US inflation since the revolution
bronco2078
Posts: 10,211 ✭✭✭✭✭
They posted a chart of US inflation since the end of the revolution over on zerohedge that's pretty interesting.
zerohedge
While the creation of the federal reserve started things off on what must have looked like a pretty steep climb it was taking the gold away that made it explode
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I knew it would happen.
If you just look at inflation in a vacuum you might think buying gold in 1970 would have been the way to beat the inflation .
Thats when the government steps in and puts its 2 cents in as explained by this link I stumbled over last year. Someone may have posted it here I'm not sure
not so fast smartypants
put the 2
Fact is real wages (inflation adjusted) Remain Below Their Peak for 39th Straight Year.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Knowledge is the enemy of fear
<< <i>Been saying this for a long time. The greatest bubble is the inflation bubble. It will pop. >>
So I comprehend, when it "pops", we'll have more inflation? Hyperinflation?
<< <i>Que the posts about being able to buy more hamburgers with a current paycheck than you could X number of years ago.
Fact is real wages (inflation adjusted) Remain Below Their Peak for 39th Straight Year. >>
Every time I read the hamburger retort I'm actually reminded of Wimpy's famous line in the Popeye cartoons. "I'll gladly pay you on Tuesday for a hamburger today". One of the greatest metaphoric subliminal phases ever written. It fits today just like it did when penned. Wimpy is clever but lazy and utterly gluttonous. What/ Who is Wimpy a metaphor for?
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Via a Zero Interest Rate Policy, the FED has ensured there will not be an increase in interest rates for the foreseeable future. Allowing any rise in rates witll spell runawa, uncontrollable soverign debt interest payments. Via QE the FED has also ensured there will be a greater, increasing supply of money. So far, the FED has succeeded in keeping most of the new money off of Main Street, thus no inflationary results - yet. It's safe to assume the FED is directly responsible for past and future inflation since they are in the driver's seat controlling money supply and interest rates. What remains to be seen is if the FED can maintain control of both the money supply getting to Main Street and low interest rates. If the market forces rates up, more money will be funneled by its bank holders to Main Street in the form of profitable loans. This is what can make the hyperinflationary threat a reality.
Understanding dollar policy as well as influences on the dollar's value is the key to understanding the need to own gold. Gold does not really rise in value, it only rises in dollars that are declining in value. Gold's value (what it can buy when used as money) has historically held steady - it's true role as a protector of wealth. It is the destruction/devaluation of the dollar that causes a rise in the dollar value of gold. Gold's role throughout history as a protector of value is best understood with knowledge of what is being done to and with the currency it is measured against. Those who understand this protect their savings by having it in gold..
Wanna know what the future holds for the price of gold? Learn all you can about what increases or decreases the value/purchasing power of the currency.
A Brief, 2000 Year History Of Gold Prices
The idiotic notion that QE is not inflationary
Merk 2013 Dollar and Currency Outlook
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Did I hide the 3rd link a little too well ? Or was it just not funny
Are they trying to recover and hold loans at bay after the last big problem like the housing mess?
Or, do they just not know what to do and taking their best shot at it?
Or do they have some other interests that suite themselves?
<< <i>there is a direct relationship between inflation and the money supply (availability of money). As long as more money is thrown into the boiler the inflation temperature will rise. The key to reducing inflation is a reduction of the money supply or a reduction in the demand for future money, or credit, via higher interest rates. Inflation will never pop. It can only be temporarily cooled with forced defaltionary action.
Via a Zero Interest Rate Policy, the FED has ensured.. >>
<< <i>What confuses me is why they are then holding the interest rate low... >>
low interest rates keep the cost of financing the US debt low, even as the amount of borrowing leaps. It is also hoped that the consumer will borrow/spend more to raise tax revenue. What has happened in reality is that the government has used the reduced cost of borrowing as an opportunity to spend more while the consumers are weaning themselves from debt. The FED has effectively become the fourth branch of government with a mission of financing soverign debt via purchase of its bonds and by stimulating the velocity of money to increase tax revenue. Wonder how long before we get to elect the FED chairman?
FY 2012 interest alone on the US Soverign debt was over $359 Billion.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Que the posts about being able to buy more hamburgers with a current paycheck than you could X number of years ago.
Fact is real wages (inflation adjusted) Remain Below Their Peak for 39th Straight Year. >>
I know. I keep saying that once a year or so in rebuttal to an inflation/cost of living thread, and the next thing you know the burgers, cokes, and fries fly. If only the PIIGS could fly.
The last big problem won't be addressed until the very end. It's the $1.1 Quad in world wide derivatives....80% of which are interest rate contracts. It's those IR contracts that are
helping to ensure that rates stay low. If not, the portfolio's of the big banks would go "poof" overnight.....just like they would have in the fall of 2008 before the FASB gave all the banks
a waiver and allowed them to switch otc derivs from "marked to market" to "marked to model/end of maturity" accounting.
The PM spike in late 1979 to January 1980 was due to the price of gold rebalancing itself to total US sovereign debt. Every 20 yrs or so gold does an audit of the US sovereign debt.
We're currently in the 12th year of the audit. Still another 5-8 years to go to complete it.
