Month: April 2011

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PracticalDad:  Is College Necessary?

When times are tough, people get back to reality and again begin debating the value and merit of ideas and institutions and boy, are people starting to debate whether higher education in its present form is still worthwhile.  Given the cost, relative to income, and especially the non-dischargeable nature of the student debt, it’s a legitimate debate and one which I have in my own house.  Thus far, we’ve raised the kids with the idea that they’ll be attending college.  The high school/college graduate income levels are clearly skewed to the college side and with middle-class American jobs steadily being eroded, we’ve been clear that this is a necessity.  But in the past two years, I’ve begun to question whether that college education has to happen immediately after high school or whether it should wait for a few years.  Is the degree itself the issue, or the classic out-of-high-school means in which it’s obtained?

Nobody – and I mean nobody – can say with certainty how the economy and job picture is ultimately going to shake out.  Will wages drop enough to make a manufacturing renaissance so that there’s a huge demand for machinists and skilled craftsmen?  Will things stabilize so that we remain in a permanently stuck service economy?  What stays with my wife and I is that there is value in education, enough that a meaningful degree is worth the time and effort to obtain it.  The trick is to assure that it’s meaningful and obtained in a way that doesn’t bankrupt anybody.

In the New York Magazine article, certain points stand out.  Clearly, there’s a lifetime income disparity between high school and college graduates but it honestly never occurred to me to consider the impact of college debt weighing upon that college income.  Given that, I decided to play with some numbers.  If you research the average starting salary of a college graduate, the median income of a 2010 college graduate with a job related to their major was $35000 and the median income for someone with a non-related job was only $25000.  With the average college graduate coming out with student debt of $24,000 and a typical repayment term of ten years at the Stafford loan rate of 6.8%, the monthly nut is about $276; according to federal debt/income ratios, this requires a minimum salary of $33,000 and is thus manageable for someone with a $35000 income.  Understand that the lesser wage of $25000 is specified as hourly.  According to the Heldrich study from Rutgers, after one year out of college, only 53% are employed full-time with 14% in graduate school, 2% in the military and the remainder either unemployed or cobbling together what they can.

While I researched for this, there were any number of 2010 newspaper articles talking about how the average job offer for the 2010 graduate was around $50000 with the unspoken upshot that things were actually quite rosy.  Just remember however, that there’s a difference between median and mean and a few truly high-paying jobs can pull the mean (average) up and away from the median, which is where the average junior Joe Six-Pack is going to be.

So where does that leave us, apart from having a disheartened adolescent in the house?

  • As always, talk with the kids as they age about the mundane reality of personal finance.  Want a car?  What’s going to happen with auto insurance and gas?  How much is spent on housing and the ancillary costs, such as utilities?  How is health insurance handled?  What’s this budgeting thingy and why doesn’t it consist solely of electronic equipment upgrades?
  • Step back and take an honest appraisal whether Junior is actually ready for college.  While the long-term benefits of college still accrue in terms of overall wage, the stats above show that the short-term pain is significant and could have a long-term impact.  Have you talked with Junior enough that there’s some semblance of a plan or is this just going to be the general-education-for-two-years-and-hopefully-figure-something-out-by-Junior-year approach?  If the latter, there’s no shame in discussing whether to work for two years while Junior makes some decisions based upon the reality of the working world.  Honestly, the two summers that I spent pouring concrete were significant in recognizing that I wanted a college degree.  Besides, the only temporal restriction upon money stored in a 529 plan is that it’s used by age 25 and not upon starting to use by age 19. 
  • Work with them to determine alternatives.  While the kid might be 18 years of age, most at that age do not have the experience and knowledge base to help them figure out where to turn.  By the time that you’re into your thirties however, you have a much better sense of where to go and with whom to talk to gather the information for a workable plan.  Also speak  honestly with them about whether their alternatives make sense.  When Eldest was in for her annual physical, the doctor inquired about what she was thinking for adulthood and when she responded in general terms, the physician agreed that that was workable given her grades and skills; I was surprised by the doctor’s subsequent comment that the plan for many teens to whom she talked took the path of professional sports and endorsements.  If that’s the case, then there are parents screwing up somewhere.
  • Let them know that a "plan" doesn’t have to be set in stone with six month bullet points (although it would be lovely were it true) and can change as the need arises.  What matters is that there’s a workable path to a rational destination.  It’s also helpful to provide a little perspective from someone who’s further down the lifepath than someone who’s at the beginning and scratching their head.

