If you’ve been to the grocery store lately, you’ll notice that the price of everything has been skyrocketing. While inflation plays a huge role in this problem, there are other factors as well, including something called shrinkflation.
Here’s a transcript of our conversation:
Emma: Hi Brittany.
Brittany: Hi, Emma.
Emma: Today I wanna talk about something that a lot of people have been noticing lately, and it’s, that stuff is getting way more expensive. I thought of this topic because it’s something that’s actually pretty close to home. My husband and me, one of our favorite things to make is grilled steak. And when we go to the grocery store and we buy our steaks, we have actually noticed that in the last year, and a half, steak has gotten way more expensive. So, Brittany, I don’t know if you have like a favorite item that you’ve noticed to get more expensive, but these steaks have gone from about $10 each to like $20 each. Cuz there’s a specific cut that I really like to make on the grill.
Brittany: Which one?
Emma: It’s a skirt steak. I like to marinate it and put it on the grill. I have a sauce that I serve with it and I have just noticed like it is getting so, so much more expensive than it compared to what it used to be. So I don’t know if you have an item or maybe something that you buy regularly that you’ve noticed the price has gone up and maybe the last year.
Brittany: So I shop at Whole Foods, so everything I buy is overpriced. I love it.
Brittany: Right? So this is not, this is funny, this is not one of my favorite foods, but this is just an experiment I’ve actually been doing since I was in college. So, you know, when you’re in college, you eat very poorly because you have no money. Yes. So I ate boxed mac and cheese more than I am even comfortable admitting, but here’s something interesting. So when I graduated high school in 2004, that box of macaroni and cheese was 49 to 50 cents. Okay. Now I don’t buy mac and cheese anymore, but I walked past an aisle at the store and it was like $2 and something. And I’m thinking like, wait a second. Yeah. Trust me, it has not gotten any better. but like.
Emma: No, probably worse.
Brittany: Right? And over the past year, even more so. So, yeah, it’s crazy to me. And I think since COVID especially Yeah. I’ve seen the prices just start to skyrocket.
Emma: Totally. And cost of living in general is way, way higher than it used to be. Like even 10 years ago. You talk about 2004, that’s what,18 too long.
Brittany: Yeah. We don’t mean to get there.
Emma: Okay. Alright. It’s almost a couple of decades ago. So that’s not too far in the past, but when you go like 50 years in the past, you can really see the difference between, cost of living and just certain things. Like if you’d go to the store, people would maybe pay $20 for all the groceries that they would need for a whole week. And you see this across the board too, where handmade clothing used to be like a couple dollars for each article of clothing. Like maybe you’d pay $5 for a really, really nice shirt from the Sears catalog. Like that’s what my grandma always talks about is you would order things in from the catalog and they would all be really good quality and the quality of things for a lot of things. I’m not gonna say for everything because there are certain things where quality has gone way up from innovation. Yeah. And cost has gone down. But the interesting thing about that is it’s not across the board. There are a lot of things where quality has actually gone down over time and cost has gone up. And this is a super complicated issue and Brittany and I, in 15 minutes are not gonna be able to explain all of it. But I do wanna talk about the big reason, why the cost of living has gone up so much over the last few decades. And the big reason here is inflation.
Brittany: Our listeners, I call them learners. Listeners have heard us say a few times.
Brittany: We’re big inflation talkers. We don’t like it, but.
Emma: We don’t like inflation. Inflation is our boogeyman, but that makes it sound fake. It’s very real. Inflation is a real thing. But Brittany, do you wanna talk a little bit just about the idea of inflation and just do a quick refresher on what it is?
Brittany: Yeah. So I know that for the most part when we talk about this with, our audience, we talked about, you know, the creature from Jekyll Island and there’s the great Tuttle twins book where the grandpa talks about movie tickets and how they used to be, you know, 50 cents and now it’s like $8. But inflation is when the government prints more money and it’s not backed by anything valuable. So we talk about, you know, it’s like watering down the dollar. It steals from people who are saving their money. And the Tuttle twin’s book, we talk about this, right? Yeah. Remember grandma and Grandpa’s retirement or the money they saved isn’t gonna get them as far as they thought because the money is being, you know, it’s being devalued. So the government is essentially robbing people who work hard and saved. And again, with older people who’ve saved and then retired, that’s really problematic because what their dollar could buy when they started saving is not gonna buy what it can now that they’re retired.
