116 3rd St SE
Cedar Rapids, Iowa 52401
Inflation can be a cruel, cold wind. It bites hardest those at the bottom of the economic ladder, or on fixed income — especially when political leaders cut benefits. The wealthiest never knew what they were paying for groceries, still don’t know nor care.
All the rest of us need to know about inflation is whether we suddenly have too much month at the end of the money – and, if so, what can we do about it?
We don’t need to understand, let alone try to calculate, the Bureau of Labor Statistics (BLS) Consumer Price Index formula: CPIt = Ct/Co * 100. That may produce a number, the percentage increase in the CPI, but we don’t buy the CPI, as if investing in an index fund. We buy from among millions of individual items.
For example, “bread” is one of the CPI products. But there are over 100 types of bread, in various sizes, from different bakeries, stores, cities, days, with very different prices.
That’s why there’s no single “inflation.” There is only your memory of what you paid your grocery store for your family’s favorite bread last summer and what you paid yesterday.
Memory is at the core of the impact of increasing prices on our mood. Some remember last year’s prices. Others can recall prices during their youth. Depending on one’s age that can make an enormous difference.
I can remember, and the BLS reports, when things cost a nickel. An ice cream cone with two generous scoops. An adult’s cup of coffee. A loaf of Wonder bread. Many grocery items were a dime, as were my movie tickets.
My young buddies and I had pennies and occasionally sacrificed one to be flattened on the railroad track. We speculated whether a 50-cent piece might derail a steam engine. But none of us had ever possessed a half dollar or would have willingly sacrificed one to science.
My first car, a roofless Model A, cost $25. Tuition at the University of Texas was $25. My four-door Texas Model A, with a roof, cost $75. The neighborhood Texaco station charged 19 cents a gallon.
During my 1974 congressional primary race my house rent was $40 a month.
Of course, wages increased, too; but without unions they haven’t kept up. It’s virtually impossible to calculate with any precision how much ahead or behind we are from 10, 20 or 50 years ago. My rule of thumb is that most things are now priced at least 20 to 30 times the prices I remember.
Nor is there much we could do even if we knew. Find a job that pays more? Good luck.
Our most expensive purchases are for “time-shifting.” Americans pay $120 billion a year in credit card interest to have things now rather than pay cash later. Sometimes that’s necessary, but not always. (Google “marshmallow experiment” or Steve Martin’s “Don’t Buy Stuff.”)
Hey, how about we pay more attention to who’s financing the politicians we vote for?
Nicholas Johnson still picks up pennies from sidewalks in Iowa City. firstname.lastname@example.org