Inflation is a thief. It steals your wages and savings quietly and efficiently. Many people don't realize the cumulatve effects of inflation because it comes at us incrementally. Unless you are in a country experiencing hyperinflation most people really understand how it undermines their currency and lifestyle. This page attempts to demonstrate how inflation has impacted our lives by robbing us of the value of our currency.

The Federal Reserve Bank of Dallas produces annual reports that normally discuss a particular topic of interest to the Fed. In 1997 the annual report was titled Time Well Spent and was an attempt to show "The Declining Real Cost of Living in America." They attempt to make the case that the real costs of things have actually decreased this century by comparing wages of average workers in the early 1900s with those of the average American today. It is a really slick bit of propaganda, that might well convince someone who does not look at the issue critically. The entire paradign falls apart, however, because there was something really important that they did not take into account in their calculations, and that was taxation.

The level of taxation that modern Americans are saddled with would have astounded the fellows who founded this nation. They fought a revolution over a level of taxation that was less than the average state's sales tax. Add together sales tax, various use taxes (i.e., those found on your telephone bill), gas taxes, property taxes to the city, state, and county, "sin" taxes, hotel taxes, car rental taxes, special taxes on airline tickets, corporate taxes (which are passed along to consumers - business don't pay taxes, you do), "windfall profits" taxes, social security taxes, medicare taxes, and the ever-popular income tax, and the average American ends up paying well over half of their income in taxation. This number goes up considerably more if you consider all the hundreds of thousands of pages of regulations passed each year that business have to comply with that raise their costs of doing business, that must also be passed along to consumers, just like the taxes on their businesses.

Taken together, along with the insiduous nature of inflation, and it absolutely blows the "Time Well Spent" propaganda right out of the water. Sure, you may make a lot more per hour than a fellow working in 1913, but you also can't buy a house for $5k either.

I hope you enjoy the page below. It's pretty cool IMO. -Zeugma

The following was stolen from the Federal Reserve Bank of Minneapolis.

What is a dollar worth?

The Consumer Price Index (CPI) is a measure of the average change in prices over time in a market basket of goods and services. The Bureau of Labor Statistics releases CPI data monthly.

Directions: Enter years as 4 digits (i.e. 1913) through 2007. Enter dollar amount without commas or $ sign in box on first line. Click Calculate button to compute dollar amount shown on second line.

If in (year)
I bought goods or services for $ ,
then in (year)
the same goods or services would cost $


How the CPI is used to make these calculations.

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