Emma: Exactly. And this is something that has been a huge problem for the baby boomer generation, which basically means someone who was born right after World War II, and my grandparents are in this generation and I know that a lot of people who are that age have had real problems with their savings that they, they were working on saving up over the years. They have just been hit super, super hard by inflation, compared to other generations before them. And they’re having a tough time right now because stuff is so much more expensive than it was when they were working and when they were saving up for their retirement and calculating how much they would need. Now things are so much more expensive that money that they saved up and we’re planning on using is now, you know, it doesn’t even get them half of what they thought it would. So that’s why we say it’s stealing from people. It really is stealing from people. And the reason why a lot of the times we print this money, the printing press is going 24/7. I don’t know if anyone knew that already, but it is always running. There are a few places where money is printed in America and they’re 24/7 printing more and more dollar bills because they can’t even keep up with the amount of money that they want to pump into the system. So usually when they fire up the presses, you know, have ’em going extra fast and printing extra money, it’s to pay for programs that claim to do things like helping the poor and fixing our infrastructure, which is, you know, our roads and bridges,
Brittany: That’s like keywords. Anything they want it to be.
Emma: Now infrastructure just means whatever. But yeah. They throw around these words like, we’re gonna fix inequality and we’re gonna do the American rescue plan. That’s one that President Biden has been pushing a lot recently. And when you actually read into these plans, basically they’re trying to engineer the economy to, you know, help people who are in an unfortunate situation or maybe subsidize. We’ve talked a lot about subsidizing certain activities or subsidizing things like healthcare or childcare or education. And that’s another thing that really starts to interfere with the free market is when people get into, or governments get into these subsidies, they’re basically picking and choosing winners and losers. And we can get into this more in a little bit, but that allows, that does not allow the free market to work when you have the government choosing, you know, what industries are gonna get subsidies. And that a lot of the times is what makes certain things way more expensive. but when the government is firing up, you know, firing up the printing prizes, they’re printing more and more money and watering down all of our dollars. They do it for these nice-sounding reasons. And a lot of people just never really stop to ask where is that money coming from? a lot of it comes from tax dollars for sure, but the government doesn’t even tax us enough to pay for all of these programs. It a lot of this.
Brittany: We don’t think they should tax us more for the record,
Emma: No absolutely not. No. Taxation is theft all day. Yes, but the government doesn’t even tax us enough to pay for all of this. They rely on us printing more and more money. Yep. And the problem is this money is not backed up like by anything valuable like Brittany said, and that’s what we call fiat currency, where it has no real value to it. So it’s unfortunate because the same products that you would be buying like a box of mac and cheese or a shirt or whatever it might be, a piece of steak, that product is not getting any more valuable, but you need more and more of the same currency to buy it. And that’s why we say watering down the dollar. It’s like if you had a big, you know, glass of lemonade and you have a certain concentration of lemon juice and sugar and water, and then someone comes in and dumps a bunch of extra water in your lemonade, it’s not gonna be worth as much. It’s not gonna do the same thing.
Brittany: No, you’re absolutely right. And you know, a lot of our listeners have lemonade stands, so that’s a really good way to lose your customers. But there’s another problem called hyperinflation. And Connor and I had touched on this briefly before, but there was something called the Weir Republic in Germany, and this was in between World War I and World War II. And they were devaluing and watering down their version of the dollar. So what was it called? A something mark.
Emma: Goodness. I could tell you.
Brittany: I can’t remember I’ll put it in the show notes. But basically, the inflation got so bad that families would bring a wheelbarrow full of money and it wouldn’t even buy them like a loaf of bread. Like it was that bad. It actually reminds me, so I know that they rebooted ducktails, but back in my day the original good Ducktail, yes. There was an episode where there’s a lesson about this because one of the scientists gives the boys a gun where they can shoot it at something and it duplicates it but every time it duplicates it takes something away from something else. And, it doesn’t mean to be a really good lesson in inflation, but it’s actually a really good lesson in inflation. Yeah. Because the more they keep duplicating their toys, like, the less good they’re to, like, it’s a great lesson. I’ll, link to the clip in there. I think Connor and I talked about it before, but. So it just goes to show you, when you water the water down and it’s herb water, I’m sorry, the money down, and it’s not backed up by anything, it becomes useless. Like, imagine a wheelbarrow of money being useless.
