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A Look At How Much Things Cost Today

1 November 2010 One Comment

Prices of some items are dropping and others are increasing.  It’s sort of a strange phenomenon.  We’re here to help you straighten out what is going on.

Flat screen TVs, the staple of most American homes these days, are continually falling in price.  A quick trip to Wal-Mart or Target or Best Buy will show you that you can go bigger and better with regards to your TV than ever before.

Meanwhile, if you go to the grocery store, you’ll notice that some of your staple items like orange juice are now in deceptively smaller containers and either cost the same or have gone up slightly in price. What’s the deal?

The prices of consumer products that are typically bought on consumer credit are going down.  Despite the government’s attempts to get people to spend, people are cutting back slightly and are not willing to make large purchases.  There are a few reasons for this.

First, more and more of individuals’ money is going into necessities like food, mortgage (is paying your mortgage still a necessity), bills, etc.

Second, the economy still sucks and people are unemployed which obviously affects consumer spending.

Lastly, people have high levels of uncertainty about the economy still.  This makes people want to hoard cash and have a buffer should something happen in the future.  They’re making do with what they have while they hope things improve on a macro level.

Unfortunately, the policies in place today are inflationary and are pushing up the prices of commodities which will show up in how much food and energy cost.  When your bread and gas prices are skyrocketing, it impacts the standard of living of the millions that are barely getting by.

What should you do about this?

You need to essentially outpace inflation.  Focus on your earning potential.  Get your income up however possible.  Maybe its with your current job or maybe its building a side income.

Next, you need to not buy useless crap.  You don’t need to replace your 40″ TV with a 55″ TV.  Put the money into savings instead.  You need additional liquidity to fight economic uncertainty.

When you have sufficient liquidity, then start fniding investments that will hedge against inflation.

One Comment »

  • paavels said:

    I guess you've never experienced 20+% inflation. Good luck beating that!