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I think this discussion is not getting the root cause of the issue at all. If today income distribution was the same in the US as it was in 1980 there would not be a problem with 2% or so inflation at all. The issue is that so much more of our national income goes to the 1% only compared to 30 years ago. The 1% have no inflation problem because their income gains far outstrip inflation at the cost of the 99% whose income is stagnant at best. Basically everyone who relies on wage income inthe US is screwed for 40+ years now. If you rely on investment or other form of incomes you made out like a bandit by comparison and you have lower taxes to boot. Amazing how nobody understands the root cause of the problem: income inequality and a tax system favoring millionaires at the expense of Average Joe. 2%+ inflation is good as long as wage gains are 4% across the board. We need to make employers reward American workers to this degree again rather than only rewarding the 1% owners like they hae the last 40 years. Plus when did they last invest in anything here? Relative to profits, company investments are at a ca. 33 year low. They basically started to stop investing with the Reagan Revolution.
When the Federal Reserve instituted the fiat fractional reserve system, they understood that they were implementing a system which would slowly steal the wealth from all the citizens of the US without them really being able to see it happening.
When you loan every dollar into existence, you create a system of debt in which every dollar saved is worth less every day.
This creates a system where debt is beneficial and savings are detrimental.
When you take this to the practical level, it means the average worker can acquire a greater amount of the physical possessions they desire by acquiring them via debt than through saving and paying cash.
Through inflation you create a environment where assets of true wealth such as real estate or privately owned businesses become much too expensive for the common worker. If you were to go back 150 years, you would find a country where the average homestead farmer owned 160 acres of land. Today, 160 acres of land suitable for growing food would anywhere in the US would make the owner a multi millionaire. Instead of assets of real wealth, today people concern themselves with going in debt to acquire possessions that depreciate and are not assets of true value. They therefore trade their lives and their labor for consumables of little or no worth.
People have their heads so far in the sand it's amazing..
What has been happening over the past century or so is the government through the Federal Reserve (which is a private bank btw) has been INFLATING the currency through the printing press, ( _____ <<enter your financial manipulation). Americans through this whole process are losing the true value of their wealth.
This is all well validated and easily can be researched now at the click of a button. It's a cycle which has an expiration date... and it doesn't look too far out now.. Global world leaders talking about differentiating to a "basket of currencies" instead of one world reserve currently (ie the Dollar)..
So with the printing of dollars, costs have increased, which now makes the traditional wages collected insufficient to pay to live anymore.
For real how are people living now off of $10 -13 / hour? Trying to support a family? .. Yet a lot of the jobs available on the market are paying this type of wage right now.
The process you are eluding to is the fractional reserve system. The mechanics behind inflation is the fact that every dollar created since 1913 has been borrowed into existence at interest. That means for every dollar created, there needs to be an additional amount borrowed into existence to pay the interest on the original dollar borrowed into existence.
This means the dollar borrowed into existence, automatically decreases in value by the amount of the interest charged by the Central Bank on it's very creation.
When the currency was produced by the Federal Treasury it was created without debt and was therefore not inflationary.
The process you are eluding to is the fractional reserve system. The mechanics behind inflation is the fact that every dollar created since 1913 has been borrowed into existence at interest. That means for every dollar created, there needs to be an additional amount borrowed into existence to pay the interest on the original dollar borrowed into existence.
This means the dollar borrowed into existence, automatically decreases in value by the amount of the interest charged by the Central Bank on it's very creation.
When the currency was produced by the Federal Treasury it was created without debt and was therefore not inflationary.
Another person who has no idea what inflation is.
If the Fed were scrapped tomorrow and we traded in gold, chickens, or tooth fairies, there would still be inflation. Your gas would still cost more chickens because more people in China are driving cars (demand-pull). Your food would cost more chickens because gas went up (cost-push). Your rent would cost more because now people want to move closer to the city center (demand-pull).
These are fundamentals of economics. Stop using the Fed as a scapegoat.
When the Federal Reserve instituted the fiat fractional reserve system, they understood that they were implementing a system which would slowly steal the wealth from all the citizens of the US without them really being able to see it happening.
When you loan every dollar into existence, you create a system of debt in which every dollar saved is worth less every day.
This creates a system where debt is beneficial and savings are detrimental.
When you take this to the practical level, it means the average worker can acquire a greater amount of the physical possessions they desire by acquiring them via debt than through saving and paying cash.
Through inflation you create a environment where assets of true wealth such as real estate or privately owned businesses become much too expensive for the common worker. If you were to go back 150 years, you would find a country where the average homestead farmer owned 160 acres of land. Today, 160 acres of land suitable for growing food would anywhere in the US would make the owner a multi millionaire. Instead of assets of real wealth, today people concern themselves with going in debt to acquire possessions that depreciate and are not assets of true value. They therefore trade their lives and their labor for consumables of little or no worth.
Oh man when ideology gets in the way of basic logic you get posts like this. I'll try to keep it very simple. Fed created around 1914. Increasing income and wealth inequality until the Great Depression. Increasing equality 1929ish to mid-1970s. Increasing inequality since then. Fed in existence all the time. There is no correlation (let's not even talk causation) whatsoever. Sorry we can never discuss based on ideology. Please return to the land of basic logic first. Thanks.
The "inflation" most relevant to adult minimum wage earners is rent inflation, which is abundant today in many markets yet is not making much impact on CPI.
Actually OER is by far the biggest factor in CPI. If OER goes up it has a MAJOR impact on CPI, much more than anything else like food, gas,... Please read the definition of CPI.
The "inflation" most relevant to adult minimum wage earners is rent inflation, which is abundant today in many markets yet is not making much impact on CPI.
What do you think causes "rent inflation" and why isn't it included in the CPI?
What do you think causes "rent inflation" and why isn't it included in the CPI?
I suppose you're going to say that "rent inflation" is the demand-pull type. I would say that greed causes "rent inflation" and that demand enables rent inflation. There are a number of examples of large property tax cuts - Prop 13 (California), Proposal A (Michigan) Proposition 2 1/2 (Massachusetts) where rents did not fall - indeed rose - when landlord cost structures declined.
Rent inflation is included in CPI to the extent it is measured by OER, which as a one-size-fits-all number totally fails to reflect local realities. Go to BFE, Detroit, and Portland, tell the locals OER is rising at 2.6 percent, and they will laugh at you or worse.
I suppose you're going to say that "rent inflation" is the demand-pull type. I would say that greed causes "rent inflation" and that demand enables rent inflation. There are a number of examples of large property tax cuts - Prop 13 (California), Proposal A (Michigan) Proposition 2 1/2 (Massachusetts) where rents did not fall - indeed rose - when landlord cost structures declined.
Rent inflation is included in CPI to the extent it is measured by OER, which as a one-size-fits-all number totally fails to reflect local realities. Go to BFE, Detroit, and Portland, tell the locals OER is rising at 2.6 percent, and they will laugh at you or worse.
It is based on a bunch of averages. Sure, it raises in the hotspots but it declines in the areas with no demand. That is typical.
If the Fed were scrapped tomorrow and we traded in gold, chickens, or tooth fairies, there would still be inflation. Your gas would still cost more chickens because more people in China are driving cars (demand-pull). Your food would cost more chickens because gas went up (cost-push). Your rent would cost more because now people want to move closer to the city center (demand-pull).
These are fundamentals of economics. Stop using the Fed as a scapegoat.
It is clearly you, who does understand what inflation is.
Inflation is purely the phenomena of an increasing supply of money chasing a relatively smaller quantity of goods and services. You cannot have inflation without an ever increasing supply of money. It is hard to believe anyone is stupid enough to argue that point.
If the money supply is equal to the supply of goods and services then no inflation can possibly exist.
The reason inflation stayed fairly constant during the use of gold and silver as money was that the amount of gold and silver produced stayed fairly consistent with the increase in GDP.
When money is produced by banks at interest, the very creation of the money is inflationary.
Oh man when ideology gets in the way of basic logic you get posts like this. I'll try to keep it very simple. Fed created around 1914. Increasing income and wealth inequality until the Great Depression. Increasing equality 1929ish to mid-1970s. Increasing inequality since then. Fed in existence all the time. There is no correlation (let's not even talk causation) whatsoever. Sorry we can never discuss based on ideology. Please return to the land of basic logic first. Thanks.
Really? That's all you got? The Federal reserve has been in existence since 1913?
It amazes me when people show such a lack of understanding of a subject as to assume any one factor can be the answer to any set of circumstances.
The Fed and its member banks use inflation as a tax on the entire economy.
Wealth inequality is only partly caused by their monetary manipulation.
The other driving factor in inequality is taxation as was explained by Beardsley Ruml, the former Chairman of the Federal Reserve Bank of New York, in 1946 in an article entitled Taxes For Revenue Are Obsolete, where he explained that Federal taxes can be made to serve four principal purposes of a social and economic character. These purposes are:
As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;
To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;
To express public policy in subsidizing or in penalizing various industries and economic groups;
To isolate and assess directly the costs of certain national benefits, such as highways and social security.
Note how none of these purposes are to support the operations of the Federal government.
Now if you would like to continue this discussion based on factual information instead of slanderous logical fallacy then make your case.
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