Thursday, October 23, 2008
Food, energy, AND stock prices have recently been decimated so inflation is whipped for the time being, right?
Try telling someone whose adjustable mortgage is resetting that *deflation* is in the air.
Here's another, albeit, smaller example. My wife takes the train into Boston. Rumor has it that they are going to increase the daily parking fee from $2 to $4 PER DAY. That's a $40 bump per month, or nearly $500 increase for the whole year.
So yeah, I'll save $1,000 this year on gasoline dropping from $4 to $3 per gallon....but then I give half of it right back to the parking attendants from the State of Massachusetts. Read on.
Sometimes my wife takes the boat from Hingham Harbor to downtown Boston. It's only $1 per day to park there. One day I took the boat in with my kids to meet up with her. I asked the guy selling tickets there if I needed to pay for parking this late in the day. He said,
"No. Those guys don't come back. Just in the morning. They steal the money anyway. There's no one watching them whatsoever. They just put the money in their pockets."
He sounded at least angry and at most jealous.
So, in the past three years we've lived in this terrible, cold state all they've done is raise the price of my wife's monthly train pass. They usually say it's to defray *higher energy costs*.
And now, now that energy is *cheaper*, they aren't going to rollback the increases, no they're going to continue to add to them.
I may just start dropping my wife off at the station since it's only .5 miles away. She may get a bike; or decide to walk more (some). Heck if we wipe out parking fees completely it'll be $80 in monthly savings - or a full $1,000 per year if they start charging $4 each day.
Now for Exhibit B.
I just got an email from Interactive Brokers, my commodities/futures broker that they will start charging $55 per month for NYBOT (New York Board Of Trade) market data. That's up from $1 per month.
How's that for a price hike?
How's that for a $648 inflation in my annual cost of living/working?
So just between train station parking and trading data I've given the $1,000 in gasoline deflation right back.
The CPI and PPI have systematically understated inflation for the past several years.
Expect Big Government to systematically overstate deflation in the coming months.