IMF: Global inflation is alarmingly low!

[HOLLYWOOD]

If anyone follows foreign news feeds and their local news, one can hear the exact same gripes from people around the world, as here in the U.S. about the increasing costs and Inflation. The IMF is just as bad as the CFR in their fabricated global con game . BTW, related to processed foods... yes we do have

Shrinkflation

 

[Vanguard101]

The reason banks aren't lending is because people have no savings. People have no savings because interest rates are artificially low. Interest rates are artificially low because politicians were/are trying to get people to spend to create a short term boom so they can get re-elected. The solution is to shrink the size of govt, stabilize the currency, and allow the market to set rates. Unfortunately that would cause a sharp, short term recession/depression and no polititician is going to allow that.

This won't cure the problem at all. You can have a big government with a stable currency and the market setting rates. That's just libertarian propaganda. I want government to shrink, but I'm not going deny that it's irrelevant to our monetary crisis. The markets probably won't even be able to set the rates in the short term.

 

[Madison320]

Nabisco's Oreo cookies
We Americans love our Oreos!
[1913] 10-25 cents/no size
[1922] 32 cents/lb
[1931] 32-35 cents/lb
[1932] 25 cents/lb
[1934] 27 cents/lb
[1936] 10 cents/pkg
[1948] 15 cents/4.5 oz
[1949] 14 cents/4.25 oz
[1950] 34 cents/11 oz
[1952] 35 cents/11 oz
[1953] 23 cents/7.25 oz
[1954] 21 cents/7.25 oz
[1955] 39 cents/11.75 oz
[1956] 33 cents/11.75 oz
[1957] 35 cents/12.75 oz
[1958] 33 cents/11.75 oz
[1959] 37 cents/11.75 oz
[1960] 45 cents/lb
[1961] 45 cents/lb
[1962] 49 cents/lb
[1963] 45 cents/lb
[1964] 39 cents/lb
[1965] 43 cents/lb
[1966] 43 cents/lb
[1967] 49 cents/lb
[1968] 45 cents/lb
[1969] 51 cents/lb
[1970] 45 cents/15 oz
[1971] 55 cents/15 oz
[1972] 49 cents/lb
[1973] 49 cents/15 oz
[1974] 55 cents/15 oz
[1975] 89 cents/15 oz
[1976] 99 cents/19 oz
[1977] 89 cents/15 oz
[1978] 79 cents/15 oz
[1979] 1.05/15 oz
[1980] 99 cents/15 oz
[1981] 1.69/19 oz
[1982] 1.65/19 oz
[1983] 1.85/19 oz
[1984] 1.79/20 oz
[1985] 2.17/19 oz
[1986] 1.69/20 oz
[1987] 1.99/20 oz
[1988] 2.49/20 oz
[1989] 2.49/20 oz
[1990] 2.69/lb
[1991] 2.39/lb
[1992] 1.99/20 oz
[1993] 1.19/5.8 oz
[1994] 2.49/20 oz
[1995] 1.09/4.8 oz
[2004] 2.99/lb
[2008] 4.29/18 oz
[2012] 4.59/15.5 oz
[2013] 4.59/14.3 oz

Notice how the price is fairly steady from 1930-1970 and then starts going up steadily after that. You'll find the same pattern if you compare most prices for that same time period. Anybody know why?

 

[acptulsa]

Notice how the price is fairly steady from 1930-1970 and then starts going up steadily after that. You'll find the same pattern if you compare most prices for that same time period. Anybody know why?

Actually, there was some inflation associated with WWII. But, yes, you're basically right.

Along about 1933 FDR called in people's gold. This gave the Fed some extra room to print themselves up some money. In 1971, at Bretton Woods, Nixon completely decoupled us from gold, setting the stage for the Fed to hike interest rates like crazy and print like crazy--thus, in cooperation with the oil companies and OPEC, creating the stagflation depression of the mid seventies.

In between, the last vestiges of the gold standard were still in effect, and saving us from that fate.

 

[Madison320]

Actually, there was some inflation associated with WWII. But, yes, you're basically right.

Along about 1933 FDR called in people's gold. This gave the Fed some extra room to print themselves up some money. In 1971, at Bretton Woods, Nixon completely decoupled us from gold, setting the stage for the Fed to hike interest rates like crazy and print like crazy--thus, in cooperation with the oil companies and OPEC, creating the stagflation depression of the mid seventies.

In between, the last vestiges of the gold standard were still in effect, and saving us from that fate.