But this time around gold has its work cut out for it. Does it rebalance the sovereign debt by itself or also to $75+ TRILL in unfunded liabilities, or $300 TRILL in otc derivs held by US
banks, or some combination of the 3? It was easy in 1980 as sovereign debt was pretty much the only significant number. Now the sov debt is a tiny fraction of the other two. The otc
derivs really didn't even exist to any extent prior to 1989.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
But it's a good thing that the FED showed up in 1913 to show us all the errors of our ways by flat-lining debt from 1776-1913. Who knew that we couldn't
have a successful and growing nation w/o increasing the rate of price inflation by a factor of 20 in one century. If J6P wasn't the primary beneficiary of that
trend then who was? Maybe it was the 2nd wage earner in each family?
<< <i>
<< <i>Been saying this for a long time. The greatest bubble is the inflation bubble. It will pop. >>
So I comprehend, when it "pops", we'll have more inflation? Hyperinflation?
There is a chance for a hyperinflationary, parabolic move. But the chart is already quite parabolic. So my interpretation is greater risk of deflation than inflation.
BTW---In the 50s a hamburger used to be served by a hottie on rollerskates, now its a fattie that has an accent. Inflation indeed. LOL
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>Been saying this for a long time. The greatest bubble is the inflation bubble. It will pop. >>
So I comprehend, when it "pops", we'll have more inflation? Hyperinflation?
There is a chance for a hyperinflationary, parabolic move. But the chart is already quite parabolic. So my interpretation is greater risk of deflation than inflation.
BTW---In the 50s a hamburger used to be served by a hottie on rollerskates, now its a fattie that has an accent. Inflation indeed. LOL >>
In the 50's I was young enough to only appreciate the rollerskates, but I do remember my mom slapping my dad.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>Been saying this for a long time. The greatest bubble is the inflation bubble. It will pop. >>
We've had inflation consistently since the Federal Reserve was established in 1913. I've never heard of a bubble that went on for a century.
<< <i>
<< <i>Been saying this for a long time. The greatest bubble is the inflation bubble. It will pop. >>
We've had inflation consistently since the Federal Reserve was established in 1913. I've never heard of a bubble that went on for a century. >>
Exactly. Greatest bubble ever.
Knowledge is the enemy of fear
It makes no sense to think that the dollar should be strong when $trillions are being pumped, except for the fact that nobody really knows how big the derivatives black hole really is.
Fun stuff. I guess we could be moving toward the Singularity in financial space & time.
I knew it would happen.
I believe the only deflationary product right now is money.
Won't the bubble pop after a hyper inflationary event?
<< <i>.......
My company sells industrial equipment to manufacturing and every year for the past 10 years, my COST to buy this equipment rises by 3%. 3% compounded over 10 years is inflationary.
I >>
A price increase of 3% per year over 10 years comes to just over 34% total increase in your cost.
In 24 years your costs will have doubled.
IMO, this is why inflation is required. Eventually, the over-valued houses that caused the bubble to pop will more closely approximate what was loaned upon them. Hooray, no more underwater mortgages!
-----
Meanwhile manufacturers are scrambling to redesign packaging so their products are not obviously smaller. The 'quart' size mayonaisse is now 26.5 to 30 ounces instead of the former 32 ounce. Toilet paper (Scott) recently shrunk from 4" by 4" to 3.5" by 4" while maintaining the same 1000 sheet count. You won't notice that probably while using it but imagine how big of a savings that represents to the party who manufactures that stuff.
This shrinkage has happened during other periods of high inflation. Campbell's soup and Hershey bars spring to mind.
Other disguised forms of inflation would include using cheaper ingredients, or including less meat and veggies and more broth in soups. It's very hard to quantify such things though so such secret inflation is usually quite sucessfull.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"Structural deflation is chiefly characterized by three things: 1.) falling wages, 2.) falling interest rates, 3.) falling money velocity."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
another 40 yr interest rate cycle begins.
Interest rates rose steadily from 1941 to 1981. They've declined steadily from 1981 to 2012? It's getting close to the time to start another 40 yr move
of rising rates. Just a matter of flicking the switch.
maybe shifting to a new monetary standard and resetting the system would help.
And these are the impetus for more and more QE. Problem is, it all goes to the banks and nothing happens because of the black hole in their balance sheets.
Interest rates will rise again once the $900 TRILL in world wise otc interest rate contracts get resolved or destroyed AND another 40 yr interest rate cycle begins.
Interest rates rose steadily from 1941 to 1981. They've declined steadily from 1981 to 2012? It's getting close to the time to start another 40 yr move
of rising rates. Just a matter of flicking the switch.
I think that the reset can only occur in one of two ways, either 1) the Treasury declares default on US Debt or 2) $900 TRILL in world wide otc interest rate contracts get resolved.
Interest rates can't rise until #1 or #2 occurs because the debt load can't support a continuation without resolution.
Resolving #1 is self-evident, but how would #2 be resolved? I can't even think of how that could occur, because the money is gone. Therefore my opinion must be that a default is inevitable.
I guess that means that there will be more and more poor people, unless the economy can be rebooted and the culture changed back to a different set of values than the dependency culture that is being promoted now.
I knew it would happen.
<< <i>I too have been noticing product shrinkage, especially the size of restaurant servings. >>
Superb!!!! Just think how much this will save in health care costs. Greatest idea ever!!!
Knowledge is the enemy of fear