.  Our food.  Our lodging.  Our everything.  Our Gubmint buys those things.  By the millions.  We're trying to compete with the folks we hire who print money.  We don't print money.  So we cannot compete.

And what we experience is a classic increase in prices of 2% or 4% or during the Biden era, 9% every year.  What costs us $100 today may cost us $105 next year.  And what does the Feds do in resonse to that increase?  They work to raise the wages of those who are left behind.  They try and increase how much people are earning in order to quell the pain they feel from the increased costs of goods and sevices.  So that those folks continue to vote for those in power.  So far so good, right?

WRONG!

That's not what those of us who are on fixed incomes need.  Not what those of us who are living on our savings need.  Not what the 57.8 Million of us who are retired and livnig on our savngs actually need.  Not what those of us who see our savings go down in value with every inflationary uptick, need.

I relate it to being on that moving walkway at LAX.  You depart the plane.  You step on the motorized walkway.  Instantly you're moving at a rate faster than those who you see walking along beside you.  And it works just fine until you have to step off.  when you reach your gate a few hundred feet or yards down the hallway.  Or the exit.  Or the bag claim.  Right away you notice you're moving much slower than those on the moving walkway.  They're moving out of sight.  You're being left behind.  And there's not a dayumm thing you can do about it.

Imagine you have $200,000 in savings.  And annual inflation is 5%.  That means at the end of this year your savings are no longer worth $200,000.  Your savings are now worth only $190,000.  And next year at the same 5% inflation rate your savings will only be worth $182,000.  And so on.  And so on.  You see how inflation diminishes the value of your savings?

Why, I'm asking, does our Gubmint always work to increase wages to meet the new inflationary level it has created, instead of working to reduce inflated costs to meet our value losses?  In other words, why not work to keep the value of our money where it was, instead of the Gubmint trying to ramp up wages to meet the cost of goods where they are?  That would keep our money at its present value.  

And what would be wrong with that?

My first job post-Army paid me $11,500 year.  And that was a good job!  Car, expense account, stock options.  Now?  Degreed and qualified people can expect $100,000 starting pay, or even more.  But they each had/have the same buying power as I did then.  But being paid $100k somehow makes you numb about the inflation that's robbing you blind.

I call the Gubmint's failure to work to keep our money  at its present value "Governmental Theft."  What would you call it? 

Imagine, if you will, Rip Van Chuckmeister going to sleep in 2020 and then waking up in 2026.  Imagine how surprised he'd be to find out how little his money is then worth.  How about a MickeyD's cheeseburger, fries and a Coke?  That "value meal" was $8.00 when Rip went to sleep.  It's now $13.45.  

Resulting from inflation.

And let's take Rip's car for instance.  He drives a 2013 Hyundai Genesis.  The sticker price on this fully loaded luxury car was $46,400 when new.  It included every single option, including the "Tech Package," whatever that is.  That option had a sticker price of $4,500.  Maybe Rip will find out what it does if he takes the time someday to read the Owners Manual.  But in the meantime, Rip notices that the 2026 Genesis that replaces his 2013, fully loaded one, now costs $104,000.  The difference is caused by inflation.  Good ol' Rip, fearing that he'd developed some sort of brain misfire when he notices the increase, rolled over and went back to sleep.

Wouldn't you do the same?  

Somebody needs to run for office promising to take a completely different tack to our perennial inflation.  To work to keep prices where they were instead of where they are.  And then takng a bow for having done so.  The average new car is now $51,120.  Up 40% from 5 years ago.  And up more than 95% from when Rip was 19 years old.  Are our elected representatives now  takng a bow as a result?  Seems to me they are.

They shouldn't be.

Oh yeah, and whereas we used to give out 15% or 20% tips for good service, everybody we come in contact with now demands a tip of 30% or 40% or even more for simply doing their jobs.  When your Starbucks barista demands a tip for simply pouring coffee, doing her job, and making a reported $100,000 a year as a result, there's something seriously wrong.  I respond by staying home and refusing to play along.  Maybe you should do the same.

Maybe we should all do the same...