Stimulus Checks Don't Even Offset a Year of Non-CPI Inflation

by: David Roskoph


The first stimulus checks are being distributed with great fanfare; as if they had real substance.  At best the money, which took us further into debt, will offset a fraction of the damage to individuals from the Fiat Reserve Bank’s [FRB] massive sale of put options to secure their Wall Street patrons. 


To gauge the stimulus’ ability to restore a flagging economy - First, click your heels together and pretend that the recipient’s wages have kept pace with the official CPI figures.  Then forget their a-historical debt burden and contemporary asset deflation.  Finally, do the unpleasant math to calculate the cost of those ever-so-conveniently excluded items of food and energy. 

Let’s look at an average family of four as described by the US Department of Agriculture (couple 30-50 with young kids).  Their prescribed “liberal” food bill in June of 2007 was $897 per month.  It now stands at $975  (compounding the latest figures for 4/08).  That’s an annual increase of $936 per family.

The average adult uses 500 gallons of gasoline per year.  The cost of unleaded gas in June 2007 stood at $3.13 per gallon.  One year later it has risen to $3.93 per gallon.  That’s an annual increase of $400 per person or $800 per couple.

If both parents work, the family will receive   ($600 + $600 + $300 + $300) = $1,800

While the cost of their non–CPI living has consumed most of it    ($936 + $800) = $1,736

How poetic – the answer is: $64!

This rebate will have NO simulative effect as it barely compensates tax-payers for the last 12 months of non-CPI inflation.  This accomplishes nothing more than returning to individuals, a diluted share of the buying power they lost in the Sub-prime bail out; a dividend for their magnanimous albeit involuntary investment.  Through the Federal Reserve system, we all underwrite the titans of capitalism.  This token rebate is an opiate to calm a middle class facing extinction.