There are no easy answers in an economy that’s presently shifting gears from one model to another.  Change can entail significant pain and the unfortunate reality is that our young adults are among the ones suffering the pain, but the pain can be minimized with some clear thinking, time and perspective. 

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Preparing the Kids:  A Non-American World

I flipped on my browser window and the Yahoo newspage appeared with the apocalyptic statement that America would be overtaken by China by 2016 and that the American age was finished.  Honestly, who’s surprised at this?  They’re a nation of more than 1 billion people with a state controlled capitalistic system with two goals – to provide employment for more people than I can ever possibly count before I die and to overtake the United States to become the dominant global power and redress centuries of political impotence.  Us?  Well, not so much.  The realization of this happening has colored my thinking for years and has had some bearing on dealing with the kids, who will be making a living in a far more competitive world than either my father or I.  What can I do so that they’re not surprised as many of their generation will be?

The reality is now clear after several years of a collapsing housing bubble and out-of-control public spending and debt.  The standard of living will decline and the competition for gainful, sustainable employment will only get harder.  What have I talked about and tried to inculcate with the kids?

  • First, make them aware of the evolving situation by sharing news and even some of what I’ve written with them.  They’re now conversant with the issue of college debt and are aware that it will follow them; they’re also aware that while we’ve saved for college, we aren’t going to render ourselves destitute to  educate them.  They’re not on their own, but a significant amount is up to them and their efforts.
  • Second, talk about current events with them.  Make sure that they’re aware of the outside world, even if you turn off their electronics to read something to them.  That also means that I have to take the time to answer their questions and explain things.  The questions might come later instead of at that moment, so I make it a point to discuss things when they raise them.
  • Third, hold them accountable for their grades.  Even if they don’t think that grades matter in the real world, grades are "the coin of the realm" for determining future paths and present activities.  Activities can be stopped if the grades aren’t maintained and truthfully, things have occasionally gotten nasty when grades have turned south for stupid reasons.
  • Fourth, be frank with them about their strengths and weaknesses as they get older. When they were younger, I praised them for attributes and traits – you’re really smart, etc. – but changed to praising them for their actions so that the reinforcement pertains to their good actions.  After practicing baseball with Youngest one evening, I complimented him on his drive to repeat something until he got it right instead of heaping blanket praise about being a good ballplayer.  Likewise, make certain that they know when they’ve screwed up.  Sometimes, things happen but sometimes things happen because of our own failures and screwups.
  • Fifth, help them to learn the difference between want and need.  This is purposefully blurred by the media and corporations but it will have to be relearned as money tightens.  For example, Youngest has his baseball pictures this weekend and while we’ll buy some shots, I refused to order a bobblehead with his face imprinted on it on the grounds that it was simply crap.  Son, in four years it will be sitting in the Goodwill bin and even they won’t take it because it’s got your face on it.  Assuming it even survives four years.
  • Sixth, help them to develop both moral and political beliefs.  We spend our time trying to teach morality, but the flip side of the issue is that our youngsters are largely illiterate about history and politics and that’s the death knell of a civic nation.  I don’t need them to vote or believe the same thing that I do, but I do challenge them with what do you think about this?  One is growing up to be fairly conservative while the younger sibling is a budding labor organizer and political radical.  More power to them, whatever they believe.
  • Seventh, be sure to take the time to talk with them.  Chat with them, explain things to them, challenge them.  Even if you think that they’ve tuned out, they’re still listening and you’ll recognize that in the oddest moments. 

There’s no question that our nation will take economic second place to China within the next number of years.  While bad news sells and our media tendency is to overstate things, there will be major economic and financial changes and no change occurs without pain.  The competition will be fierce and there’ll be real and significant adjustment to our way of life.  The best that we can do is to recognize it and pave the way beforehand so that they aren’t blindsided.

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Is Inflation Coming?  McDonald’s Says…

Yes.

