Why My Coffee Is Costing So Much More This Year

Why Deflation is Out of the Question for the U.S. EconomyWe are told that in the month of January, inflation in the U.S. economy increased by one-tenth of a percent. In February, prices increased by a similar percentage. In the entire year of 2013, the “official” rate was only 1.5%. (Source: Bureau of Labor Statistics web site, last accessed April 8, 2014.)

Some economists are calling for even less inflation in 2014 and even outright deflation (a period when prices decline).

This is absurd! Anywhere you look, things are costing more each passing day.

Consider the chart of gas prices below. Since the beginning of the year, spot prices for gasoline have increased by eight percent.


Gasoline Unleaded - Spot Prices Chart Chart courtesy of www.StockCharts.com

Unfortunately, gas prices aren’t the only thing that has gone up. Basic food prices are skyrocketing, too!

Since the beginning of the year, corn prices have gone up 22%. Coffee prices are up more than 75% year-to-date. Why aren’t these price increases reflected in the “official” numbers? It’s because the government leaves out two very important consumer essentials when it calculates its official inflation rate: energy and food prices.

As we all know, over the past few years, food stamp usage in the U.S. economy has dramatically increased. In January of 2014, 46.5 million Americans were using food stamps. (Source: U.S. Department of Agriculture, April 4, 2014.) The use of food stamps in the U.S. economy is a well-known fact, but have you wondered why so many Americans can’t even afford to buy food? You can blame inflation. Food costs are rising quickly so it’s becoming increasingly difficult for people to keep up with rising food prices when their incomes are not rising as fast.

I have been harping on about this for too long; all that new money the Fed printed over the past five years (trillions of dollars of it) will catch up to us in the form of inflation. And inflation in the future is going to be a major problem for the U.S. economy—bigger than it is today.

Our dollars are buying less and less each passing day. While politicians and many economists are not taking inflation seriously here in 2014, as usual, it will be too late for them to do anything about it when the inflation crisis does hit.

As inflation becomes a mainstream issue, there is only one thing that can protect the buying power of your money when general prices rise fast: my favorite commodity…gold.