Is Your Cost of Living Rising? Why the Elites Aren’t Worried About Inflation

In our household, we measure real-world inflation with the Burrito Index: How much has the cost of a regular burrito at our favorite taco truck gone up?

The cost of a regular burrito from our local taco truck has gone up from $2.50 in 2001 to $5 in 2010 to $6.50 in 2016.

That’s a $160% increase since 2001: 15 years in which the official inflation rate reports that what $1 bought in 2001 can supposedly be bought with $1.35 today.

My Burrito Index is a rough-and-ready index of real-world inflation. To insure its measure isn’t an outlying aberration, we also need to track the real-world costs of big-ticket items such as college tuition and healthcare insurance. When we do, we observe results of similar magnitude.

Our money is losing its purchasing power much faster than the government would like us to believe.

According to official statistics, inflation has reduced the purchasing power of the dollar by a mere 6% since 2011: barely above 1% a year. We’ve supposedly seen our purchasing power decline by 27% in the 12 years since 2004—an average rate of 2.25% per year.

But our real-world experience tells us the official inflation rate doesn’t reflect the actual cost increases of everything from burritos to healthcare.

The cost of a regular taco was $1.25 in 2010. By official standards, it should cost a dime more. Oops—it’s now $2 each, a 60% increase, six times the official rate.

The cost of a Vietnamese-style sandwich (banh mi) at our favorite Chinatown deli has jumped from $1.50 in 2001 to $2 in 2004 to $3.50 in 2016. That $1.50 increase since 2004 is a 75% jump, roughly triple the official 27% reduction in purchasing power.

So let’s play Devil’s Advocate and suggest that these extraordinary increases are limited to “food purchased away from home,” to use the official jargon for meals purchased at fast-food joints, delis, cafes, microbreweries and restaurants.

Well, how about public university tuition? That’s not something you buy every week like a burrito. Getting out our calculator, we find that the cost for four years of tuition and fees at a public university will set you back about 8,600 burritos. Throw in books (assume the student lives at home, so no on-campus dorm room or food expenses) and other college expenses and you’re up to 10,000 burritos, or $65,000 for the four years at a public university.

University of California at Davis:
2004 in-state tuition $5,684
2015 in state tuition $13,951

That’s an increase of 145% in a time span in which official inflation says tuition in 2015 should have cost 25% more than it did in 2004, i.e. $7,105. Oops—the real world costs are basically double official inflation—a difference of about $30,000 per four-year bachelor’s degree per student.

Here’s my alma mater (and no, you can’t get a degree in surfing, sorry):

University of Hawaii at Manoa:
2004 in-state tuition: $4,487
2016 in-state tuition: $10,872

Sure, some public and private universities offer tuition waivers and financial aid to needy or talented students, but the majority of households/students are on the hook for a big chunk of these costs. And remember that many students are paying living expenses, which doubles the cost of the diploma.

If you think I cherry-picked these two public universities, check out this article.

So the divergence between real-world costs and official inflation isn’t limited to burritos; it’s just as bad in items that cost tens of thousands of dollars.

As for healthcare: feast your eyes on this chart of medical expenses.

According to official inflation calculations, the $12,214 annual medical costs for a family of four in 2005 “should cost” around $15,000 today.

Oops—the actual cost is $25,826, $10,826 higher than official inflation, which adds over $100,000 in cash outlays above and beyond official inflation in the course of a decade.

So let’s add the $30,000 per university student above and beyond inflation for two college students over a decade and the $100,000 in healthcare costs that are above and beyond inflation over that decade, and we get $160,000.

Since deductions for education and healthcare don’t completely wipe out income taxes, the household has to earn close to $200,000 more over the decade to net out the $160,000 to pay typical college and healthcare costs above and beyond what education and healthcare “should cost” if inflation in big-ticket items had actually tracked official inflation.

$100,000 here, $100,000 there and pretty soon you’re talking real money in a nation in which median household income is around $57,000 annually.

So if a household’s income kept up with official inflation over a decade, that household would have to earn at least $20,000 more per year just to keep pace with real-world, big-ticket cost increases.

That’s the problem, isn’t it? If the household’s wages only kept up with inflation, there isn’t another $20,000 a year in additional income needed to pay these soaring big-ticket costs. So the shortfall has to be borrowed, burdening the household with debt and interest payments for decades to come, or the kids don’t attend college and the household goes without healthcare insurance.

Once again, real-world costs have soared at a rate that is almost six times higher than the official rate of inflation.

The reality is real-world inflation in big-ticket essentials is crushing every household that doesn’t qualify for government subsidies of higher education, rent and healthcare.

No wonder the political and financial Elites don’t care about inflation: their incomes have soared far above mere inflation. When you’re skimming millions, who cares about a mere $150,000 for a university education, or $25,000 for healthcare insurance?

Do you reckon the lobbyists for Big Pharma and the rest of the healthcare racket are spending millions lobbying politicians to slash the soaring costs of healthcare? Do you think all the universities collecting billions in government-guaranteed student loans are lobbying politicos to reduce loans to debt-serf students? Sorry, but that’s not how pay-to-play “democracy” works.

In pay-to-play “democracy,” the goal is to raise prices without improving service, and have the federal government enforce this racket on powerless debt-serfs.

