The evils of inflation
The better than expected Q3 Real GDP report has raised the debate over whether the American Recovery and Reinvestment Act of 2009, aka the stimulus package, was a positive catalyst in helping. I will not get into the political discussion and will only specifically discuss the tax cut that was given to individuals that qualified under certain income levels and put this into perspective with the evils of inflation and the damage it can do to lower income earners specifically. In the stimulus package, a payroll tax credit of $400 per worker and $800 per couple in 2009 and 2010 with income thresholds of $75k for individuals and $150k for joint filers was given. This equates to an $8 tax cut per week per person. According to AAA, the average gallon of gasoline yesterday hit its highest level in a year at $2.69 up $1.06 from Jan 1. That equates to an extra cost of about $12.50 per person per week on average.
October 29th, 2009 at 2:54 pm
And that is a great example of why inflation is alive and well. Sure, it’s not runaway 100% per annum inflation, and I don’t think we have to start printing $1,000,000,000 bills to overcome it (yet), but the costs of running a household and running a business, which are variable but still required, are just going higher and higher. I know that Wal-mart can sell me an LCD tv for $19.99, but I don’t those very regularly. I DO however buy infant formula, at 23.00 for 1 weeks’ worth, and I DO buy diapers, which have never cost more than they do right now, and I DO pay for childcare, which never goes down in price, and these are FIXED, required costs. There are not alternatives for many people. Babies have to eat, and have to be diapered, and have to have a safe, stable environment during the day when dad and mom are working, and no parents are available for free childcare.
It’s not getting less expensive to work. It’s getting more expensive to live.
October 29th, 2009 at 3:36 pm
I love BR, but, this is ridiculous. Gasoline price movement is extremely complicated and only peripherally related to anything O has done.
Ok, fine, take away the $8/week. That’l show ‘em.
October 29th, 2009 at 3:49 pm
Still beating that inflation drum…
October 29th, 2009 at 5:29 pm
@wngoju
This is Peter Boockvar, not BR.
However, I agree with you that this is an utterly ridiculous and blatantly political post. I would argue that the price of gasoline is rigidly controlled by the domestic petroleum cabal and large scale investment funds that artificially manipulate prices via derivatives. Supply and demand has absolutely nothing to do with the price of gasoline. Absolutely nothing–the price is fixed by his friends on Wall Street.