According to a brief news report, they are.  McDonald’s executives, those responsible for more than 32000 restaurants globally and 14000 in the US alone, now acknowledge that rising prices for beef, dairy and other products are squeezing their margins and have updated their own inflation forecast to 4 – 4.5% in the US and Europe alone.  Their problem is in figuring out how can pass the price increases along to a customer base that they also acknowledge to be squeezed, particularly when one of their key demographics is the young male – you know, the guy whose age bracket is presently afflicted with an unemployment rate of more than 18% and the worst in more than 60 years of recordkeeping. 

This is more in keeping with what the PracticalDad Price Index has seen through six months of existence, with ground beef increasing 10% at the retail grocer level and bread products rising about 8%.  The buns – bread products – will be particularly affected by oil prices, but not for the reason that might be suspected.  Apart from the cost of transportation to get everything to the various locations, the baked products all contain some elements of vegetable oils.  These oils are sensitive to oil prices as the biofuel manufacturers use these as an offset to oil, so that more of the vegetable oils are purchased when oil rises.  Dairy costs are being passed along to teh corporation instead of teh consumer however, because milk prices are set at the retail level and cannot be apssed along.  There will come a point however, when the dairy producers scream loud enough about their input costs that the milk board will finally have to pass that along to the retail shopper and that particular product will rise as well.

Other restaurant chains, such as Yum’s Chipotle Mexican Restaurant, are likewise seeing their wholesale costs rise but haven’t been as successful at controlling them as their peers at McDonald’s who apparently differ in that McD’s will work hard to keep the prices down.  We’ll see.

In the meantime, you might as well supersize while you can still afford it.

 

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Food Is Still Cheap, Now…

There’s been much written in the financial and economic blogs about the prospect of inflation and it’s effect upon the American middle class, and much of it is angst-ridden and full of doom.  But prices are trending upwards for food – I track a marketbasket of 46 different grocery items – and it helps to keep some sense of perspective.  That having been said, I read Michael Deane’s view of food inflation in the SFGate and while I appreciate the attempt to place it in perspective, it misses the practical point.

According to Deane, and he’s technically correct, food prices aren’t the boogeyman issue since Americans spend far less for food – as a percentage of income – than in most other areas of the world.  There are some regions where food accounts for upwards of 40 – 50% of the family’s budget, far higher than what an American family typically pays.  Reading Deane’s article, the sense is that some prices will rise, but they aren’t the cause for concern since we can always rejigger what we presently purchase.  Besides, there’s so much more that we can conceivably handle given the little that we comparatively pay already.  But he views the issue too narrowly.

  • We’ve built a highly complex economic system – almost chaotic in the scientific sense – in which things are connected in an intricate web.  Why does something which occurs in Fukushima have a bearing on next year’s homeowner’s insurance rates?  Foodstuffs are woven into the web and the disgruntled Arab student waving his arms in Saudi Arabia most definitely creates a breeze in the bread aisle.  What is affected elsewhere will probably find its way into the food arena.
  • Many Americans, particularly parents, are scared because they understand that the average income is flat at best and the economic future for our children is not as good as it was for future generations.  This means that there isn’t likely to be as much to go around to cover a familly’s budget.
  • Deane’s article states that inflation is expected to be at 2%, but expected by whom?  In November, 2010 I began to track the cost of food at the retail grocer level via the PracticalDad Price Index, which had a marketbasket cost of $178.39.  By January, 2011 the marketbasket cost had risen to $179.38 and by April 1, the price index rose further to a cost of $181.91.  On a year-to-date basis of January to April, this is an increase of $2.53, or 1.41%.  Annualize this and we’re at a food inflation rate of 5.64%, almost 3 times what’s "expected".  This is hard data drawn from a survey of three independent and unrelated grocery stores.
  • Let’s apply this inflation rate to real-life for the more than 44 million Americans enrolled in the federal SNAP (formerly Food Stamp) program.  The average monthly SNAP benefit was $133.79.  Since the rate of inflation compounds – it builds upon the previous year – the effect would appear like this.

