The US government can “legally” have more money printed and tax you to pay for it.
But don’t you dare try to print your own money to pay those taxes, that would be illegal.
If you were to use college tuition as the marking stick for inflation, then you would have to say that there was skyrocketing inflation during 2008 even though there was negative nominal GDP growth.
Sumner is basically right, that high inflation is utterly inconsistent with every other data point. If inflation were a few percentage points higher than the official estimates, then NGDP growth should be much higher and real GDP growth should much lower (or negative).
Though, Schiff is probably assuming a different definition of inflation (i.e., inflation is defined as a growth in the money supply, no matter what the rate money velocity is).
There is supply inflation (QE, as admitted to) and price inflation/value loss (which the fed and the media is denying).
10 year gasoline prices: (2003 to 2013) 150% increase
10 year college prices: (2002-2011) 31% increase
10 year health care prices: (2002 to 2012) 125% increase
10 year home prices: (2002 to 2012) 24% increase and that’s including the largest crash in history.
Based on this inflation calculator (http://www.usinflationcalculator.com/) there’s been 26.9% inflation over the last 10 years. That’s very significant.
So, how is there no inflation?
The time interval you choose is pretty important. If prices rise by a factor of (1+i) over 1 year [where i is the inflation rate], they will rise (1+i)² over two years, and (1+i)³ over 3 years, and so on. If your time interval is 10 years of course you’re going to get a high inflation rate even if the yearly inflation rate is low.
To find the average yearly inflation rate (if prices rise by 26.9% over 10 years) we take the tenth root of 1.269. The answer is 1.02403, i.e. yearly inflation is 2.403%. Even given this, it is misleading to look at inflation over the past decade as a guide to policy for the current economic situation. Nor is listing specific commodities for which prices have risen rapidly a helpful guide to the current inflation rate across all commodities.
Let me just add that, yes, inflation over short periods of time (1 year, for example) is not a big deal per se.
But who makes and saves money for a single year? Most of us have working careers of much longer periods, somewhere between 25 and 45 years. This means that we save money for a substantially longer period of time (not just a single year).
Looking at single-year inflation rates isn’t going to give you the big picture of the impact inflation has on savings and the public.
By now you’re probably thinking that the video brought into question the impact of QE on inflation rates and not just inflation in general.
I answered that in my response to theshotgunrhetoric, but I’ll reiterate here. Most of QE’s influx of liquidity has been hoarded by banks and many top corporations are sitting on record cash reserves. In order for inflation (price inflation) to actually kick in, that money would have to make it’s way into the public’s hands. It has not. Not yet.
But Schiff is a believer in the Quantitative Theory of Money (I’m not) and his opinion is that inflation is there, it’s just artificially postponed because the banks are damming up the cash. My theory is that the inflation is looming and unless the Fed soaks the cash supply back up, it’s only a matter of time until the trillions of liquidity the Fed pumped in hits the market and begins to drive prices (more so than it already is).
If I wrongly attributed my inflation data (or lead you to believe that QE drove that inflation data), then i was wrong in doing so. i was a little off my game yesterday I guess.
Anyway, click HERE for all my comments.
How The Banking System Works.
- Banks: Trust us with your money
- People: What if you lose our money, who will insure our money?
- Banks: The government
- People: You mean the government that's funded with our money?
- Banks: Yes.
- People: So we are giving you our money and if you lose it we will be paid back with money that the government taxes from us?
- Banks: Yes.
- People: Where will that new money come from if you lost it in the first place?
- Banks: We'll lend it to you.
- People: How does that work?
- Banks: It's complex. No need to worry, the system can't fail because if it did, everything would come to an end.
- People: ...
- Banks: ...
- People: ...
- Banks: Trust us with your money.
The minimum wage in 1955 was $1.00/hr.
That would be four quarters, back when quarters were made with silver. The melt value of those four quarters (in today’s money) is about $20.gee I wish this had a source..
you can literally google every aspect of this post.
1995 minimum wage, silver content in US quarters pre-1964, spot price of silver
These are not hard pieces of information to find. Not everything needs to be injected directly into your thick skull from somebody else in order for you to know about it.
I mean honestly. Are you that fucking dumb?
I hate lazy people who want a source for everything as if Google doesn’t exist on your computer, phone, playstation and tv.
All of the info in the world, right there at your fingertips and you are too lazy to search or to comfortable with your skepticism that you refuse to do so.
Someone yesterday asked me “If IP law hurts individuals, why isn’t there anything written about it?” I wanted to cut my neck with a pencil, pull my brains out with a toothpick and jam them down my throat so I could suffocate to death.
Minimum Wage in 1955 to 1956: $1/hour (via Dept of Labor)
Price of an ounce of Silver in 1955: $0.95/ounce (via The Silver Institute)
What $1 in 1955 is worth in 2013 dollars: $8.23 (via Bureau of Labor Statistics)
Price of an ounce of Silver in 2013 (3/28/13): $28.82 (via MonEx)
The US dollar literally lost $20.59 or 71.4% of it’s value since 1955 due to inflation.
Next time don’t be so damn lazy.