We have a winner! It's amazing what happens when you go off a gold standard. If you look at oil prices, gold prices, wheat prices, etc going back to 1933 it's more or less a flat line up until 1970 and then an overall steady increase from 1970 until now. And the same thing goes for the monetary base. The monetary base was flat from 1930-1970 and then started climbing once we were no longer bound by our supply of gold. And since 2009 it's gone thru the roof. Which is why I fully expect prices to do the same even in the unlikely event that the Fed and Govt do the right thing and stop printing and borrowing. The only way I see prices not going up is if the Fed actually shrinks it balance sheet. And that's not happening. My guess is the Fed pushes the monetary base up a few trillion more before the dollar collapses.

 

[vickersvimy]

So people just randomly decided to take out too much debt? All at once, the whole nation was consumed by animal spirits and they all decided to go into debt?

Or maybe, just maybe, it was because interest rates were set artificially low.

No. Envy caused it. People were envious of their richer neighbours and same income friends buying houses then selling them for money - due to an inflow of foreign capital- so they bought and sold houses but of course with everyone doing that it didn't end well.

 

[vickersvimy]

We have a winner! It's amazing what happens when you go off a gold standard. If you look at oil prices, gold prices, wheat prices, etc going back to 1933 it's more or less a flat line up until 1970 and then an overall steady increase from 1970 until now. And the same thing goes for the monetary base. The monetary base was flat from 1930-1970 and then started climbing once we were no longer bound by our supply of gold. And since 2009 it's gone thru the roof. Which is why I fully expect prices to do the same even in the unlikely event that the Fed and Govt do the right thing and stop printing and borrowing. The only way I see prices not going up is if the Fed actually shrinks it balance sheet. And that's not happening. My guess is the Fed pushes the monetary base up a few trillion more before the dollar collapses.

Oil is a finite resource. As it got rarer the price went up.

Also - US inflation from 1919 onwards.

7

It was either inflating - what it is meant to stop - or deflating - what lowers overall income.

Don't get me wrong here - switching to fiat had initial problems. This was due to both markets and the fed adjusting how they used the money. While inflation still hasn't fully stabilised it is still more stable than the gold standard.

 

[Madison320]

No. Envy caused it. People were envious of their richer neighbours and same income friends buying houses then selling them for money - due to an inflow of foreign capital- so they bought and sold houses but of course with everyone doing that it didn't end well.

I can't tell if you're being serious.

 

[vickersvimy]

I can't tell if you're being serious.

How is that less valid than yours? Your argument is literally "Well the Fed did it..." but crashes -even depressions- happened before the fed. Heck, before the fed when there was a crash you had to rely on private persons, if they could even afford it, to bail the economy out. In the 1907 crash JP Morgan himself had to bail the economy out. The Knickerbocker Trust which had essentially caused a run on the trusts was thought to be insolvent and so he didn't intervene until it caused a run on the whole trust system. Similar events were seen during this crash when The Lehman Brothers collapsed causing a run on some shadow banking sectors. The only difference now is that we don't depend on private individuals anymore. The modern Fed grew out of free market ideals - from clearing houses that were insufficiently prepared to handle a large crash.

 

[acptulsa]

How is that less valid than yours? Your argument is literally "Well the Fed did it..." but crashes -even depressions- happened before the fed.

Of course there were. That was the excuse for fiat. They were going to manipulate the stuff and minimize, ameliorate and maybe even prevent recessions.

Fact is, the Fed has more often made them worse and more long-lasting. I don't see any evidence it has prevented a single one. May have caused a few extra.

 

[vickersvimy]

Of course there were. That was the excuse for fiat. They were going to manipulate the stuff and minimize, ameliorate and maybe even prevent recessions.

Fact is, the Fed has more often made them worse and more long-lasting. I don't see any evidence it has prevented a single one. May have caused a few extra.

Actually it has lessened the length and effects of depressions. For an example look to the Great Depression. During the New Deal years President Roosevelt, under pressure from contemporary economists and his cabinet, turned to economic conservatism. It caused the Roosevelt Recession. It was ended by an arms buildup and the fed eased credit. It worked.

 

[acptulsa]

Actually it has lessened the length and effects of depressions. For an example look to the Great Depression. During the New Deal years President Roosevelt, under pressure from contemporary economists and his cabinet, turned to economic conservatism. It caused the Roosevelt Recession. It was ended by an arms buildup and the fed eased credit. It worked.

Oh, so that's why the Great Depression and the Stagflation Recession and the current depression have all lasted more than twice as long as the Panic of 1873 or the Panic of 1907 or even the Depression of 1893 did...

 

[Dr.3D]

This is a better chart for that.

 

[vickersvimy]

Oh, so that's why the Great Depression and the Stagflation Recession and the current depression have all lasted more than twice as long as the Panic of 1873 or the Panic of 1907 or even the Depression of 1893 did...

