Talking About the Inflation Tax

[IrrigatedPancake]

An excellent example of the inflation tax, that people can feel is the price of gasoline. Adjusted for inflation, the value of gas today is not far from the value of gas around 70 years ago. The only reason it seems like gas has been getting so much more expensive is because our money supply is being inflated so our dollars buy less and less gas each time we go back to the pump.

It works just like the dollar value of gold works. Gold always has the same value, but it costs more and more dollars as congress has the Federal Reserve print more and more dollars.

Gas dollar value has gone up rapidly since about 2003. My guess is that a lot of the inflation is being caused by the billions and billions of dollars congress is spending to fight the war.

This would make a much better chain letter than those "don't buy gas on tuesday" efforts because this is something that actually has a significant affect on the price of gas.

GRAPH OF DOLLAR PRICE OF GAS AND PRICE OF GAS IF THERE WAS NO INFLATION (adjusted for inflation)

So no inflation from the Fed giving billions to congress to throw at the war would mean we would be paying about $1.10/gallon today. Instead we pay about $3.30 - $3.40 (on average).




I'm not an expert on this subject, so if this sounds like a persuasive way to get people interested in Ron Paul, we need to make sure this is correct and maybe even call RP and check that his plans would stop the accelerating growth of gas prices.

 

[Gee]

Well, in the long-run, inflation is meaningless. The inflation "tax" arises rapid inflation, i.e. large amount of money entering the economy relatively quickly in certain sectors (with our banking system, its created from loans). Those who use the "new" money first use it at a higher value, and the prices of everything else change as it "trickles down". I'm not really sure how long that takes, though. So slow rates of inflation aren't much of a problem, since the new money trickles down before it can create any oddness.

A perfect example is the latest housing bubble. The Fed had interest rates around 1% for a while, and it triggered the start of a ton of investment in real estate. With an interest rate that low, what do you have to loose on a mortgage? Very little. So tons of people bought and/or built houses, driving the price of housing through the roof. Much of the new money was in housing, after all, so inflation of real estate is going to be the result.

 

[DjLoTi]

You beat me to it.

Looking at the two words ' inflation tax ' together says this to me.

If the ' inflation tax ' is 5.3%, that means 5.3% of everything ( and I do mean *everything*, or nearly everything ) is really

* not there *

NOT THERE

INFLATION TAX IS TAX ON NOTHING. IT'S TAX ON (INFLATION)??

here's the logic -

The cheaper the dollar becomes, the more we're going to take away from you.
They make billions and billions of dollars. 5.3% to them is almost as much as some of us make in our lifetime. Maybe this webpage should be front story news papers.

Here is a great example of 'inflation tax': http://www.randomuseless.info/gasprice/gasprice.html

 

[Gee]

The inflation "tax" is a term used to describe the depreciation of personal savings (in the currency in question) during inflation. Inflation can happen one of two ways. One is from our fractional-reserve banking system (low interest rates causing banks to lend out a lot of money which they really don't even have), and the other is government spending. Because governments have control over the printing presses which create money, they can print money to finance their own programs, and they very often do.

The result is an erosion of personal savings and wages of all individuals who are not participating in this creation of new money. So it is, essentially, a "tax".

 

[DjLoTi]

What ever happened to. . .

Taxation without representation? Did that all of a sudden go away? Did the colonies happen? </end sarcasm>

I think better representation of the facts are in order. If one things for sure, Ron Paul will give you that. I've only been following for 2 weeks and look at all I've found out..

I've done in my time this weekend, it's almost time to get out there

 

[DrStrabismus]

Aren't prices effected by supply and demand? how does everything's price go up simultaneously? is it due to rising population: more demand of everything?

It seems if you have more people you will need more money for the people to use. if they have enough money to buy stuff with, demand for products goes up and that drives prices up and then if supply can't meet the demand that drives prices up further, so decreasing the money supply would cause people to not be able to buy as much stuff and the prices would go down?

it seems like money should represent some form of real value, doesn't that value ultimately come from natural resources and resources like your time spent working?

would the quantity of gold in the world be enough to facilitate the amount of trade that needs to happen? maybe a more common substance would be better. is there enough silver available?

 

[fedup100]

Please don't talk about subjects as important as the gold standard unless you are educated on the subject. Please watch Dr. Paul's video regarding the matter. Personal opinions without knowledge will only hurt Ron Paul's efforts.

