You know how nobody (except the vast
majority of Americans) considers inflation a problem? How
inflation is
under control, and
doesn’t even exist, and wouldn’t be a threat if it
did exist, and in fact needs
to be even higher? 

This kind of sophisticated economic theory is hard for ordinary
mortals to understand because our money has
only lost 10.9 percent of its value over the course of the
worst recession since World War II. (Does it really need to be
pointed out that in times of economic stagnation prices are
supposed to go down, not up?)

It’s also hard because so many
distracted shoppers miss an important mechanism for increasing
price: reducing the portion size and charging about the same
amount. A while back I noted
this phenomenon in describing how ice cream
underwent stealth
inflation late in the Bush Administration, when the
venerable half-gallon container was disappeared and replaced with
1.5-quart and 1.75-quart lookalikes.

Here’s an even more obvious price-up. While New York Mayor
Michael Bloomberg has been waging war against
bigger serving sizes, one of America’s most beloved portions –
the venerable 64-ounce carton of orange juice – has been downsized
by 12.8 percent. And it
happened more than two years ago. 

I’m chagrined not to have noticed this swindle for so long. All
those hours of stalking supermarkets in a simmering rage of price
checks, only to miss an obvious one like this! Nor is this a
challenge that can be solved through the mythical “substitution
effect.” This now-standard 59-ounce container is full of
Florida’s Natural – which in my experience is the cheaper
alternative to Tropicana and Minute Maid. (Maybe I should
switch to SunnyD? Does the
PCE basket consider that an OJ equivalent?) 

Last year New York Fed President William Dudley stirred up a
wave of ridicule by
noting that the price of an iPad had not risen. That one’s
still
good for a few chuckles, but it does reveal something about how
your betters think. Bernankenomics will afford you the rare
privilege of staying exactly where you are right now, as long as
you can go without eating anything or drinking anything. In fact,
do yourself a favor and don’t check the price of anything
either.