Wednesday, December 7, 2011

The Used Car Experiment- How the Government and Bankers Secretly Stole 250% From Us

For the past couple of weeks, I've been looking at used cars. Some new ones.

Mostly I am doing this because I am tired of getting my ass kicked every time I fill up my Ford F-250. It costs me about 300 bucks a month in gas just to get around town. Ten bucks a day.

Yesterday, I very nearly bought a used '06 Pontiac Grand Prix GT. I went home, thought about it, and scanned the car ads. I was absolutely blown away at the price of 9 and 10 year old cars. Oddly enough, through October this year, the cost of used cars according to the BLS has risen over 5%.

Let me put this in perspective. In 1978, I bought a used 1971 Dodge Challenger for 1200.00. That meant the car was 7 or 8 years old. I think gas was around .67 a gallon. I wrecked that car six months after I got it because I was an idiot teenager. Now I am an idiot adult.

During my third year of school (1982), I bought a 1974 Ford Galaxie. Ugly fucking car. The Galaxie had a little bit higher miles than the Challenger and it was 8 or 9 years old. It only cost me 800.00.

I've owned a lot of cars in between.

Some 30 years later, I am looking at 9 year old Pontiac Grand Ams for 5000 bucks. The Grand Prix was only 6 years old but it cost 9000.

So what the hell happened? Why does it cost 4000 more dollars today to buy a 9 year old Pontiac Grand Am than it did to buy a 7 year old Dodge Challenger in 1978? Gas is 3.30 a gallon now. Five hundred percent more than 1978.

That is the secret tax. Inflation. Government at all levels- has been increasing actual tax rates. But they don't just settle for that. They have also been inflating away the value of the money you earn. The double whammy. So I surfed over to the Bureau of Labor Statistics and wouldn't you know...the CPI tables going back to 1978 were not available. So I had to use this conversion calculator instead. I plugged in 1000.00 dollars in 1978 and the calculator told me that in 2011 the equivalent amount of cash is 3,472.
http://www.bls.gov/data/inflation_calculator.htm

A paltry 250% loss in buying power. Cumulatively speaking, over those three decades, we are losing about 8% real inflation every year. But wait a minute, doesn't the BLS publish those bullshit statistics minus food and energy that tells us inflation only runs 2-3% a year? Of course they do. Cleverly manipulated data sets that are changed over the years to hide the truth from you. Why? Because all fixed income government retirements and social security cost of living increases are based on CPI. The lower they can manipulate that number- the less they have to pay you. There is one other HUGE thing you should know. CPI does not account for the loss in taxes. Each time a taxing entity raises taxes- it does not land in some basket where that is measured and accounted for. That money is lost- taxes are not taken into account.

Most people don't know this but the BLS used falling home prices to offset the price rise in all other commodities. In fact, they nearly doubled the weighting as it applies to housing costs to something on the order (from memory) of 47%. That's why they can show this ridiculously low inflation rate when all of us are simply getting our asses kicked- week after week in retail outlets, grocery stores, and at the pumps. They even manage to exclude food and energy costs which are through the roof year over year. I am having a difficult time locating a non pdf file to verify the huge weighting the BLS has given housing rents recently after the steep decline in 2008. (They quit using home ownership and switched to rental costs for some ambiguous reason that I am sure suited them)

That's why those little ridiculous cost of living increases are such a joke. They are based on deceptive and fraudulent numbers generated by your government BLS. Tonight I went to my Public Employees Retirement site to see how much our annual cost of living raise was going to be. I was not shocked to see that it was only 1% again this year. That means we lost another 7 or 8% again this year on top of the 7 or 8% we lost last year. So far, two years into the retirement system and I have already managed to lose 15% of my buying power. I am trying to remain grateful.

Perhaps the best part of the BLS site is that they contradict themselves and prove my point. By default they tell you the truth. Not in the month to month numbers, or even in the yearly numbers. That little calculator of theirs- tells the truth. We have had 30 years of 8-9% inflation, not the 2-3% they report annually. That's how we lost 250% worth of buying power since 1978.

13 comments:

shakealeg said...

"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." :0(

shakealeg said...

My four favorite blogs. Yours, Golden, Denninger and Hanson. If you want to read his books I'll send them to you if you promise to send them back. :0)

http://victorhanson.com/

Anonymous said...

Question!

Why do we rely only on the government to calculate inflation (or CPI)?

Surely, it can't be that hard to do for analytic firms or universities out there.

Why don't we have independent firms reporting what they think inflation is. You know, a little competition?

A one minute search found this site,
http://inflationdata.com/inflation/inflation_rate/currentinflation.asp

And they do agree it is just slightly higher, but upon further reading, they use the BLS CPI data!

I'm a little freaked out that we rely solely on government to produce the underlying data for CPI and thus inflation.

What is going on here?

Anonymous said...

OK, I just found this, but don't know if this reliable.

http://www.shadowstats.com/alternate_data/inflation-charts

If this is true, there should be much outrage.

rawmuse said...

All commodities are about to go exponential. Literally exponential, in the true mathematical sense.

I suggest you go to YouTube and search for Chris Martenson's informative videos for more information. It is not happy viewing.

Brian said...

Shit I am proud of you guys for being up so late. I am gonna look at both of your tips. Shit. I'm not even thru editing this thing yet...

Brian said...

Shakealeg...thank you. Just tell me which ones to get and I'll order them from Amazon. Hell I need a year to get thru the books I already have piled up.
Thanks again.

Brian

Dave said...

Ah Brian, you are in the same boat I am. I own both my vehicles and the thought of buying another car makes me puke. But sometimes you have to. A car guy told me that very few folks are buying new cars ( they got smart or their broke or both). The market is in used cars, where the dealer makes huge markeup and everyone wants them. Its really a huge shell game. Buy a new VW Golf and screw em over.

Brian said...

I been looking at VW's A new jetta with a stick shift for 16.5 inn't bad..love CC's but they are fucking expensive.

shakealeg said...

Ha! I'm trying to dump my uread books on you. The Greek way of War is great read. I like his blog best though.

I have no advice on the car issue. I drive a 2006 e250. If I weren't a contractor I would be driving the most fuel efficient car on the road.

Used Car Danvers said...

I also watched Chris' videos on Youtube.com. I'd like to add more in you're post, I'll share something.

Cheryl Pass said...

Brian, don't forget how "cash for clunkers" took how many good used cars out of the market place, thereby creating a scarcity and pushing used car prices up. Your oldie but goodie was probably crushed into smithereens. Forcing us into the "Leaf" or the "Volt" is the goal. Then we can all go up in flames while O gets a ride on us.

Used Cars Los Angeles said...

I think that it's in part because of inflation but also due to demand. Right now the demand for used cars is higher because of the recession and folks are holding on to their cars longer. Also, the crisis in Japan also has affected the market; since new cars weren't being exported more buyers were buying used. It's a combination of things.