Measure of Inflation
inflation is only robbing us of 2 percent of our wealth each
year. (That is what inflation does it undermines the value
of the cash you have unless the cash you have is increased
by an amount equivalent to the increase in inflation which
for most of us does not happen.) More reputable sources such as
John Williams ShadowStats
claim the actual figure is closer to 6 percent.
Since I write
about cars for my living, I have another measure: The year-to-year
increase in the price of cars that are the same this year as last
year. What are called carryovers in the jargon of the
car industry. If a given make/model of car is carried over to 2013
without any changes relative to the 2012 version of that car, then
the price ought to be about the same or even less, given
that its no longer the newest, latest thing.
But in fact,
it is almost always more.
The 2013 Ford
Transit Connect I just reviewed (see here) is a case in point. The
2012 version of this vehicle carried an MSRP or base price
of $22,035. The identical in every respect 2013 version,
however, has an MSRP of $22,265 a difference of $230.
dissect this a little. On the face of it, that $230 increase is
not exorbitant it works out to about a 1 percent uptick relative
to the MSRP of the 2012 Transit. But, one should also take into
account that whatever funds one had available last year are
by the governments own admission devalued by at
least 2 percent. Which means, the typical person that
is a person, whose income doesnt uptick along with inflation
needs at least 2 percent more Fed Money Money to this
year to make the same purchase he could have made last year. Which
means, at minimum, we have a 3 percent uptick in the amount of Fed
Money it takes to buy a 2013 Transit Connect vs. a 2012 Transit
And using the
Transit Connect as an example is being over-generous to the private
banking cartel that styles itself the Federal Reserve.
Because the Transit is a model thats not been updated significantly
since its launch in 2010 as a 2011 model. Thus it is a three-year-old
model, and one thats not hugely popular, either. Such factors
tend to depress prices (in real terms). Lets look at what
may be a more relevant example:
The Fiat 500
micro-car was introduced here as a brand-new model in 2012. It had
an MSRP of $15,500. The identical 2013 version of the Fiat 500 is
priced $500 higher at $16,000. Thats about a 4 percent
uptick, year-to-year. Which means, youll be paying about six
percent more to buy a 2013 Fiat than you would had you bought the
same car in 2012. That six percent tracks exactly with the
number touted by Shadowstats.
Now, to be
fair, its true that a number of 2013 model new cars only
cost a couple hundred bucks more than their 2012 equivalents. But
the thing to focus on is they all cost more than their 2012 equivalents.
These rising-for-no-other-reason prices are tangible proof of inflation.
And of our impoverishment. Each year, we have to come up
with more Federal Reserve notes to purchase a given
item. Cars are no exception. They continue to get more costly
not so much in real terms, but in terms of the amount of money
notes, actually it takes to buy them.
the amount is absolutely shocking because it is vastly more
than even the 6 percent annually reported by Shadowstats. How much
more? Heres an example:
of my column know I own a 1976 Pontiac Trans-Am. Ive owned
this car for 20 years and am only the second owner the car
has ever had. I have the original window sticker from 1976, when
it was brand-new. The base price was $4,987. In current (2012) Fed
Funny Money, that transmutes into $20,281 an almost exactly
four-fold increase in the quantity of Federal Reserve notes
one would have to possess today in order to travel back to 1976
and buy a new Trans-Am.
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automotive columnist and author of Automotive
Atrocities and Road Hogs (2011). Visit his
© 2012 Eric Peters
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