Wednesday, June 18, 2008
One aspect of "inflation" as it is reported by the government has always bothered me more than any other. That is, the shopping basket used to determine the Consumer Price Index - the basis for annual payment increases for untold trillions of dollars in government and pension fund liabilities - is not representative of those individuals most affected by it, namely, senior citizens.
With much higher spending on food, energy, and health care than, say, someone in their twenties who lives at home and buys lots of electronics and clothes, both of which have been falling in price for years, seniors are taking a much bigger hit from soaring prices than any other group.
Some time ago, a London newspaper calculated the "pensioner" rate of inflation at ten percent or more and that's probably about what it's running in the U.S. right about now. The last Social Security cost-of-living increase was a miserly 3.3 percent last fall.
So, it shouldn't be too surprising to read that bankruptcy is rising sharply among seniors as reported in USA Today:
Swamped by debt and rising medical bills, elderly Americans have been seeking bankruptcy-court protection at sharply faster rates than other adults, a study to be released Tuesday indicates.Medical bills are suspected to be the major cause of the recent increase, but food and energy costs have probably contributed greatly in the last year. It's downright depressing to think that Social Security is the largest source of income for most senior citizens.
From 1991 to 2007, the rate of personal bankruptcy filings among those ages 65 or older jumped by 150%, according to AARP, which will release the new research from the Consumer Bankruptcy Project. The most startling rise occurred among those ages 75 to 84, whose rate soared 433%.
Inflation (especially when your government isn't being truthful about it) really is the cruelest tax of all.