An increase in the quantity of dollars will decrease the value of dollars (all things being constant) and this will drive up the price of gold AS MEASURED IN DOLLARS.
2010 - You bought a home for $100,000 and your favorite sandwich costs $5. 10 years later… 2020 - You sell the home for $200,000 and your fav sandwich costs $10. (1) Did you make any money? (2) Did you increase your wealth? Are you richer? Answers: (1) Yes (2) No 2010 - $100,000 is worth 20,000 sandwiches ($5/each) 2020 - $200,000 is worth 20,000 sandwiches ($10/each) You made $100,000 dollars so you made 100,000 more money/dollars. But you cannot buy more sandwiches. Your money still buys the same number of sandwiches: 20,000 sandwiches. Your wealth did not increase. But you actually reduced your wealth because the gov't will tax you at maybe 20% on the dollar profit. Your dollar profit is $100,000, which means you pay $20,000 in taxes. You're left with $180,000 which can buy 18,000 sandwiches. Your wealth was reduced by 2,000 sandwiches, even though you had a dollar profit (after taxes) of $80,000. It's the consequences of inflation (devaluation of the dollar).
The dollar-price for a first-class postage stamp will rise 10 percent next year! That means the dollar will be worth 10 percent less than in stamps. If the dollar is worth 10 percent less, will thou get a 10 percent salary increase? Thy employer is paying out dollars that will be worth 10 percent less, at least in stamps.
Of course if thou uses something other than dollars as a store of value, then the dollar-price may not be important.
A headline from AL.com, says, “Stamps set for largest-ever price increase in January 2019”. It may be the largest increase in cents, but is it the largest percentage increase? No. Later, the journalist reveals that the 1991 increase was 16 percent.
As the dollar continues to be debased/diluted, the net increases will be larger, but the percentages may not. As this continues, at some point, the price of the stamp will rise from $1.00 to $1.10, a whopping eight cent increase, but really just an eight percent rise.
Similar journalistic shenanigans occurs with stock market rises and falls. A 300 point increase or decrease sounds like a lot until the article reveals it is a one percent change.
One must quickly acclimate to the new larger numbers tossed around or focus on percentage changes.
Still, the postage stamp price is going up 10 percent. That is quite a jump. The rampant increase in dollars during the past five to 10 years is finally hitting us, hard.
What’s the solution, store thy wealth in non-dollar assets. Before a purchase, convert into dollars.
Back in 2006, inflation slowed dramatically to 2.4 percent and was 4.4 percent in 2008. Then a recession hit, and a new administration came to power. Inflation dropped significantly this year and now sits at 4.1 percent, about the level back in 2008, just before the recession. Bill Maher recently quipped that he wanted a recession as a means to push President Trump from power. Others may agree with Bill and are putting the gears in motion. See table below showing the growth in the quantity of dollars (aka inflation and aka money supply).
I am also cheering the lower inflation rate since creating new dollars steals value from all existing dollars. There is less theft.
Yet, I also dislike wild swings in the quantity of dollars as that confuses people. High inflation can lead to energy going into a specific business sector, then a sudden drop can cause those businesses to fail, as they had mistakenly planned on persistent easy money and loans, and the resulting high spending.
It’s best to have zero inflation. If we can’t get that, let’s have steady low inflation. But I do not want wild swings in the inflation rate and especially a swing designed to influence an election.
See the new page about how measuring profits with dollars does not show if you really made a profit. As an example, consider a home sale valued in dollars versus lunches. The goal of making a profit is so you can buy more things, such as more lunches.
Learn more about how home sales can be measured with alternatives to the Federal Reserve dollar.
The annual inflation rate of Federal Reserve Dollars is 7.3%. As you can see in the chart, usually Federal Reserve reduces the inflation rate after a series of high increases, but since 2014, the rate has remained level at about seven percent. Look for prices to continue to rise as the value of the Fed dollar falls. Learn more about these charts.
The inflation charts page has updated inflation data as of July 2017. Inflation is at 7.5 percent, based on revised Federal Reserve data. The rate appears steady. I was expecting the rate to decline so that ‘they’ could trigger another stock market crash, but maybe not. Still, a 7.5 inflation rate means…the value of the U.S. dollar has or will be worth 7.5 percent less than what it would have been worth if Federal Reserve and the U.S. administration had not created more dollars. This is despicable.
Here are the updated charts:
For more details, visit the Charts page.
We are so far behind. We are so in the dark. The Japan Central Bank is using its power to create money to buy everything, and most recently the shares of all companies. This is possible because all central banks can create money. It’s no different than if a counterfeiter was in your town, printed fake money, and bought every home in town. Then everyone thinks they’re rich because they have all this money. But they soon see the value of the money has plummeted because of the counterfeit money. So they have money, but no value. The counterfeiter, on the other hand, has all the houses. We are so far behind.
Read about the buying spree here.
Central banking is a religion and the bank ‘governors’ are the priests. I say this because it is a sacrilege to question the central bank’s actions. There is so much pomp and circumstance around every central bank. When, in reality, they are just money counterfeiters. They are ponzi scheme creators. They convince everyone to use their tickets, then they print as many tickets for themselves as they want, until the bank owns everything, and the people are paupers.
We simply have to stop using their money. We can start small. In each town, try to use silver, gold, or any real thing to trade with your neighbors. Stay in the private side of things to avoid corporate income.
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.