 

[DrStrabismus]

Please don't talk about subjects as important as the gold standard unless you are educated on the subject. Please watch Dr. Paul's video regarding the matter. Personal opinions without knowledge will only hurt Ron Paul's efforts.

link to the video?

 

[DjLoTi]

Please don't talk about subjects as important as the gold standard unless you are educated on the subject. Please watch Dr. Paul's video regarding the matter. Personal opinions without knowledge will only hurt Ron Paul's efforts.

I do know that gold has recently hit an all-time high, however that's about the only thing I know.

Since I know about the inflating dollar, it makes 100% sense.

I haven't seen a video on in-depth economic reform, but I imagine it'll come soon.

 

[Liberty]

A weak dollar is inflationary as goods we import cost more.

 

[DjLoTi]

*edit*
NVM I've been up for hours...

About 13 hours of research ect... plus weekend fun ;-)

i'm running out ........... *smiles*

 

[wwycher]

The film Money Masters also talks about this subject. You can look it on google video. Get some popcorn, it is close to 3 and 1/2 hours long. Yeah, interest, I think it is called usery too, is indeed theft. The fact that the Fed and the Bank of England founded these banks with none of their own capital is also theft. That's right, they demand 20% of the stocks be bought by the government in gold and then using their invention of the fractional reserve banking system, they lend money out to their buddies to buy the remaning shares. Great scam huh. The question I have about the whole money system thing is where is the Gold? The Fed says they are holding it as collateral for our national debt. I guess what I am asking is if the fed has the american's gold if we switch to a gold standard don't they still have all the money?

 

[DjLoTi]

The film Money Masters also talks about this subject. You can look it on google video. Get some popcorn, it is close to 3 and 1/2 hours long. Yeah, interest, I think it is called usery too, is indeed theft. The fact that the Fed and the Bank of England founded these banks with none of their own capital is also theft. That's right, they demand 20% of the stocks be bought by the government in gold and then using their invention of the fractional reserve banking system, they lend money out to their buddies to buy the remaning shares. Great scam huh. The question I have about the whole money system thing is where is the Gold? The Fed says they are holding it as collateral for our national debt. I guess what I am asking is if the fed has the american's gold if we switch to a gold standard don't they still have all the money?

They win on 2 counts of their money war. *victory* to the war on terror.
No. The war on people.

 

[rpliving]

The dollar has lost half of its value in the last 10 years, so anyone who is trying to save their money gets screwed.

 

[Brandybuck]

Aren't prices effected by supply and demand? how does everything's price go up simultaneously?

Price is indeed affected by suppy and demand, among a few other minor things. But price is the market value of a good. That value would be the same whether you aquired the good through barter, gold, euros or dollars. For convenience, we use dollars as the unit of value measurement.

Inflation is like a rubber ruler. What happens when you stretch a ruler? Suddenly it measures your height as 4'8" instead of 6'2". Did you shrink? No! Your height is still the same. Likewise, under inflation the value of goods are the same, but because their price is measured is dollars, you need to use more dollars to get them. Fiat money is in essence counterfeiting. If you're not the guy doing the counterfeiting, or one of the earlier folks to receive the counterfeit currency, you're screwed.

 

[NMCB3]

I think we have to chill-out about the idea of gold being talked in economic debate with Ron Paul. That's his personal decision, and he should work for the *people* and the *people's* system. Ron Paul should not represent the intrest of gold in America

If you dust off your Constitution and read it, you will find that Gold and Silver based currency is not only Ron`s "personal decision" but is the constitutional position also.

 

[DjLoTi]

I'm far more worried about 3 million votes not being counted then .... the fact that gold is an international currency ....

First, lets get the people home from the war. Then, lets get some investigations going on.

I have *No worries* about the American economy. When we all get together and create something big... WE'RE AMERICANS... WE GO HUGE!!!!

 

[Brandybuck]

I'm far more worried about 3 million votes not being counted then ....

I appreciate your enthusiasm on that issue, but this is a thread on inflation. Please don't hijack it with something completely unrelated. Thanks.

 

[MsDoodahs]

Well, so much for my hope that you would have some calming words that would ease my mind re: hyperinflation.

I tend towards perma-bearishness, and have been a gold proponent for a few years now.

 

[MsDoodahs]

That's the lesser of two evils IMO.