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Inflation Facts and Fiction

14 April 2008 - Features - Editor

The figures you read and hear may sound wrong. Hyper inflation for one person may not concern the wealthy. An official figure is like a stock market index. An average can mislead. The bills that accumulate in your mail are facts. Fed claims may appear fanciful. Politicians claim to have taken corrective actions. You do not know when such steps will take effect. How should you deal with threats of expenses overtaking revenues?

Start by understanding the structure of your recurrent expenses. Which are the big ticket items? Are they subject to inflation? Do you know which items are likely to cost much more in the coming months? Typically, food costs worry the poor. People in the emerging world are especially vulnerable in this respect. Energy costs are more pressing concerns in countries such as the United States. Gas and electricity hurt most. The United States does not meet its energy needs. It is a major importer of crude oil.

Food and oil inflation are fundamentally different for the United States. We are self-sufficient for staple diet. Getting around, air-conditioning, cooking, and heating, are other matters. We cannot do without these things any more. These facilities depend on imported crude oil and related materials. That is not good news for our currency, which loses value by the week.

Change to domestic energy. Ethanol, biological waste, sunshine, wind, tides, hydrogen, and even North American crude, are all made and sold in dollars. You can change to a car with a hybrid engine. Install solar panels on the roofs of your home and office. Invest in units to convert your waste in to power: ditto for insulation, natural lighting, and energy saving motors in ventilation systems.

Let crude touch whatever Bush decides with his Saudi friends. The facts of inflation need not touch your life.

 


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