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loki

why prices rise.

7 posts in this topic

Inflation:

not good, and has a clear reason why it happens.

Historically it's easiest seen in the worst times.

Germany after WWI. Industry had been destroyed, therefor minimal wealth generation through manufacturing, mining, and farming. Paper money was printed to let government pay for it's expenditures because tax income was very minimal, ~1% of their budget at times. This caused their money to be devalued, like stock of a business that was losing money, with no hope of growth. the smartest german citizens bought gold and other currency before Hyper inflation happened.

Wholesale Price Index:

July 1914 1.0

Jan 1919 2.6

July 1919 3.4

Jan 1920 12.6

Jan 1921 14.4

July 1921 14.3

Jan 1922 36.7

July 1922 100.6

Jan 1923 2,785.0

July 1923 194,000.0

Nov 1923 726,000,000,000.0

At one point it was cheaper to burn the money than to buy wood with the money.

source: http://www.usagold.com/germannightmare.html

To cure our inflation the elected government must balance the budget / start paying off our debt or increase wealth generators here with relaxed restrictions, to increase tax revenue. If the people you vote for don't care about a balanced budget, or want more programs without taxing us to death, then that is not helping the situation, and only aid in this country's downfall.

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but we do have wealth generators.... Haliburton comes to mind...... and isn't Toyota an American company now?

that's how the people who buy Camrys often justify their purchase....

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Inflation in the 70s was because of the Government trying to engineer the economy to follow the theoretical Phillips curve, which completely backfired as we know. Johnson's Great Society and Vietnam also didn't help.

Here are some good quotes from this week's Economist about today's situation:

Taken as a whole (and using official figures), the average world inflation rate has risen to 5.5%, its highest since 1999. The main cause has been the surge in the prices of food and oil, which briefly soared above $135 a barrel this week. But Mr Trichet's concern is that higher headline rates could push up inflation expectations, leading to bigger pay demands, and so trigger a wage-price spiral, as in the 1970s.
Yet so far there is little sign that higher food and oil prices are pushing up other prices in the rich economies. Wages have remained relatively subdued and core rates of inflation (excluding food and energy) are little higher than a year ago. Moreover, growth is expected to be below trend in America and Europe over the next year or so and unemployment is likely to climb, which will help to curb wage rises.

As Asian economies and Middle East oil exporters ran large current-account surpluses, they piled up foreign reserves (mostly in American Treasury securities) in order to prevent their currencies from rising. This pushed down bond yields. At the same time, cheap imports from China and elsewhere helped central banks in rich economies hold down inflation while keeping short-term interest rates lower than in the past. Cheap money fueled America's bubble.
Even if the Fed's interest rate suits the American economy, global interest rates are too low. In turn, the unwarranted stimulus to demand in emerging economies is further pushing up commodity prices

Whole story here: http://www.economist.com/opinion/displayst...ory_id=11409414

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but we do have wealth generators.... Haliburton comes to mind...... and isn't Toyota an American company now?

that's how the people who buy Camrys often justify their purchase....

but we also have the least manufacturing / mining prolly since the depression. Subsidies don't help either, that's just recycling wealth.

Haliburton moved to Dubai, remember?

the other thing is that paper money, you possess, but it's not your property. it does not represent anything of intrinsic value, unlike gold.

if you want to see the inflation look at the 1933 act that took people's gold (gold currency became "illegal") and only gave them 60% of it's worth. that caused 40% inflation over 8 months.

in another part of http://www.gold-eagle.com/editorials_03/holloway011303.html is my source for that.

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>>"To cure our inflation the elected government must balance the budget / start paying off our debt or increase wealth generators here with relaxed restrictions, to increase tax revenue. "<<

Keeping tax- & spend-happy socialist candidates out of office is a great first step. Addressing corruption, waste, fraud & increasing beaurocracy is a nice follow-up.

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>>"To cure our inflation the elected government must balance the budget / start paying off our debt or increase wealth generators here with relaxed restrictions, to increase tax revenue. "<<

Keeping tax- & spend-happy socialist candidates out of office is a great first step. Addressing corruption, waste, fraud & increasing beaurocracy is a nice follow-up.

absolutely. increasing taxes (more than 1 year) will not help us in the near future. and the "winning dem candidate" wants to tax us more, and it won't even stay in this country for our needs. and the "rep candidate" wants to have a cap and trade on GHG's. :yuck:

Edited by loki
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>>"To cure our inflation the elected government must balance the budget / start paying off our debt or increase wealth generators here with relaxed restrictions, to increase tax revenue. "<<

Keeping tax- & spend-happy socialist candidates out of office is a great first step. Addressing corruption, waste, fraud & increasing beaurocracy is a nice follow-up.

:yes:

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