Cost of Living 2013

cost of living
Why the US Cost of Living Index is Increasing

The US cost of living index measures exactly what it says it does, how much it costs to live in the US. Unfortunately, this is a number that has been almost constantly increasing over the past few years, and has risen another 1.7% in percent in 2013 alone. These dramatic increases in the cost of living in recent years has left many struggling to get by and wondering what exactly is causing the cost of living to increase at such a rapid and constant rate.

The simplest answer as to what is causing the US cost of living increase in this way is inflation. But, what is inflation? Inflation is when the prices of goods and services on the open market go up, thusly causing the value of currency to do down. In the US economy much of the inflation that has haunted the nation throughout its history and the corresponding increase of the nation’s cost of living index can be tied back to debt. This increase is caused by debt both in the private sector and the US government’s debt to the Federal Reserve.

Contrary to popular belief, the Federal Reserve that prints the United States’ money is not actually part of the federal government and is actually a private corporation (not regulated by government). For the US government to circulate money and distribute it to banks they must first trade bonds to the Federal Reserve for said money. These bonds are basically loans, promising to pay the Federal Reserve back all the money issued to the government plus interest.

The problem caused by having the Federal Reserve or any central bank print and issue the United States’ currency is that in order for the government to pay the Federal Reserve back they must charge interest to the banks they distribute the money to. This formula of charging interest to borrowers is repeated all the way down the ladder to the local level. It causes a bubble of debt made up of money that doesn’t even exist and forces businesses to constantly raise the price of their goods and services just to pay this interest off and make a profit and to dramatically increase the cost of living (for more information see the Cola Calculator). In turn, these businesses raising the prices of their goods and services leads to inflation and increases in the cost of living index as the US is currently seeing.