If you want to understand why we’re fragmenting as a society, start by looking at the asymmetric burdens imposed by inflation. The Elites aren’t worried about inflation because they don’t even feel it. And since they rule to benefit the top 5%, they don’t really care what the bottom 95% are experiencing.

In other words, “Let them eat cake.”

Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

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  • Zartan

    Median houshold income = 2 people.

    People should not Marry so they can afford to buy a house! That is some kind of perverse prostitution. However, it seems children are taught to behave in this perverse way. They call it normal. However, it is only another form of inequity. You are much better off staying single, but with government inequity giving your tax-dollars to someone “elses” children, well, the government is caught sowing this inequity with marriage priviledge and child tax credits.

    Remember, Octomom?

    America is Octomom!

    Split that median income in half and that is more realistic. Now, anone who wants to marry with that income has a screw loose and it will end badly.

  • LeseMajeste

    Yeah, but just think of all those fine college football, baseball, soccer, basketball, hockey, tennis, volleyball, etc games we get to watch! And all those new buildings the colleges have!

    Go back even further, to the time when college tuition was free to California residents and that is one heck of an increase.

    And to think that college and health care was free in Libya and still is in Syria. Plus Syrians were getting paid 11%–not a typo–interest on their money held in a savings account.

    • Dorothyhcrum

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  • jadan

    Inflation is not inflation, it is devaluation. So-called passive income generated by usury, the loaning of money at interest rates that exceed the rate of growth of GDP, creates money without wealth. The interest the debtor pays to the owner of the debt is the printing press of the rich who are less invested in productive enterprise than financial scams. A stock market that grows while the real economy is stagnant is creating hollow dividends. The people fund stock market gains with increasingly worthless dollars. Real inflation is the result of consumer demand for goods and services that are in short supply. We live in a deflationary period. The private ownership of the magical money machine ( the Fed ) destroys the people’s money.

    • Zartan

      Most commodities are strong-armed by big corporate government “FED” bailout powers to rise prices for gross profit. Many things have increased because of GREED, like housing, which does not reflect a weak dollar, but rather, the weak minds of the people who allow such. Inernational banks and brokers colluded to push US housing markets up and this is a crime, it will eventually detonate and many, many people will lose their homes.

  • Zartan

    People are too focused on Inflation, which is a lame number, because “all the factors” that cause price increases are omitted.

    1. There are many reasons for “price increases” namely, speculation, and market manipulation. This can be found in housing where International Bankers have colluded with Brokers and even NATIONS ( CHINA) to buy US single family homes and strong arm the prices into the stratosphere! This should be Treason.

    2. Markets are not FREE, the US stock markets are a NEO-Corporate Cabal, whereupon, corporations and banks get FREE money from the Government to speculate and buy up assets causing massive price inflation. If they fail there is no depreciation, because the get bailed out by Governments printing money. All the Worlds Major Governments are colluding in this effort; therefore, there will be no infighting or downgrades. No Crashes or Calamity … Prices will only go up! If the American people were wise they would see this and demand a piece of that PIE. The Bankers got theirs!

    3. Governments are not bound to the same accounting methods as the surfs, peasants and slaves; because Governments work on international standards that allows them to carry huge debt over term. Governments have responsibilities and cannot be strapped like the common slave. However, governments also are alloted: FAVOR, ( a simplifying analogy) akin to a shop owner who gives the “Hot Chick” a free coffee every morning and charges everyone else 5-cents more to make up for his perversion. The US government is the worlds hot chick and can do anything it pleases, financially.

    The US government has AAA status, and will never be “meaningfully” downgraded, because it is the HOT CHICK! Also, nobody is going to risk Nuclear War, Death and Destruction that would follow such a downgrade. Without Meaningful Downgrades on DEBT, you will never see Weimar Repeat in America, simply, it cannot happen. Weimar was the result of the Treaty of Versailles, Banker Collusion, and Ill intentions by allied powers on thier vassal Nation Weimar Germany.

    4. All currency is faith based, and there is no lack of the faithful in the USD; however, anyone who loses said faith is droned out of existance. This is a power of economy, such as the world has never seen to date, allowing the US government with the “worlds most powerful military” to set all economic laws and decrees to its standard. The world simply obeys.

    Any discussion about inflation ( price increases) must take all factors of price increase into consideration or you will get the wrong answer. Simply, there are many forces working to “rocket prices up” and drag wages down: forces of Tyranny, Greed, Speculation, Debt, Supply and Demand, Market Manipulation and so on … Endless. We need a better system of economy, because the economy we have is set up to FAVOR and Cater all the HOT CHICKS and make us ( Surfs, Peasants and Slaves) pay for all of their FREE RIDES!

  • Zartan

    Deleted Again!

    Oh, well …

    There are many factors involved with price increases ( inflation) and currency devaluation is only a small part of that total factor. Most price increases are caused by government/banker/corporate collusion with wall street to strong-arm prices up! The Housing Market is also a product of strong-arm tactics by bankers colluding with Nations, Brokers and Wall Street. Speculation, Greed and Government bailouts of Wall Street are important in understanding price increases, because when DOW is at 20,000 ( on government handouts to corporations to buy their own stock) everything gets priced up. Government rigging, bailouts and manipulation is largely responsible. Market Commodities are manipulated (up and down) and with said commodities go practically all of your consumer goods.

    So, it may look like currency is losing value, ( due to increased cost of goods) but in reality it is mostly the Market Rigging, Speculaion and Greed: All important factors in price increases.