COLA (cost of living allowence) and how it affects you

It's been a busy week. I apologize to anyone looking for my financial comments on Wednesday when I usually post my comments.

COLA (cost of living allowance) is supposed to be a measure of the inflation for the cost of living. Both business and the governments, local, state, and national, all use it to determine wage adjustments for their employees. This is not a merit raise, but a way of keeping up with inflation. This worked well for many years. An employee would get a bust to income to keep up with inflation and then a merit raise if they had earned one.

After the inflation fiasco of the 70's the government decided to prove there was no inflation. We are living with that "revised" system now. From the COLA formula, the government stripped out a few things. Housing, medical costs, fuel costs, education costs, and food costs. Now COLA is a measurement of inflation to things like televisions, wash machine, dryers, heavy machinery, cars, the things the average person buys everyday. Yeah, right.

I confronted my congressman on this subject at one of his town hall meetings. He told me the areas taken out of COLA, housing, medical, fuel, education, and food were to volatile to calculate. What? I offered him the use of my laptop to help with the calculations. When has anything gone down? Some things do and the COLA for that year can be adjusted. If t were to go down the employees would not get more money to stay on top of inflation. Anyone who has gone shopping in any of the stripped out area knows on an overall level everything has gone up. Yes, gas did pull back a little and the reasons are beyond the scope of this article.

Now, officially, we, in the United States, are under 2% inflation/year. Talk to anyone who goes to the grocery store and they will happily explain the Federal Reserve Bank, who keeps talking about how they control inflation, is full of material that squirts out the back end of a large male bovine. Education is skyrocketing, medical care is right behind it. Housing is in a massive bubble, defined by Gregory Mannarino, a man I would encourage everyone to watch, as the inability of the average person to buy the average house.

Where did all the money saved by business go? Have you paid attention the executive bonuses lately?

Until next week.