 

Effect of Constant 5.64% Inflation Upon Average SNAP Monthly Benefits
Year % Inflation Adjusted Inverse SNAP Benefit Buys
now   1.00 1.00 133.79 133.79
1 5.64 1.0564 .946 133.79 126.56
2 5.64 1.116 .896 133.79 119.87
3 5.64 1.179 .848 133.79 113.45
4 5.64 1.245 .803 133.79 107.43
5 5.64 1.315 .760 133.79 101.74
  • The effect of only a 5.64% inflation rate upon the SNAP benefits shows that by the end of five years, the average person would only be able to purchase what can be bought now for about $102, or a full quarter less.  Critics can contend that this is a static analysis since SNAP benefits will certainly increase, so "it won’t be so bad…" but consider that the government benefit increases are based upon the Consumer Price Index, which is reported exclusive of food and fuel.  Any increases based upon CPI will certainly increase the monthly benefits but at a far lower rate than that of actual food inflation.  Consider what’s going through the minds of people who don’t yet qualify for these benefits and have children.
  • Inflation is not only a monetary phenomenon but also a psychological one, and fear feeds into that.  You can’t fund the necessary and useful projects if everyone is spending their dollars on food and items now for fear of what it will cost a month, week or day in the future.  Like the old fable, our society changes from the proverbial ants preparing for the future to the grasshoppers that live in the moment and are reduced to penury for having eaten everything.
  • We’re a society that’s been programmed for more than three generations to consume and our economy is now composed of about 70% end-stage consumption spending.  Individuals and families will be faced with far harder choices than our grandparents and as spending from flat family incomes shifts back to food, there will be a significant downward effect upon the national economy. And frankly, we have to now push the process of rethinking consumption and in the era of HSN and QVC, that will be no small feat.

So while we’re in good shape relative to a family in Kenya or Mumbai, the problem is that we aren’t in Kenya or Mumbai.

 

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PracticalDad:  What Are BRICS and Why Should I Care?

If you hear the financial and economic news, you’ll periodically hear the term BRICS.  It doesn’t pertain to a building material – although they are trying to build something – and it isn’t something with which to hit – although we’re likely to get whacked.  BRICS is an acronym for a five nation consortium, each of which has significantly growing economies as well as a wealth of natural resources, such as people, oil, and gold.  These five are Brazil, Russia, India, China and South Africa and while each is a regional power in its own right, they are now cooperating to further their own interests and create a new monetary system that removes the dollar as the global reserve currency – the linchpin.  While the most recent meeting in Hainan, China on April 13 didn’t gain huge press, there are distinct consequences that people should understand and these revolve around the dollar.

Remember that the dollar is both the global reserve currency and a fiat currency.  That first means that since the end of the Second World War, all of the world’s international transactions and business have been settled in dollars, even when they’re between two entirely different countries.  This has given us a freedom from the kind of worry with which other nations must contend in terms of their currency’s strength and has made international business that much easier.  There have been other global reserve currencies throughout history, such as the English Pound and the Roman Denarii and what also tends to accompany a global reserve status is military power.  In the other cases, think of the Royal Navy and the Roman Legions.

What a fiat currency means literally is there is nothing backing the currency except for the user’s faith (the Latin fiat) that the money has any value.  There’s neither gold nor silver nor any other natural resource backing the dollar, except perhaps for the American taxpayer.  Literally, what gives the dollar value is the belief among the rest of the world in that phrase on the buck backed by the full faith and credit.  These words have been on the dollar for a long time, certainly longer than we’ve had a $14+ trillion national debt and annual deficits in excess of $1.2 trillion, and because we Americans generally suck at math, the rest of the world has already figured out what we’re now starting to understand:  how in the hell do we actually pay this back, ’cause God knows we can’t agree on where to cut anything without upsetting somebody. 

What’s now apparent to the world is that the US Federal Reserve plans to handle this nominal debt load by repayment with greatly depreciated dollars and since they’re giving us stuff like oil for what they consider to literally be worthless promises, they’re all starting to look around for the exits so that they’re not left holding a flaming bag of horsepuckey.  This is where the BRICS come into play as they are growing national economies with abundant natural resources, whether it’s oil (Russia and now Brazil), gold (China and South Africa), minerals (South Africa, China, Brazil, Russia, India) or people (China and India).  They don’t want to give away their resources for flaming bags of horsepuckey and they’ve also come to realize that because they collectively hold so many dollars and US Treasury bonds in their foreign exchange reserves, any sudden moves that tank the dollar will literally wipe out their foreign exchange reserves in a heartbeat.

