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.
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.