Monday, August 01, 2016

Inflation Hidden in Plain Sight

Can we be honest and say that many of the reductions in value, quantity and quality are actually instances of fraud?
Yesterday, I showed how Consumer Prices Have Soared 160% Since 2001 for everything from burritos to healthcare. This enormous loss of purchasing power is not reflected in the official measure of inflation, which claims inflation is subdued (1% or so annually).
But price inflation doesn't necessarily reflect all the inflation that's hidden in plain sight in smaller quantities and declining quality. We've all observed prices of consumer items remaining the same while the amount of the product we receive for our money is less than it was a few years ago.
While a reduction in product quantities can be easily calculated, reductions in quality are harder to discern and calculate.
Consider the quantity and quality of the paint being applied to kitchen appliances. Although I can't quantify this, I've noticed appliances such as ranges and refrigerators are now prone to rust along the bottom edges in a few years because the manufacturers no longer apply much paint to surfaces and edges that are not visible, for example the underside of the steel exteriors.
This sort of rust was unknown in older appliances, or would only be visible after decades of service, not a few years.
I also notice that the paint is now so thin that scrubbing will in some cases remove the top layer of paint.
These reductions in quality may be the result of corporate cost-cutting or planned obsolescence or both. The net result is a form of inflation/loss of purchasing power as the price does not reflect smaller quantities and reduced quality/ service life.
As a result, many hedonic adjustments to inflation that are supposed to reflect better quality or productivity characteristics are bogus. A laptop computer may have more memory and processing power for the same price as previous models, but who measures the reduction in service life or the stagnation of productivity?
The reality is that most of us don't even use the full capacity of the processors or memory, and the industry's planned obsolescence has reduced the service life of new PCs. My 31-Year Old Apple Mac Started Up Fine After 15 Years in a Box (February 28, 2015)
Big Pharma has been busy jacking up the cost of medications that are off-patent by 500% or more. Meds that were a few dollars are being increased by 1,000% because, well, Big Pharma can raise prices without delivering any additional value.
Can we be honest and say that many of the reductions in value, quantity and quality are actually instances of fraud?
Whether we attribute inflation in plain sight from reductions in value, quantity and quality to cost-cutting, planned obsolescence or fraud, the reality is that these declines in purchasing power and value (i.e. inflation) are real but difficult to calculate and track.
That is why inflation in plain sight is so attractive to corporations and institutions.


My new book is #7 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition)For more, please visit the book's website.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Timothy B. ($50), for your wondrously generous contribution to this site-- I am greatly honored by your support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP