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I get my inflation figures from my checkbook. I know how much stuff cost in 1970, and I know how much they cost today. Everything today costs at least 10x as much. When was the last time you had a 10 cent cup off coffee or a 25 cent beer? When was the last time you rented a 2-bedroom apartment, utilities included, for $100/month? When was the last time you paid $20/month for health insurance? The official inflation figures are so far from reality they are ludicrous.
I don't still have my '70's checkbook ledgers. So I use this unofficial estimate:
I thought the problem is the dollar getting too strong. That hurts any business exposed to imports or trying to export. True, it attracts investment; but not in public work. Fortunately, there is a solution. Print more money. Then it can be used for infrastructure projects, putting people to work and tackling long ignored public works. And it should keep the dollar from rising too much.
I thought the problem is the dollar getting too strong. That hurts any business exposed to imports or trying to export. True, it attracts investment; but not in public work. Fortunately, there is a solution. Print more money. Then it can be used for infrastructure projects, putting people to work and tackling long ignored public works. And it should keep the dollar from rising too much.
Yep it's super easy to devalue the US$. The people in charge simply don't want to.
how should it be phrased? there has to be some effect on the average citizen when this happens...
For a start, they'll have had a pay cut. Secondly, they'll be tricked into thinking that their house, and any other solid assets have, have gone up in value.
On a national level though, devaluing money, is a way of decreasing the value of debts that the country owes.
For a start, they'll have had a pay cut. Secondly, they'll be tricked into thinking that their house, and any other solid assets have, have gone up in value.
On a national level though, devaluing money, is a way of decreasing the value of debts that the country owes.
You are talking about domestic inflation. That is different from currency devaluation relative to our exchange rate with foreign currency. The latter is the one we are discussing.
The US$ has been over valued for over 30 years if you use trade as the benchmark. The natural result is job loss, depressed wages, and escalating private and public debt. For nearly all citizens a lower US$ value would be a benefit. Those making billions from globalization and using the US as a great absorber of foreign production, like a high US$ value.
Certainly your demographic has prospered relative to those farther down the scale, but in prior US history real worker compensation kept pace with per capita GDP gains.
Charts such as those in post #72 are illuminating, but a couple of caveats are in order. First, those mega-rich 0.01%-ers are now only catching back up to their income-level of the year 2000 – which they attained, presumably, from gains in assets (stocks, bonds, real-estate). This was before our latest wave of off-shoring, automation and so forth. Second, highly compensated professionals, who are not in the 1% but who live drastically below their means and save and invest the majority of their salaries, will see income-growth (and fluctuations) akin to those of the highest earners. The total magnitude of their income (or assets) is much less, but the trends are similar, once they attain a position in life, where they're earning more from their stock portfolios than from their medical practice or engineering-consultancy or whatever.
What matters most is return on capital vs. return on labor. If the former exceeds the latter, this benefits investors – even if they're small investors.
An altogether different chart is say the increase in the ratio of salary of CEOs vs. the median employee. This is specifically a comparison of salary, not total income (which can be from investments).
Quote:
Originally Posted by rruff
...Those making billions from globalization and using the US as a great absorber of foreign production, like a high US$ value.
A cheaper dollar isn't a boon just for billionaires or speculators. Do you have a second house in London, UK? Then a fall in the Dollar/Pound exchange rate means that your house is now worth more dollars. Do you invest through your 401K in the Vanguard Total World Stock Market index fund? Then a fall in the US Dollar (relative to most currencies) means that your account-value, in dollars, goes up.
A weaker US dollars helps all US-based investors, large or small, who diversified their holdings by buying foreign assets. Inversely, if the FTSE goes up by 0.5% but the US Dollar has risen 1% against the British Pound, congratulations - your UK stock index fund has just fallen.
Last edited by ohio_peasant; 12-11-2016 at 11:41 AM..
If you woke up one morning and an announcement was made that the US dollar was devalued by 10%, what would the practical application of this be to the average citizen?
Suppose someone had $10,000 in the bank. I understand they would still have $10,000 in the bank, and that this money would be worth 10% less (i.e. it takes more dollars to buy the same thing). But what would the average citizen be looking at for cost increases ? Will products made in the US not be affected as much as those imported? or visa-versa? What items are likely to be more sensitive to a devaluation than others?
This is what inflation does to people on fixed incomes, like seniors on Social Security.
The first real signs that our debt balance begins to get out of control. I.e. Debt growing st 2x GDP growth and we begin the talking about faultering on note repayment out currency will be in the toilet. Until then they will continue to use monetary policy to keep the dollar and Econony strong. There is a tipping point on government spending and long term debt that has to be recognized.
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