Inflation – The Little Debbie Indicators
Dr. Michael L. Ford
5 May 2005
You have heard of the Twinkie Defense in criminal justice? Well now I have a related means for judging inflation I call it the Little Debbie Indicators. I have heard people solemnly pronounce that real inflation is probably three to four times what the government is claiming. But my Little Debbie indicators reveal that their estimates are actually conservative. One of the evidences that my guideline to judging the financial condition of the United States is probably correct is Australia’s Treasury Secretary has issued a warning that a U.S. economic collapse is more than possible.
Let me tell you how I realized the Little Debbie method of economic prognostication existed. You see, I buy for the snack bar enjoyed by students during breaks at our seminary extension center. The money raised through selling coffee, soda, and snacks like Little Debbie cakes help to pay for promotions to let people know about our school. When the profit margin began to be challenged by the rise in soda prices I put that down to Coca Cola’s tendency to try and gouge the market for all they could anyway, but then candy prices started going up as well. The last thing to follow suit, except for the price of crackers, was Little Debbie. When Little Debbie went up I knew the snack bar could no longer make a profit with its current pricing structure. We were in trouble.
Not a few reading my report will have been concerned about the great increases in the price of energy, most recently that experienced at the gas pumps. We had already experienced price gouging in other energy areas. Some have asked why there have been no Windfall Profits Legislation enacted to stop this cycle of robbery of the American people? Many remember the Windfall Profits Tax that was designed to cool off the oil companies when they lined up at the trough in a feeding frenzy before. That was when the corporate CEOs had gone crazy, probably from eating too many Twinkies.
When I tried to research the Windfall legislation, I discovered a great many areas of American life, blocks of companies like pharmaceuticals not just energy companies, have been making obscene amounts of money over what is a legitimate return on investment. The result is necessities like food have increased tremendously in price. Some reports say that overall increase is ten percent, but last week I priced basic can goods and found them up by a third. Right where Little Debbie went when her ninety-nine cent box became a dollar twenty-nine.
Recently some reports have indicated that stock market traders have switched to trading on inflation driven funds. They are making money in that market because we have run away inflation fueled by unstopped price gouging. I was in the market, Mutual Funds for retirement twenty years ago, and saw the value of my investment reduced over two-thirds in less than a week. The people who are making money trading now did not lose any money back then either. The reason I, a staunch conservative have opposed the President’s social security plan is that it does not pass the Little Debbie Inflation Indicators Test. As long as there are those that manipulate and control the market you dare not trust your financial security to it.
The Consumer Price Index has become the Consumer Poverty Indicator. It does not indicate inflation but as people make adjustments to try and keep from going broke they proceed toward poverty at a rate adjusted to meet the Little Debbie Inflation Indicators. Why was it necessary to pass legislation to make it harder for people to declare bankruptcy? It was not because the number of millionaires in the United States fell by a hundred thousand last year. It was because the regular people are being more and more impacted by my Little Debbie Indicators and determining they can no longer deal with their debt load. So the politicians acted to make it harder for people to stay out of the poor house or become homeless.
Do you really believe we have 2% inflation when oil is up 100% and food by the Little Debbie standard is up at least 25? Did you let your house stay a little cooler last winter because the cost of heating was up at least 40 percent? Someone once said, "As an economic system, capitalism succeeds because it takes seriously Original Sin; as an economic system, socialism fails, because its practitioners believe people can be 'made to be good.'" As we moved towards socialism Little Debbie reminded us about Original Sin. And guess what? Economic sin has gone unchecked!
P. O. Box 752
Buchanan, Georgia 30113