[Toddsterpatriot]

Only when we went to pure paper money for a time during war.

We only had inflation during wartime?

Did we have more wars than I remember? Maybe your memory of gold standard price stability is faulty?

The inflation of the past is exactly measured by the price of gold discounting the speculative spikes

Was inflation exactly measured by the $255 price in 2000? And now it's exactly measured by the $650 price? I didn't realize we had 155% inflation since 2000.

That's one magic loogy.

[expat_panama]

If we maintain the price of gold by whatever means there is no inflation or deflation by definition.

Instead of trying to keep the dollar steady by pegging it to gold and then struggling to keep the gold steady, America's figured out that it's a lot easier to save a step and just keep the dollar steady and forget gold.  

During peacetime, that extra step made life unbearably miserable for the all but the extremely rich.  Maybe history's being taught differently these days, but I remember having to learn about William Jennings Bryan famous speech in the 1800's (full text and original audio) that ended:  "we shall answer their demands for a gold standard by saying to them, you shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold."   

Going to a gold standard now would make life miserable if this were peacetime.  This is not peacetime, we're at war, so a gold standard would make national survival absolutely impossible.  It's always been that way, which was why "...we went to pure paper money for a time during war.." 

[arthurus]

The CPI doses not measure inflation. To measure inflation by using a group of prices, that group of prices must measure the selling prices of ALL products in their real ratios or it is inaccurate with no way to know how inaccurate or in what direction. Inflation is characterized by product substitution as the prices of things go up in nominal dollars. The various cpi amalgamata do not take this into account nor do they take into account that this substitution ameliorates the rise in the aprices that are rising in the "basket." The spikiness in both directions of the proffered chart should have been your first visibly obvious clue that it is not an inflation chart. The cpi is a handy device used by Keynesians and statist monetarists for obfuscating actual inflation. Its message is that inflation is what the official economists say it is and we're doing fine. Government economists are not in the business of giving accurate measures of inflation because that would cause the voting population to become concerned. Government economists are in the business of providing rationale for government meddling in the economy which is primarily for political ends, to punish other countries or, rarely, to reward other countries, and to repudiate a portion of the Debt by inflating the currency. Also note that the "basket of goods" used to calculate cpi and official inflation is changed, both in content and in ratio, from time to time to produce results more favorable to government policy.