On Sat, 5 Nov 2016 08:06:07 -0400, Ed Pawlowski wrote:

On 11/5/2016 5:59 AM, J. Clarke wrote:
In article , says...

wrote in message
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On Wednesday, November 2, 2016 at 3:14:40 PM UTC-5, dadiOH wrote:
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Inflation, which has run below the Fed's 2% target for years,

How many years? At 2% it would take about 36 years for prices to double.

My pocket book tells me that prices are about 2.5 times - or more - what
they were 20 years ago, nowhere near what the government claims. For
example, in 1996 I could buy a gallon of paint thinner for less than
$2.00;
now, it is $9.98. I could buy a senior ticket to a movie for $3.00; now
it
costs me $7.50.

However, inflation is great for debtors, the federal government being at
the
top of the heap. BTW, federal debt in 1996 was a bit less than 1/4 of
what
it is currently (5.2 billion vs 19+ billion).

IOW, the government's CPI doesn't reflect the real world.

http://www.bls.gov/cpi/cpid1609.pdf

Go to page 87 of this PDF and you can see the annual percentage inflation
for the past 45 years. Couple pages above and you can see the annual
inflation for the prior 56 years before that.

Thank you buI know where to find such.

The CPI is comprised of normal everyday items people purchase. It shows the
change in prices for a basket of these goods. Not sure if housing,
gasoline, etc. are included or not. Some of the inflation rates include or
exclude these types of items. It is what the average person buys. The CPI
would not capture the cost of living for an over the road truck driver who
sleeps in his cab and eats at diners and never pays utilities or does
anything else except drive. And the CPI would not work for an 80 year old
wood worker who lives off the grid and eats day old bread and peanut butter
only and uses tung oil and hand planes and chisels and hand saws only.
AVERAGE American is the key here. CPI is applicable to most people. Paint
thinner? Senior movie tickets? Does the average American buy these items?

Probably not but the average American doesn't have college tuition & fees
(one of the items in the CPI) either; nor cigarettes; nor propane, kerosene
and firewood. Here's the whole list...
http://www.businessinsider.com/break...-basket-2014-1

Here's another link...income over a span of time. Pay attention to the
median. In 1995 it was $16,650. Last year - 20 years later - it was
$29.930. If you plug $16,650 into an "inflation calculator" for 1995 and
ask for the 2015 equivalent it will spit out $25,894. Do you really believe
that real median income has increased by more than $4,000? I don't.
https://www.ssa.gov/oact/cola/central.html


Personally I'm making about twice what I was making in 1985. In 1985 I
felt like I was struggling to make ends meet. Now I don't feel that
way. So no, I don't buy the argument that living expenses have doubled
over the past 20 years.


Anecdotal evidence is sketchy. I just looked at what I made in 1985 and
I've more than doubled it, but in 1986 I had a $6000 increase. In 1985
I was just getting by, but in the interim, two teenagers moved out of
the house, the house has been paid for etc. I also have more money in
my savings account than ever in my life but got less than 50 cents in
interest last month. In 1985 I had enough to cover upcoming taxes but
got a couple of bucks for it.

It's also cherry picking. I didn't get a raise (though I did change
jobs with some change in income, up and down) for fifteen years and
they've been minimal since. If picked that period, it would have made
everything look worse.

That said, I'm in much better financial situation because, as you
allude to, as we age the non-discretionary part of our income tends to
go down. A house purchase fixes a big chunk of the monthly expenses
to that time. It's the greatest inflation hedge there is. As we've
seen, it's not 100% safe, if you're forced to sell at the bottom (not
much different than any other investment). Add to that the increase
in the value of my homes (living in the 4th), over that time (~6x),
and I'm in good shape, and that will be paid off in a matter of
months. However, none of this helps the kid just entering the market.

No, anecdotal evidence isn't good and it's easy to ignore the details.