The inflation charts page has updated inflation data as of July 2016. Inflation is at 7.2 percent, based on revised Federal Reserve data. Inflation continues to fall, but there is still inflation so we have work to do. Inflation is when Federal Reserve banks, from the “central” bank to all its member banks, created dollars when they make loans.
Here are the updated charts:
For more details, visit the Charts page.
The good news is that the U.S. inflation rate has fallen to 7.2%, down from a high of 14.4% five years ago. The bad news is that there still is inflation – meaning the Federal Reserve banks continue to create dollars and lend them out to governments, businesses, and so-called homeowners (people who rent money to buy homes). Inflation is when banks create dollars.
The company GoldMoney created a video highlighting the benefits of gold as a means to save one’s earnings. The video states the value of the dollar has declined about 66% over thirty years, while the value of gold has remained about the same. Nevertheless, I wish the video focused on a different food.
The annual inflation rate of U.S. Federal Reserve dollars has fallen to 7.2 percent, a pace not seen since 2009, about seven years ago. Federal Reserve IS slowing the economy. It’s banks are making fewer loans and this means fewer dollars in the system. However, fewer dollars means that all existing dollars will not lose their value as quickly; it will be a 7.2 percent decline in the value of the dollar versus the 15 percent decline seen in 2012. If there’s a 15 percent decline, then everyone must ask for a 15 percent salary increase to maintain their same standard of living, all other things being equal. But a better way to describe this is that by increasing the number of dollars by 7.2 percent, all salaries and savings will be worth 7.2 percent less than what they would have been worth had Federal Reserve banks NOT increased the number of dollars.
The main charts have been updated. The Federal Reserve banking system issued 7.5 percent more dollars during the past 12 months. The annual change had been slowing since 2012, but now has quickened slightly. The lowest recent increase was 7.4 percent, but now has risen to 7.5 percent. See the bottom of the table below. The total dollars is 11.4 trillion, double what it was just seven years ago.
Comparing the quantity of dollars to prices shows an uncanny symmetry. The quantity of dollars goes up, and so do prices. This is not unexpected because when the quantity of anything increases, the value decreases, all other things being equal.
Read more about this relationship.
The annual U.S. inflation rate is now 7.5 percent, down from 7.9% last year and 9.5% the year before. FedRes is slowing the economy, so plan accordingly. Plus FedRes just increased the main interest rate, making loans more expensive, which also reduces economic activity.
I also show the instances when the quantity of dollars doubled, since 1985. Whereas FedRes took 14 years to double the quantity of dollars back between 1985 and 1999, the most recent doubling only took seven years.
Since the truth is always the opposite of what’s in the big media, the lower inflation rate means your savings and your salary won’t lose value as fast as prior years. Though the value of your paycheck and your savings will go down 7.5 percent (all other things being equal).
Visit the charts page for supporting charts and tables.
Most articles about U.S. inflation don’t mention U.S. inflation. That’s because they focus on price changes not the amount of Federal Reserve “dollars” in existence. The powers-that-be wanted to hide their devaluation of the money by simply changing the definition of the word most used to complain about the devaluation of the money. That word is “inflation.”
There may be articles about increases in the quantity of dollars, which is the real inflation, but most of the articles won’t use the word inflation. The authors might just be noting the change, without stating how an increase will harm anyone holding dollars. That is that an increase in dollars steals value from anyone holding dollars.
Take for example this Bloomberg article with the headline “Where’s the inflation?” The article states,
The Bureau of Labor Statistics estimates that overall consumer prices were down 0.2 percent in July from a year earlier, driven largely by a sharp decline in oil prices. Even after stripping out food and energy, prices were up 1.8 percent — or 1.2 percent, according to the Fed’s preferred measure, produced by the Bureau of Economic Analysis. That’s well below the central bank’s longer-term target of 2 percent.
The article is supposed to be about inflation, yet it focuses on prices changes. It also mentions the two percent inflation target of Federal Reserve, which is really a price change target.
They have done a good job of distracting attention away from the issuing of new dollars. And they need to do this because inflation was 14 percent in 2012 and is now about 7 percent in 2015. (See charts). Inflation is so bad that in just seven years, the banks (working with borrowers) doubled the number of dollars in existence. This means that the value of the dollar will soon be half of what it would have been if those new dollars had not been issued. That’s why a lunch sandwich costs about $10 when it used to cost five dollars about seven years ago, wouldn’t you say?
If you want to reach about inflation, visit this site, not Bloomberg or most of the corporate media. You should note that many media companies are owned by companies that want low interest rates on loans. Interest rates can be low if the banks are simply creating the money. If the banks actually had to borrow the money from someone else, than interest rates would rise and loans would cost more.
Updated charts for U.S. annual inflation appear below. For the last 12 months, inflation has been 7.3 percent, based on a 12 month moving average. That is lower than the prior period which had an 8.2 percent increase and much lower than 2012’s increase of 14 percent. Yikes!
If you’re not making 7.3 percent more than last year, than you are likely WORSE off because the value of the dollar has or will go down about 7.3 percent, all other things being equal. Now if people from other countries suddenly want more dollars, than the value of the dollar may not fall the full 7.3%; the value could even go up. However, the value will be 7.3 percent lower than what it would have been if Federal Reserve had not created more dollars. Note, all the entities that took out loans are equally responsible since Fed Reserve banks only created dollars when they loaned them out.
The chart below shows that numbers of dollars doubled in just seven years, two years faster than the prior doubling.
Here is the data driving the charts.