Postage stamps to cost 10 percent more, due to lower-value 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, 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.

The last time inflation was this low, there was a recession

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).

Table showing inflation rates from 2003 until 2018.

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.

Underlying data:

Data for FRD Quantity - 2018.08 v01

Gold as Money

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.

Inflation by any other name…

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.

Lower inflation but still high

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!

Annual Changes FRD - 2015.08 vert bars v1

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.

FR Digit Quantity thru 2015-08 Website v1

Here is the data driving the charts.

Money Quantity Table - 2015.08

Dollar geyser is ebbing, though doubled in nine years

Many financial analysts wonder whether Fed Reserve will raise interest rates, but the actual increase or decrease in dollars may be more important. The chart below shows that Fed Reserve has slowed the issuing of new dollars for the past three years. For the 12 months ending June 2015, Fed Reserve issued 7.5 percent more dollars, whereas the 2014 increase was 8.3 percent, and the 2013 increase was 10.5%. Since the 7.5 percent increase is a smaller increase than past years, any increase in economic activity is likely to be less than past years.

Annual Changes Federal Reserve Dollars

A recession can happen even if Fed Reserve issues more dollars. Though if the pace slows, then less economic activity might happen versus past years, and some businesses or business projects may fail if the business managers expect the higher growth of past years.

The total quantity of dollars has doubled during the past seven years. This was two years faster than the prior doubling. This might be due to the size of the bank and business mistakes that helped cause the recent great recession. Bigger mistakes require bigger infusions of new dollars. Of course, Fed Reserve could have let those businesses fail since they made mistakes, but it’s a rigged market and the politically and financially connected often come out on top.

Fed Reserve Digit Quantity thru 2015-06


Is another recession looming?

One way to try to forecast booms and busts is to look at changes in the quantity of dollars in circulation. More dollars, means more loans, and more jobs but also more inflation and lower valued salary. As of May, 2015, the quantity of dollars increased about 8 percent versus last year, but this increase was a little less than the prior annual increase and the increases have been declining. Fewer dollars means fewer loans and less business transactions BUT also less inflation and a higher value salary, if you still have a job.

Annual changes in Fed U.S. Dollars - tapering last few years - a another recession may be coming


Number of dollars doubles in just seven years

It’s not hyper-inflation, but it is inflation. The number of dollars in circulation doubled in just seven years. This means the value of dollars from 2008 are now worth half as much as they would have been had Fed Reserve and U.S.Gov not issued the new dollars. The seven year pace is faster than the prior doubling that took nine years. The new dollars are loaned to the U.S.Gov to cover the budget deficit.

Growth of federal reserve dollars - doubling past seven years

Have gas prices risen? Depends on how you pay.

Just in time for July 4th stories about rising U.S. gas prices, I created a graphic showing that gas prices may have risen when measured in dollars and even Venezuelan bolivars, but gas prices have fallen when measured in wheat and coffee, since 2004. If you were lucky enough to have inherited wheat futures instead of dollars back in 2004, you would be better off when buying gas today. The 500% price rise when measured in bolivars shows that rising prices may in fact mean the value of the currency is falling. The dollar price rise was about 100% and not so coincidentally the quantity of U.S. dollars has risen 115% during the same time frame. Try our gas price calculator to change the years.

Table showing gas prices measured in dollars, wheat, etc.

When a price changes, either the thing you are buying changed in value or your money, the thing you are paying with, changed in value. Often both things are happening. The falling values of the Venezuela and United States currencies are definitely impacting the price.

The solution is to allow people to choose their money since money/products can lose, retain, or gain value.

Nationalism obstructs common sense about money

I was trying to explain to someone that the banks and government were stealing from her and everyone else by devaluing the money. I said issuing more digits/dollars steals value from all existing digits/dollars. The person replied, “the economy must be managed.” I just couldn’t help but think that all those years of government schooling has made this person trust government officials even when what they say is flat out wrong and part of a scam to steal wealth from people. Just because someone set up a country, doesn’t mean they have your best interest in mind. The economy does not need to be managed. They manage it so they can create booms or busts to sell high and buy low and to fund government deficits and provide low-interest loans at the expense of EVERYONE ELSE – from the elderly living on retirement incomes, to the elderly and disable on social security, to people paid wages that are not increased enough to compensate for the devaluation of the currency. We don’t need government officials to set the number of rental cars, or the amount of wheat grown, or the price for a pop song. In fact, when government officials do this, there are shortages or waste. Same goes for the amount of money in circulation – in that no group of people should specify how much is needed. Just like the number of rental cars, the amount of money is based on thousands of decisions by people, not arrogant and even criminal officials.

The solution is to separate the state from money. Let people choose their money.