So what to do?  Their response, provided last week, is to stop settling their mutual transactions with dollars.  If China buys oil from Russia, the transaction will be settled in Rubles and Yuan instead of dollars.  When Brazil sends raw materials to China, the transaction will be settled in Reales or Yuan.  Because these five nations are going to account for an increasing share of the global economy in the next twenty years – and China is expected to overtake the US as the lead economy in about fifteen years – the defacto effect is to grow their way out and render the dollar meaningless.  It’s akin to a half-drowned and freezing Kate Winslet telling Leo DeCaprio I love you and I’ll never let you go…as she lets go and he begins his slow descent to sleep with the fishes.  As this occurs, expect other nations to begin settling their debt in other currencies until the US is left having to settle debts in other currencies as well; the painful moment will occur when the oil producing nations no longer settle oil transactions in dollars, at which point we’ll truly be in a world of hurt.

Remember that capital is the blood flowing through the global economic body.  What doesn’t receive blood withers, and those entities that can’t obtain capital wither likewise.  But what scientists have understood for quite some time is that when there’s a blockage that prevents the efficient flow of blood in the body, the body can respond by creating capillaries and routes to bypass the area and deliver the blood.  In effect, this plan by the BRICS is precisely that:  the creation of new financial capillaries to assure that capital flows to the remainder of the global economic body.

While you can become angry with the nasty furriners for their tricky ways, the reality is that they’re doing what they must to protect themselves from our own foolishness.  We’ve permitted our government to live far, far beyond our means and we’ve sat back while the Federal Reserve System – which is actually owned by the banks and not the government – has been allowed to flood the world with dollars that are increasingly worthless.  Indeed, what’s the point of having a signed Babe Ruth card if all that Babe did in his retirement was sign cards like bankers signing foreclosure documents – quickly and in volume?  Everybody has one and you might as well clip it to your bicycle spokes.

So what does this mean for us?

  • In the next number of years, expect that inflation really does take hold.  Oil, and all things oil-related, will rise.  Likewise with other products, such as clothing made from cotton, leather products, metals and all the way down the line.  This will also be the case for food.
  • Don’t look for any serious rises in wages since we’re going to be competing with lower cost labor in these other countries, and there is alot of labor there.
  • We have to seriously review how we travel and our mobility.  At this moment, we’re paying just below $4/gallon and Europe is paying the equivalent of $9/gallon and even if we get a handle on our use, the cost will rise significantly still.
  • As our dollar decreases, and we have to pay higher interest rates to attract lenders, government spending will be so taken up by interest payments that there will be no choice but a significant retrenchment of government spending.  We’ll have to fully redefine the social contract amongst the various interest groups and decide what we can and cannot afford.  Regardless of what you think of Paul Ryan, his recent budget plan is a first crack at this nut.
  • We’ll have to rethink our consumption based economy model.  Do we really need to spend this for something in order to be happy?  Is there something besides stuff that gives us meaning?
  • We’ll have to reconsider the meaning of the term middle class.  I increasingly think that we’ve lost sight of the real meaning of the term and have simplistically equated it with consumption and the ability to consume.
  • We’ll have to review our currency and our monetary authority, the Federal Reserve System.  Should we place something as crucial as the nation’s monetary policy and supply in the hands of a privately-owned body such as the Fed?  (And if you wonder, think about a good part of what’s gotten us here in the first place).

There are a massive number of issues to consider, so many that the body politic is going to truly undergo a shock in the next number of years.  The changes will be serious and frequent enough that the American family is going to be buffeted as it hasn’t been since the years of the Great Depression, so hang on and put on your helmet.

The BRICS are going to hurt.

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PracticalDad and College:  Involving the Parents

Now Marymount sends parents postcards several times a year, invites them to parents-only events and publishes a full-color "Guide for Parents."  It is one of a growing number of schools to discover that it’s not enough to communicate with prospective students.  The colleges are also wooing parents who are digitally tethered to their offspring and want more involvement than writing a tuition check.

 – Washington Post: College Catering to Curious Parents As Well As Prospective Students (April 9, 2011)

Colleges are discovering "that it’s not enough to communicate with prospective students."  And while there is "digital tethering" involved by some parents, the reality is that many parents are truly concerned about the cost and prospective debtload.  We’re involved because we’re not stupid.

