There is a store named Five Below, where everything in the store is priced below five dollars. Except, that isn’t the case any longer.  They now have a section that is ten below.  This section has products priced between five and ten dollars.

I don’t know if this store will end up being the equivalent of Motel 6, which was originally named because you could stay there for 6 dollars per night.  Five Below is no longer five below.  It is really Ten Below.  Maybe it will be Twenty Below before we know it.

I have pointed out before that you will know price inflation has gotten bad when the dollar stores break the buck.  If the dollar stores that currently sell everything for one dollar or less have to go above a dollar for certain items, then you know the Fed has been effective (from its viewpoint).

To be clear, I don’t think Five Below went above the five-dollar threshold just because of price inflation.  I think the business model has been successful enough, and the company just wants to be able to expand the number of products it can sell.

I have been in a Five Below store before.  For the most part, I don’t like it that much because I don’t need or want most of the things in it.  Some of the products are priced about the same or even higher than what you would find at Walmart.  But I have seen some products that seem like a pretty good deal if you happened to be looking for certain things in particular.  Some items really are a bargain.

I tend to like dollar stores better.  Sometimes I need plastic utensils that I can throw away when I am eating away from my home.  I can buy a package of 16 spoons, 16 knives, and 16 forks, all for a dollar.  That’s 48 plastic utensils for a dollar (plus sales tax).  That is quite amazing. It is actually amazing that dollar stores are able to exist.

The Great Contradiction

This is part of the contradiction of the times we are living in.  You can shop in a store with thousands of products that are priced at one dollar or less.  Meanwhile, one night in the hospital will cost you and your insurance company several thousands of dollars, or maybe tens of thousands of dollars.

I am amazed at how inexpensive some things are.  At the same time, I am amazed at how incredibly expensive some other things are.

Unfortunately, it seems to be more needs than wants that are in the expensive category.  Medical care and insurance are extremely expensive.  Housing is mostly expensive.  Education can be very expensive, although higher education is not a need.  The expensive things tend to be in areas where there is a large presence of the government (i.e., the state).

Food is obviously a need, but it is not as insanely expensive as other needs like medical care.  Food prices have gone up, but somewhat more in line with average price inflation.  The government certainly has its hand in food production, but the price inflation is largely reflective of the central bank and its money creation.

Meanwhile, you have some new technologies, especially when it comes to electronics, where prices are actually going down.  In some cases, prices stay about the same, but you get much better quality. This is all in spite of a monetary system that favors inflation.  Imagine if the Fed wasn’t creating money out of thin air for the last decade or more.  We could have even lower prices for smartphones, tablets, and televisions.

I find the prices of big-ticket items are also high these days.  If you need a new roof or air conditioning unit for your house, you are going to pay a lot.  This is due to a combination of many factors, including central bank inflation, tariffs, regulations, and other taxes.  The government is extracting a lot of resources, and it makes our living standards lower than they should be.

As I’ve written about before, a roofer putting on a new roof isn’t making huge bucks.  Even the company owner may not be making massive profits.  It is all of the costs of the materials, the labor costs (other than salary), the insurance costs, the associated taxes, and regulation compliance costs.  It makes life expensive.

This will be the positive aspect of the next recession (correction).  It will hurt many people because asset prices will come down.  Some people will lose their job.  But for all American consumers, it should actually lower prices as long as the Fed doesn’t get too crazy too fast.

We need a correction just to make life more affordable again.  We need to keep the dollar stores as dollar stores.