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.
Doubling. It’s something that one can understand quickly. The Federal Reserve banks have doubled the number of dollars in just seven years – 2008 to 2015. That was three years faster than the previous doubling and seven years faster than the doubling before that. Inflation is picking up.
When there are twice as many dollars, than prices will be twice as much as they would have been had the quantity stayed the same. This is because the value of ANYTHING is based on supply and demand. When the supply doubles and demand is the same, then the value of the item is worth has as much; think of a glut in oranges and the price of oranges falls.
When prices double, that means your salary and savings are worth half as much as they would have been if Federal Reserve had not increased the quantity.
The annual increases in the dollar quantity of Federal Reserve dollars continues to decrease. Last month’s update showed a 7.5% increase compared to 12 months ago, whereas this month’s update shows an 7.4% increase, using data through July 2015. The annual change last year was 8.5% and the year before was 10.2%. (The increases are based on a 12 month moving average.) Everyone is focused on the changing interest rates, instead of just looking at the actual changes in the money quantity that show Federal Reserve is already applying the brakes to the economy. How can they do this? The banking system is a cartel. Almost all banks are part of the Federal System. We have this situation because the federal departments taxed the alternatives out of existence. See the updated charts showing the Quantity of Fed Reserve Dollars and the Annual Percentage Changes in the Quantity.
People use different ways to calculate the quantity of Federal Reserve U.S. dollars. At Monetary Choice, the inputs are:
Currency in Circulation + Checking Deposits + Savings Deposits + U.S. Government Demand Deposits and Note Balances + Demand Deposits Due to Foreign Commercial Banks + Demand Deposits Due to Foreign Official Institutions.
The first three comprise 99 percent of the dollars:
We include savings deposits because the money can be easily moved into a checking deposits from which it could be spent.
See more info about our tracking of Federal Reserve U.S. Dollars.
Insider information about forthcoming business events has long been known to enrich people and get them thrown in jail. Insider information about government actions has been less covered in the press and possibly by prosecutors likely because of the halo people place on U.S. government actions. Hedge fund manager Dan Loeb proved one could make billions betting on the government bailouts of 2008. Anyone with insider knowledge of the bailouts could have done the same.
he bet that the government bailouts would work. “We bought things like Chrysler Finance Company bank debt, which doubled in two weeks leading up to the bankruptcy of Chrysler,” he told an audience at the Jewish Enrichment Center, in New York, in 2009. “We bought insurance companies like Lincoln National and Hartford that were rescued by TARP. We bought Bank of America preferred stock.” In six weeks, Third Point went from being down 7 percent to being up 7 percent. [Vanity Fair]
Four years later, Dan Loeb won again by investing in Greek sovereign (government) debt that many believed was worthless but was soon bought by the European Union. Anyone with insider knowledge of the debt purchase could have also made millions.
…Loeb’s 2012 bet that Greek sovereign debt would rise in value as a result of a bailout from the European Union. Loeb, he recalls, bought the debt at 17 cents on the dollar and sold it for 34 cents a few months later. “He made himself about $400 million or $500 million,” Scaramucci says. [Vanity Fair]
The potential for insider trading based on government bailouts is yet another reason to end them and to remove the ability to bailout by stopping central banks from creating new money.
Another article confirms Federal Reserve’s artificially low interest rates hurt savers. Elderly, retired people who had been living off of the interest on their savings now find themselves with much less earnings due to one percent and lower interest rates. Faced with the lower income, some are falling prey to financial scams.
“What we really have now is a combination of the fraudulent seller with the needy buyer,” said A. Heath Abshure, commissioner of the Arkansas Securities Department and president of the North American Securities Administrators Association. “Right now, because of interest rates, the fraudulent sellers aren’t having any issues finding a buyer who wants to believe the lie.”
The head of the banking cartel, Ben Bernanke, defended the low interest rates.
“You’re not gonna get strong returns in an economy that is fundamentally weak,” [Bernanke] said before Congress. “The best way to get sustainable high returns to savers is to get the economy back to running on all cylinders.”
In truth, the best way to help savers is to let the interest rate rise to its natural level. Big businesses wouldn’t like this since they want low interest rates, regardless of the cost.
In a free market, borrowers and savers would negotiate interest rates; they would not be set by the Federal Reserve cartel of banks. In most business categories, prices vary amongst businesses. In banking, all banks charge about the same interest rates.
If we had multiple monies in the market, there would be different interest rates for each money and different interest rates with each money market.
See the Washington Post article.
Federal Reserve’s increases in the money supply have decreased the value of senate salaries by about 65 percent since 1998, when measured in commodities. 14 years ago, senators earned about $138,000, or the equivalent of about 137 “commodity baskets.” They now earn $174,000, a 27 percent increase, but those dollars are only worth 48 baskets. Senators need a raise in dollars and they need to audit Federal Reserve. Read the article.
The myth that central banks can create jobs will take a hit if the Sound Dollar Act, proposed by Kevin Brady, passes the U.S. Congress. The act will remove the mandate that Federal Reserve boost employment. In reality, a central bank only creates dollars that take value from other dollars; for every job created with those dollars, another is lost. Plus these new dollars often fuel bubbles that end with massive unemployment. See essay by Dave Doctor of Monetary Choice posted on GoldStandardNow.org.
There’s a fiat money pyramid, and you’re likely at the bottom. New Federal Reserve dollars reach you in the form of a higher salary about when prices are already higher, so you can’t buy any more than you used to. A four-minute video about fiat money explains this and other key points about our current monetary system, most importantly that banks and governments benefit at the expense of most everyone else.