Website review: Village Idiot's Blog
LadyPredator discovered this in Government
•1 reviews since Oct 27, 2007
inflation
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LadyPredator discovered 8 months ago- Inflation Inflation has been defined as a process of continuously rising prices or equivalently, of a continuously falling value of money. [1] The cause of inflation is expansion of the supply of money in relation to gross domestic product (GDP). In other words, when the Federal Reserve System (Fed) creates more money than is warranted, inflation occurs. You may have noticed your buying power has been significantly reduced over the last 15+ years. However, at the same time, official government statistics indicate very low inflation as measured by the Consumer Price Index (CPI). Last year, for example, the official CPI was about 4%. However, the true rate of inflation was about 7.5%. The government agency that measures price changes does not do a very good job. I've read that some folks think this is quite deliberate. I know: the horror to think the government would actually lie to us! Whether intentional or not, the fact remains that I can't buy as much stuff with $100 as a year ago. The government says this $100 is now worth $96, but the truth is more like $93. [2] Recently, the printing press got into full-swing under the Clinton administration, and hasn't stopped since. This was combined with low interest rates to stimulate the economy artificially. The low interest rates were intentionally done for this purpose. The idea behind this is to inflate the economy so as not to suffer economic downturns such as depressions and recessions; and also, to maintain low inflation while encouraging full employment. It can be argued that this strategy has been largely successful. We do in fact enjoy relatively low unemployment; haven't had a recession in a while; and inflation is really low: at least on an official basis. Holes can be shot through all the good points mentioned, except we really haven't had a recession in some time. Already discussed was the fact inflation is much higher than officially stated. Also, official unemployment statistics are known to be wrong (nothing recent, they have always been wrong). But unemployment seems better than at many times in the past. One noticeable thing related to unemployment: you can find work, but what about trade work which pays well? It seems the quality of jobs, in terms of wages and so forth, is lower now compared to 20 years ago. This is probably due to the fact that as a nation, we do not make (manufacture) hardly anything anymore. Using "official" statistics, the long-term purchasing power of the dollar has decreased dramatically since 1913, the year the Fed was created. If you put a dollar in a cookie jar in 1913, it would buy only 5 cents worth of stuff now. Another way of saying this is that in 1913 a dollar would buy what $20 buys today (unofficially, it takes 35 2007 dollars to buy what 1 dollar bought in 1913). Since the primary reason the Fed exists is to maintain purchasing power of the dollar, it is obvious that the Fed is a failure.
