There is no inflation

Anyone who claims there should be a substantial increase in COLA (Cost of Living Allowance) for Social Security recipients on the grounds there is now a surge in prices clearly does not understand how the system works.

It is supposed to monitor and account for the increase in the cost of essential products and services, and then – using the Chain Price Index concept of substituting less expensive alternatives as a logical way of controlling one expenses when the cost of something that you are buying or a service basic to your life goes up – the system allows the appropriate increase in the monthly benefit over the future year..

The increase in SS benefits over the past four years has been a grand total of less than 1% per year. This coming year is running in the same range.

Once I knew what it would be, I began budgeting using less expensive alternatives that provide the same service or product, while lowering my cost of living. 

For example. a few weeks ago, my bank increased the cost of a money order to pay my rent by 50%. So my alternative is to (oh, wait, there is no alternative. My landlord will accept only money orders, no cash, no personal checks).

OK, so that not a good example. Let’s look at something else.

The cost of a cup of coffee and a muffin at my local coffee shop went up 15%. So, now instead of coffee and a muffin, I buy a . . . (oops, sorry – another bad example).

Maybe this next example will help you understand how reasonable and fair the Chained Price Index is in indicating the COLA. 

I have been reading with great excitement, that thanks for the practice fracking to extra low cost oil and gas, the price has come down so low, we are actually shipping more energy out of the USA than ever before. A sharp drop on the cost of oil, gasoline and natural gas is sure to lower my home electric bill. But the premium rates added to the bill have just caused that to go up, so instead of electricty for my home, i am going to use . . . I can’t think of the name. Or if it actually exists.

Maybe this will make the point. My rent went up 5% this year so, in order to live at the same standard of living using my Social Security , I will simply . . . ummm . . . I will . . .  hmmm . . . Let me get back to you on that. 

There are better examples.

I’m working on some now . . . errr . . . ummm . . . I’d call you with one, but my phone bill just went up 6% and was shut off because I can’t pay. Send me your postal address and I’ll write you a letter.

Now where are those 26-cent stamps I bought a few years ago? 

 

 

 

 

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