Here's the chart of M3. In 2008 M3 money supply was just under $15 trillion. In 2013 it's right at $15 trillion.
Posted on 06/22/2013 1:25:44 AM PDT by blam
The Inflation Predictions Were Just Wrong, And Now They're Hurting People
Cullen Roche, Pragmatic Capitalism
June 21, 2013, 4:21 AM
Remember back when QE started and we saw charts of high powered money going vertical all over the place and everyone who didn’t understand modern banking said that the reserves would flood out into the economy causing high inflation or even hyperinflation? And do you also remember how most of those same people also said that the only way you’d be able to protect yourself from this hyperinflation was by owning hard assets like gold or silver? Well, the inflation never came. The most recent reading of 1.7% pretty much proves that we’re much more Japan than we are Weimar (and yes, even independent gauges confirm the low inflation story). And now the portfolio recommendations are falling apart as well….
It’s one thing to be wrong about the way banking works and the way inflation might spread. But most of these people were explicitly recommending a substantial overweight in gold and silver as well. And they’ve been annihilated in recent years. Gold is down 33% from its 2011 highs. And silver is down a staggering 60% since the time I started referring to it as a bubble. These are massive moves and if you’ve been substantially overweight these metals in your portfolio then you’ve experienced substantial pain based on sheer misunderstandings by people who are posing as experts.
The thing that really drives me crazy about this is that so much of this has come from the ideologically driven groups who were really selling nothing more than fear and hatred of the Fed and the government. Look, I know the government hasn’t done everything right and I am certainly no Federal Reserve apologist, but that doesn’t ever justify bad analysis and specific portfolio recommendations that are simply irresponsible. And that’s all we’ve seen here. People selling an ideology based more on politics than knowledge….
“We’ve got a very serious threat of deflation —far worse than inflaion— something brutally clear with the collapse of comodity prices. “
That is true for now, however, should interest rates rise, watch out. It could swing wild in either direction. My take is there is already less demand and so as supply continues to try to stay afloat, or else businesses would fold, prices will have to continue to come down. Once interest rates cross the chart where business have failed and supply dwindles, prices will skyrocket. Just my take, nothing concrete.
Some things I have noticed have come down in price in significant portions and others have gone up considerably. It seems hit and miss even within markets like food stuffs and consumer products.
“Shouldn’t our currency become more, not less, valuable over time? “
If the dollar was based on gold or silver, not fiat as it is, it would roughly stay the same in value, give or take. $1 would buy the same amount of sugar in 1800 or in 2000. In a rough sense we have learned how to use machinery to get more gold per year but we also have more people and labor for the gold to represent. Therefore, it is a rough estimate that gold would remain constant in value. It sure beats the manipulated markets and currencies we have today.
From the press release that the BLS (that is, the "government") uses to announce inflation:
Consumer Price Index Data for May 2013Food
The food index fell 0.1 percent in May after rising 0.2 percent in April. The index for food at home fell 0.3 percent, its largest decline since July 2009. Four of the six major grocery store food group indexes posted declines, led by nonalcoholic beverages, which fell 1.1 percent. The index for dairy and related products decreased 0.8 percent, its third decline in the last four months. The indexes for cereals and bakery products and other food at home both turned down in May, falling 0.4 percent and 0.3 percent, respectively. The index for meats, poultry, fish, and eggs, which increased in April, was unchanged in May. The only grocery store food group index to rise was fruits and vegetables, which increased 0.4 percent in May after a 1.4 percent decline in April. The food at home index has increased 0.8 percent over the past year; the fruits and vegetables index has risen the most of the six groups over that span, increasing 2.1 percent. The index for food away from home rose 0.2 percent in May and has risen 2.3 percent over the past year.Energy
The energy index rose in May, increasing 0.4 percent after substantial declines in March and April. The gasoline index, which declined sharply the previous two months, was unchanged in May. (Before seasonal adjustment, gasoline prices rose 0.8 percent in May.) The fuel oil index continued to fall; its 2.9 percent decrease in May was its third consecutive decline. However, other energy indexes rose. The electricity index, which increased 0.5 percent in April, rose 0.8 percent in May. The natural gas index rose 2.4 percent, its fourth consecutive increase. Over the last 12 months energy indexes are mixed, with the index for fuel oil falling 5.8 percent and the gasoline index down 4.1 percent, but the natural gas index rising 14.2 percent and the electricity index up 1.7 percent.
” I know I’m paying about 50% more for groceries since 2008.”
