Sunday, June 14, 2009

Life in Whacko World!

I guess I must have successfully escaped reality and landed in a loony bin. Case in point:

2009 prices of commodities I use, tax on property we own:
  • the price of gum (I used to chew occasionally until last week): UP 16%
  • our estimated 2009 property taxes: UP 11.15%
  • Cheezits, veggie dogs (and other "meats"): Prices -- steady! -- package weights or actual product have dropped 20-25%.
  • Water bills (in Eugene, OR, anyway): UP 24%
  • Gasoline (from the government's Energy Information Administration: UP 54% (since Jan. 1, 2009)
  • etc., etc.
OK, so it was out of much curiosity that I anxiously flipped to page four of today's USA Weekend magazine in our Sunday paper to learn of the "3 safe places for your money" that would earn me a decent rate of return on my swindling savings.

The first thing I noted was it's author -- Sharon Epperson. I remember Epperson from when I watched CNBC faithfully during those internet bubble years of irrational exuberance. She was another "pretty face" ala Maria Bartiromo, analyzing markets for us with their most distractive, attractive presences.

But I digress. Cut to Epperson's article in today's mag rag where I read with incredulity, "Even a 2% rate of return will beat inflation these days," she assured us all.

I have one question: Where in the fuck does Sharon Epperson and whoever she's working for come up with a 2% CD rate of return beating the inflation rate in this country? A visit to the United States Department of Labor's Consumer Price Index through the end of April 2009 shows me why I'm obviously speaking here from inside the looney bin, to wit:

Thru April, 2009, the inflation rate for all urban consumers for the previous 3 months was an annualized rate of 2.5%. But that did not include the cost of food and energy which, according to the BLS, declined 1.7% and 8.5% respectively meaning, if you add those two items back into the index, a 2.0%/yr. CD makes you feel like you discovered gold in Sutter's Creek! (See the above price in gas this year --up just 54%!)

So what's my point? Well, my experience doesn't match reality obviously. That leads me to one conclusion: I'm apparently fucking crazy! (Either that, or my CD's enriching me daily, just when I was feeling more and more impoverished. "Okay, have you finished ironing the kinks out of my "straight" jacket? Take me back to my rubber room.)


D.K. Raed said...

apparently we all belong in the loony bin, along with our "swindling savings"!

The consumer price index is completely out of whack with reality. Epperson should look at the Commodity Price Index (the other CPI) if she wants a better grasp of real inflation.

BTW even if they are right about CD's earning more than inflation, most economists are more worried about hyperinflation happening very soon, which is another good reason not to tie up your money too long term. You'll want to take advantage of the increased CD rates that should accompany hyperinflation -- in a sane world!

D.K. Raed said...

Dada, to make sure I just looked up the current Commodity Price Index. It's at the same level at the Consumer Price Index was for March 2006 (yup, somehow we have timewarped back to 2006). So, looking at the Consumer PI for Mar '06:
Items in the food basket = up 4.3%
Transporation = up 10.5%
Energy = up 21.8%
All items EXCEPT food and energy = up 2.8% (why do they even bother with that meaningless calculation?)

Even if you accept the phonybaloney razzamatazz, 2.8% is still higher than a 2% CD. How does that beat inflation?

Dada said...

D.K. -- Thanks for checking on the other CPI. I was hoping it would show me a glint of light, an ounce of reason, but thanks for trying anyway.

As for hyperinflation: In prepping this blog, I came across an excellent hyperinflation quote. (Of course, it was on some site that wanted to sell me some protection against it, so the quote was extra, extra scary.)

**off topic** I've been to your blog a couple of times -- always on the iPod where I refuse to attempt comments, so one is yet to come but will. I love those photos and old Clyde.

Just wish I'd captured the pic of your new digs (and rotated it) before my neck got all cricked into a temporary permanent disfiguration most of the day. (BTW, love the floorplan, LOVE that enclosed courtyard, great storage space and four car garage.)

More later....(mild spring, huh?)

Fran said...

Food & energy prices down?

Which planet are they reporting on???

D.K. Raed said...

Hah, Dada, I probably shouldn't have commented at all last night, being too punchy after the long drive home through some wild T-Storms! I captured some cloud pics which I'll post when I get a spare moment. They aren't as weird as the "asparagus" one you posted below, but scary to drive through.

While visiting some friends this weekend who are very INto their I-Pod, I had them show me how to use the "keyboard". YEEKS! I don't blame you for not wanting to tackle that! But FYI, that sideways floorplan (sorry about the neck damage) was from BEFORE I re-designed ... some of the things you liked most are GONE (replaced by options that I designed myself and which the builder will now be offering to other buyers, after I did all the design work for them, the story of my life).

Re hyperinflation, I hope that CD rates will rise accordingly -- but based on this last cycle of understated inflation, they won't! Because when it comes right down to it, we are screwed no matter which way we turn! Clowns to the left, jokers to the right ...