Emma: Yeah. It’s crazy to think about. And I know that sounds probably pretty far-fetched, it sounds like, oh, that’s a crazy thing you’d read about in a history book, but this is very much a real thing. this is what happened in Venezuela before. Yes. Before the country really went south and people were like scrounging for food to eat and like before the country really, really went down a bad road, inflation was sort of the first sign that things were going bad and people, you know, you would have all of this money and the money wasn’t worth anything because there was nothing to back it up. So people would start trading like cell phone chargers and batteries and, you know, you’d get in a taxi and it would be like, oh, I have three eggs. Can you take me to this part of town where people start bartering because the money is just completely worthless? So thankfully we are not there yet, but that is a very real risk that we’re posing as a country when we basically take away the value of money and we disconnect it from value. So that’s kind of the inflation part of it. But I’ve also talked about subsidies and I wanna quickly talk about, we don’t have a ton of time here, but I wanna talk about the cost of college. And this is something that we’ve talked about a lot before, why college might not be the best idea for everyone and why you should think through taking out loans before you take them out. but back in the seventies, a lot of people didn’t even need loans to pay for college. And a lot of people would argue that a college education was actually worth more back then because of, you know, what these people were learning. It was a lot of valuable information and it was specialized skills. But in the seventies, the federal government decided, and this is the exact same kind of thing as the American rescue plan, it’s a nice sounding plan that was not thought through properly, they decided to subsidize college by basically guaranteeing that anyone who wanted to go to college would be able to for a loan from the government. And they thought that this would make college more affordable for everyone and that it would knock down barriers and allow more people to go to college. But that’s not actually what happened. In fact, it was the complete opposite. And Yeah.
Brittany: Oh, sorry. Go ahead. Sorry. Sorry.
Emma: No, it’s okay. It’s okay. I was just gonna say the cost of a college education now is about 3000%. That sounds crazy. 3000% more expensive than it was in 1970. And that’s basically because colleges, they saw that the government said, you’re gonna be able to get a loan no matter what. And the colleges said, well, hey, this is time for us to cash in. We can charge whatever we want. And instead of having to compete with each other and keep costs low for students, we’re just gonna count on the fact that the government is gonna pay the bill. So, Brittany, I don’t know if your parents have ever talked about, oh, you know, back in my day when I went to college, but nowadays, like I have friends who, they have literally like over a hundred thousand dollars Yeah. In debt for college. It’s, insane what people our age have to pay for a product that’s not even worth any more than it was before.
Brittany: And I have not, quite six figures, but I have a great amount and I didn’t even finish right, because I ended up dropping out and going elsewhere and just starting my career. But it’s even more frustrating cause I’m like, I didn’t even get my piece of paper. Yeah. So, yeah, it’s absolutely terrible. But we see this happen in other industries as well. We’ve talked about subsidies and, with, with farmers who grow certain crops and we’ve also talked about how that affects our health even but it also affects the cost of food. So, you know, farmers who grow soybeans and corn, which aren’t very nutritious compared to other vegetables, they get huge tax breaks. Yeah. So this makes, you know, this is why we have so much corn and soybeans in our economy and it makes it so they can sell their products for much cheaper. That’s why, you know, for example, a bag of Doritos, which are mostly corn, might be cheaper than an apple at the store. And, you know, that’s causing our health to go down because what are you gonna, you know, what are you gonna choose? Yeah. What is cheaper? And families who maybe can’t afford to eat better end up getting the Doritos. But it’s also why every time you open a bag of chips, there seems to be more air. And that bugs me to no end when you open chips and there’s like four chips.
Emma: Yep. But
Brittany: But It’s all air.
Emma: Yeah. It’s crazy. And this is something that has been nicknamed Shrinkflation. Yeah. I love that because it’s kind of like a sneaky way that inflation affects us, where these companies are saying, all right, we can only afford to buy. because, and inflation affects businesses as well, where, you know, if they have a certain amount of money that they have to spend on their supplies, but the money doesn’t get them as far because the supplies are worth more than the dollar. They have to figure out creative ways around this too. And I’m not saying that it’s good for them to short customers like I’m not about that, that drives me crazy. But they have to find a way to keep their, business open. Yeah. So what they do is they start putting less and less of the product into the boxes of cereal and the bags of chips and that kind of thing where products are actually getting smaller and smaller. We’re getting smaller servings compared to what they used to be, but they’re charging the same or even charging more. Like you’ve talked about the box of mac and cheese, it costs probably about four times what it used to only 20 years ago, not even 20 years ago. So that’s another sneaky way that inflation affects us. and we talked about the creature from Jekyll Island. There’s actually another great Tuttle twin book that sort of talks about subsidies and what happens when you start messing with the free market. So that one is called the Tuttle Twins and The Messed Up Market. So a couple of good book recommendations if you’re interested in this. Like, I said, Brittany and I can only talk about so much in 15 minutes. But there are all kinds of ways you can learn more. So we will link to both of those books in the show notes as well as an interesting article about Shrinkflation. I love that word. So, if you wanna learn more about that and maybe figure out what products are starting to skimp on you a little bit, you can click that. But Brittany, thank you so much for chatting with me today, and we will talk to all of you guys later.
Brittany: Talk to you next time.