We’re now fully engaged in the college courtship process as Eldest is wooed by multiple colleges and universities, which range from huge University of Southern Cal and Georgia Tech to tiny Belmont Abbey College.  She’s gone with her mother to several college open houses and will go to several more as interests and options are explored and I’m honestly surprised to think that the higher learning institutions wouldn’t include significant activities for the parents.  I’m honestly surprised that this piece of common sense hadn’t occurred to the marketin…er, admissions folks before now.  To their credit, the institutions visited thus far have had excellent sessions for students and parents, some both together and separate so not every university has climbed aboard the Crazy Train.  The dean of one college honors program endeared himself to my wife when he stated that one of their primary goals was to provide the best education possible without hanging a mortgage around a kid’s neck.

This generation has produced a signficant number of parents who are overly-involved, so much so that the term helicopter parent was coined.  We love our kids and perhaps since many grew up in divorced households, have gone too far in the direction of involvement and protection.  But parents have something our kids lack in spades, and that’s experience.  If a kid has a decent chance of incurring a mortgage sized debt by the age of 23, then he should be shepherded through a visit that’s heavy on fun and light on such questions as faculty/student ratios, facilities, financing and work-study programs.  There’s a local private college nearby that prides itself on a modern student center replete with Mongolian Grill, and if that’s the tripe that’s talked about with the kids, then parents need to be greatly involved.  When I first heard about this the other year, my thought was Mongolian Grill?  Hell, where are the Mongolians?

Why do we plan to be involved with the college decision?

  • Because the cost of higher education has grown at significantly higher rates of inflation than the core CPI monitored by the government and is expected to continue for the foreseeable future.
  • Because the cost of higher education is now significantly more disproportionate to the average family income than it was thirty or forty years ago.
  • Because that many more families are now tasked with funding their own retirements than thirty or forty years ago, when our parents and grandparents had pensions.
  • Because good jobs for the youngsters are increasingly hard to come by and it’s increasingly less likely that Junior is going to be able to obtain an entry level position that will permit him to service the debt load on non-dischargeable student loans.
  • Because we understand that there’s life beyond college and that young adults should have the opportunity to live, travel and enjoy life before settling down to raise children.
  • Because we understand that children are expensive and that our grandchildren will be impacted by the money spent on servicing college debt instead of helping provide for them.
  • Because one of the first adult decisions facing teenagers is one with huge financial implications, involving factors with which these teens have little experience.

There are two comments from the article that stand out in my mind after reading the article.  The first is from a parent:

Even when parents try to hang back, it’s hard not to get involved, said Allen Barnett of Tuxedo Park, NY, who toured American (University) with his 17-year-old son, Cameron, during spring break last month.

Barnett said he tries to keep his opinions to himself as he shows his son college options.  But at the end of the search, he said, "you always want to make sure they don’t make a mistake."

The second is from an "admissions marketing consultant" who stated:

"If I could ban parents from the campus visit, I would.  They take the fun out of it…People are still trying to figure out these parents."

To Mr. Barnett, I would say that he’s not hurting his son or disrespecting his decision-making skills by sharing his opinions.  This doesn’t constitute something only in the "mistake" category.

And to the admissions marketing consultant, I can only say that I hope you have triplets.

 

 

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Inflation?  Use Your Head…

One of the memes that’s been gaining credence recently is that the price inflation/deflation argument is close to settled and that inflation is about to reappear in truly significant fashion. More articles are cropping up and the debate is the reason that I began the PracticalDad Price Index in late 2010, to actually monitor developments on a specified basket of 46 items.  But you have to take a moment to think about it and whether certain articles about inflation are truly about inflation or something else entirely.  That was the case this morning as I read Zerohedge’s somewhat excited article about major inflation on Costco’s Survivalist Food Cache, which had jumped in price by 47% over a six month period.  I like Zerohedge and it’s on my regular reading list, but some might have to stop and think a bit about this particular article.

Yep, the number 47 is correct and I’ve no doubt but that it did rise by that much, also taking into account the stealth inflation of downsizing the package amounts.  But there are some things to bear in mind.