That is simply explained. The Great Depression was caused by the stock market bubble. Without stocks being worth much then businesses lacked new capital to use. Even then some countries recovered in the early 40's. The current depression recovery has been hindered by conservatives. The Obama bailout program failed due to its size (7 billion dollars) relative to the size of the US economy (around 17 trillion dollars GDP). The stagflation of the 70's can be explained by it being the second form of inflation -cost-push inflation- which occurred due to the oil crisis which pushed the cost of products up due to its importance in manufacturing.

 

[vickersvimy]

This is a better chart for that.

Irrelevant. Having a high value dollar would hurt more than it helps. US manufacturing would suffer as US products would be more expensive to buy and the poor wouldn't be able to take out any loans because of the high cost of doing so.

 

[Zippyjuan]

The chart only reflects the effect on prices. It ignores what has happened with incomes over the same time. It assumes that a person held onto a dollar they got in 1913 and put it someplace which offered it zero return on investment.

REAL (adjusted for inflation) wages since 1913 (changes in actual purchasing power of consumers getting average wages):

http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

Let us take at the period from 1913-2006, where we have complete data. So what do they mean, when they say the dollar lost 95.1% of its value in those 93 years? Essentially, an average good/service that cost $1 in 2006, used to be priced at 4.9 cents in 1913. In other words, the average price level of goods/services increased by 1930% since 1913. True, but guess what, average earned income increased by 6560% during the same time period. Average earned income rose from $740/yr in 1913 to $49,300/yr in 2006. Adjusting for inflation, $740/yr in 1913 is $15,000/yr in 2006 dollars. Average incomes, not only kept pace, but beat price inflation by 230%.

So does it make any sense all to say the dollar lost value? In reality, the REAL purchasing power of the average American, has increased by 230% in the past century. Sure, prices were cheap in 1913, but $740/yr doesn't buy you a whole lot, not anymore than 15,000/yr today. Even this statistic doesn't fully capture the quality of life gains of the last century. A household making $15,000/yr today is well below the poverty line, but yet, they are highly likely to have a refrigerator, indoor plumbing, electricity, tv, cell phone and maybe even heating and cooling. They are highly likely to have government help in making ends meet - food stamps, subsidized housing, Medicaid etc:. And yeah, thanks to advances in medicine, they don't have to worry about half their children dying before the age of 5. Their analogue in 1913, making $740/yr had none of these "luxuries". And that was the average income... Can you imagine what the poverty line looked like then?

 

[Dr.3D]

Irrelevant. Having a high value dollar would hurt more than it helps. US manufacturing would suffer as US products would be more expensive to buy and the poor wouldn't be able to take out any loans because of the high cost of doing so.

It also illustrates what happens to savings people have put away for their retirement. Consider those who are on a fixed income. The constant devaluation of the dollar is hurting those people, and there is a growing number of them.

 

[vickersvimy]

It also illustrates what happens to savings people have put away for their retirement. Consider those who are on a fixed income. The constant devaluation of the dollar is hurting those people, and there is a growing number of them.

Which is why in some countries stuff like welfare is tied to the inflation rate. We could also solve this by raising the minimum wage. If you are right then there would be little effect. If you are wrong then we would see a similar effect to if the Gold Standard returned. (Wages would be worth more thus more expensive)

 

[Zippyjuan]

Which is why in some countries stuff like welfare is tied to the inflation rate. We could also solve this by raising the minimum wage. If you are right then there would be little effect. If you are wrong then we would see a similar effect to if the Gold Standard returned. (Wages would be worth more thus more expensive)

Actually raising the minimum wage would have no impact on what you are talking about here.

But savers have always been offered a rate of return less than the overall rate of inflation. Even before 1913. And note that much of the post- 1913 period WAS on a gold standard (until 1972 when it finally ended).

 

[Dr.3D]

The chart only reflects the effect on prices. It ignores what has happened with incomes over the same time. It assumes that a person held onto a dollar they got in 1913 and put it someplace which offered it zero return on investment.

REAL (adjusted for inflation) wages since 1913 (changes in actual purchasing power of consumers getting average wages):

http://realfactbias.blogspot.com/2012/02/no-dollar-did-not-really-lose-95-of-its.html

It shows the flat out thievery of devaluing the currency. If some deflation were to happen every so often, there would be no need to keep increasing the income of the working man and his savings would be much more secure. All increasing the income does is to continue the upward spiral of inflation as more money is printed to make it seem like people are being paid more.

It's an illusion people are just waking up to. They are now starting to figure out, they don't make more money when their income goes up due to some cost of living allowance. The prices also rise due to inflation so that raise means nothing. It's all a guise to steal value from savings accounts and some other real property values.