Go read what the government claims it does for inflationary indexes. It is laughable. They claim such things as grocery store products save money such as Safeway carrots at $0.69 is deflation because it is a new product and before you had to buy Del Monte at $1.09. Maybe you don’t like the inferior product the Safeway brand represents and want to continue buying the Del Monte brand, but it went from $79 to $1.09. Tough. There is no inflation in their liberal minds.
They include such things as televisions, as though every year we buy new ones, or that consumer electronics is all that much of your annual spending. I am an engineer and geek and buy electronics but I still don’t but more than $1,000 a year at best.
They include price of cars as a value and not cost. So they claim a $35,000 that was $27,000 is of better value, assign it a relative index, then claim $35,000 is deflation due to it being a better car.
I could go on and on about their schemes but they do not compare apples to apples, but apples to applesauce.
You forgot to quote the rest of that Wikipedia article.
What you posted:
“Most importantly, none of the prominent legislated uses of the CPI excludes food and energy. Social security and federal retirement benefits are updated each year for inflation by the All Items CPI for Urban Wage Earners and Clerical Workers (CPI-W). Individual income tax parameters and Treasury Inflation-Protected Securities (TIPS) returns are based on the All Items CPI-U.”
The rest of that paragraph:
“The use of CPI-W conflicts with this purpose, because the elderly consume substantially more health care goods and services than younger people.[7] In recent years, inflation in health care has substantially exceeded inflation in the rest of the economy. Since the weight on health care in CPI-W is much less than the consumption patterns of the elderly, this COLA does not adequately compensate them for the real increases in the costs of the items they buy.”
Your claim in post #11 was wrong. Sorry.
That's funny.
The Fed stole your money? How?
Banks kept their own money? That's awful! LOL!
Here's the chart of M3. In 2008 M3 money supply was just under $15 trillion. In 2013 it's right at $15 trillion.
Whoa, before either of us gets too sure about something that isn't true, let's both get together on what we both know:
Article I Section 8 - Powers of Congress "To coin Money, regulate the Value thereof".
No restriction on how much gold or silver the dollar's supposed to equal, no restrictions on how often congress can change it, no restriction on what the bank notes are supposed to say, and no restrictions on how banks are supposed to run. If it ain't forbidden it's allowed. Let's be sure of that and not so sure about the other stuff.
If we're switching back and forth between gold and silver then the dollar will not stay the same. A hundred years ago an oz. of gold cost 15 oz silver, in 1940 it cost a hundred, then in '67 it went down to 17, then back up to 90 in '92, and right now it's still jumping back and forth.
Come on, nobody can run a business with a goofball funnymoney like that.
It was an attempt to show you the difference between CPI and inflation. I’ll bet I’m not the first to fail at educating you.
Well then, try me. Let’s get started. What’s the difference between the CPI and inflation, bearing in mind that you are talking about “government statistics?”
“What’s the difference between the CPI and inflation, bearing in mind that you are talking about “government statistics?””
Nothing. The definition of “inflation” is derived directly from the CPI as a measured percentage from a previous CPI.
The "small amount of inflation each year" is a de facto tax on those who do not get "injections" of cash from the Federal Reserver or its proxies.
The value of the dollar should rise and fall in the same manner as do other assets.
Everytime I read about the Fed's virtues, I am reminded of Ralph Waldo Emerson's famous quote.
While it's true that inflation is similar to a tax, that tax is better than the deflationary depressions we would have if the FED wasn't targeting a small amount of inflation.
And the FED has done a phenomenal job of keeping inflation low while still avoiding deflation and adjusting monetary policy to the the business cycle to minimize the recessions.
The dollar value as measured by the CPI has had year to year variations of less than half of what the dollar had under the gold standard. And we haven't had a deflationary depression in over 80 years.
That is worth the small inflation tax. The average household doesn't keep that much cash anyway. They invest in their homes, their stock portfolio or they at least put it into a savings account to draw interest to offset the inflation.
Assuming that the average household keeps 3 months of after tax earnings in a cash emergency fund. And average household earnings are around $47k. So 1/4 of $47k is $12k. 3% inflation tax on $12k is $300.
You would have us risk deflationary depressions to avoid a $300 tax!?!!!! Are you INSANE!???
Correction 3% of $12,000 is $360. Again well worth avoiding deflationary depressions.
Why didn’t you tell this person to go research it themselves and call them stupid and lazy ?
Or do you only do that to women?
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