  • Inflation is first and foremost a monetary phenomenon, usually a response to the supply of currency coursing through the economy at that time.  That’s why economists follow such money supply data as M1 or the larger, more inclusive M2 with such interest and why the skyrocketing M2 amounts have given inflation proponents real grounds for concern.  Other things can cause inflation, such as a supply shock a la the Arab Oil Embargo, but that’s not the issue this time around.
  • Watching a market basket of items at three unrelated stores for six months has provided an insight into the early onset and/or the behavior of price.  When most go shopping, they’ll typically note that something has gone up in price only if it’s something which they constantly buy and with whose price they’re intimately familiar.  More typically, someone will see the price and think I swear that I didn’t pay that much last month, did I?  But since almost nobody keeps their receipts and goes back to reference them, there’s typically no positive identification and comments fill the blogosphere with observations and questions of whether something was noticed.  Inflation is more akin to having a rodent that runs up and down grocery shelves, peeking its head out so that it’s seen peripherally by the shopper.  When checked, the rodent is gone but a dropping is left to confirm its presence and as you step back, you see it pop out again three shelves up and twenty feet away.  If you don’t want to shop in that particular store, think of inflation as akin to one of George Norry’s Shadow People, who are typically only noticed peripherally.  It isn’t going to happen in such a concentrated instance unless things really are becoming hyperinflationary, or…
  • Someone sees a chance to make a bit of a killing.  When all of the pricing activity is occurring across a wide variety of generally unrelated food products – and lima beans are really not related to cake mixes – and from one particular business source, then whether the price rise is truly inflationary is questionable.  My God, inflation is even hitting the company that packages all of the end of the world as we know it supplies…it must be true.  When prices for such a disparate lot of items is rising that much at one clip, then you’ll witness it everywhere and certainly not from one supplier.

I suspect that prices will rise given the sheer volume of money that’s been thrown into the economy over the past two or more years, but there will most likely be a period of creeping inflation before anything such as that hits.  Besides, the banks have been the recipients of most of that money and we all know how willing they are to part with it, don’t we?  When they decide to let it loose in the larger economy, then we can buckle up for the ride.

 

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PracticalDad:  Because I Said So…

In an ideal world, parents and kids should communicate freely.  If the child is asked to do something and has legitimate questions as to why, she can ask and Dad has an obligation to explain why.  That’s the ideal world though, and in the real world, this PracticalDad has on more than one occasion simply responded with because I said so.  It clearly isn’t the best response and not one that teaches kids the rationale behind why things are – or aren’t  – done, such as why it’s not good to clean off the muddy shoes in the bathtub or why a window has to be opened because a bedroom is thoroughly penetrated with Axe body spray.

The real world is different from the ideal that parenting experts and child psychologists hold up for multiple reasons.

  • The child, and that includes the teenager, is using the question as a means of postponing the request and if the kid is really lucky, getting Dad so caught up in the response that the request is completely avoided.  Talking is easier that actually getting up and doing something.  When the question is one that’s been repeated on more than two or three occasions and Dad’s comfortable that the kid isn’t the drooling village idiot, then the response is an entirely appropriate one.
  • The child isn’t actually asking, but whining about it.  There’s been more than one occasion when the response is nothing more substantive that because I said so when the question is a reflexively whining why do I have to?  And it’s been more than once that PracticalDad’s response to that has been when you can ask and not whine, then I’ll explain it.  Otherwise, because I said so.  Kids have to learn that whining is unacceptable to the request or direction of someone in authority.  Make no mistake, the authority in the household can’t reside with the kids.
  • PracticalDad is human as well.  Things in a busy household have to get done and when someone’s trying to multitask – and it’s not really easy for a guy – then the press of events overtake the ideals of good parenting.  This is when it really is important to try to rebound from because I said so, because children are a blank slate and while they’re older now, they won’t learn how to choreograph a schedule or do something if you don’t actually take the time to explain it.  That doesn’t mean that conversation won’t become tense, but it does mean that I have to make the effort.
  • Related to the first bullet point, the fact that a kid will just repeat why out of  stubbornness, even when it’s been answered simply and satisfactorily already.  Now it’s a matter of imposing parental authority on the kid.  While some believe that parenting shouldn’t be a contest of wills, there are moments when it is and as my father stated on multiple occasions, I’m not losing this argument to a (&*^&*  second grader (or third, or fourth, or even ninth).  We do learn from our parents and now that I’ve got my own, it’s a stance that I can appreciate.

One of the keys to parenting is to follow-up with the kid and when I’ve hauled the phrase out, I’ve usually tried to have a subsequent conversation when the job is done and the angst is passed.  It’s uncomfortable and I’ve even occasionally apologized, but more often than not, the result has been that the child does understand so that there isn’t more angst when the request arises again.