Comments on: A Visual Guide to Inflation

By: Magnus

Magnus — Sat, 24 Oct 2009 22:22:45 +0000

Let’s just go back to the old meaning of inflation, the true one: Inflation is the inflation of the money supply.

CPI/ price measuring is just a way of measuring how much less the money is worth. More money => money less worth => prices rise.

The problem with CPI is that it can be manipulated. CPI is a basked of chosen products that are weighted.

By: Mitch

Mitch — Tue, 22 Sep 2009 18:38:30 +0000

To the pro-gold standard posters:
Adopting a gold standard flies in the face of two serious problems.

First, gold has a radically unstable market value. You might think it an “inherent stores of value,” but an ounce of gold is worth a whole lot more Big Macs today than it was a few years ago, and it has dropped just as dramatically in the past. Compare the purchasing power of the dollar to that of an ounce of gold over time, and you’ll see that hoarding gold has always been a risk-filled strategy compared to hoarding dollars. People who want to know how much food or clothing they can buy tomorrow, or when they retire, can sleep much more soundly with today’s greenbacks stuffed under their bed than the would with gold-backed dollars.

Second, if the U.S. declared that every dollar bill was backed by a dollar’s worth of gold as of midnight tonight, there would have to be that much gold in our national reserves. But M2 alone is around $10 Trillion. (All the gold ever pulled out of the ground is worth maybe $5 trillion, at today’s stunningly high price but before we try to corner the market, so maybe by driving up the price as we going along, we could gather $10 Trillion in gold.) That’s an incredible amount of public spending to avoid the risk that public spending is not constrained by a gold standard.
(Any attempt to set a “reasonable” reserve percentage below 100% becomes subject to the same political pressures, in times when we will want to print more currency, that scare us towards using a gold standard in the first place.)

By: Mitch

Mitch — Tue, 22 Sep 2009 17:39:06 +0000

The guide, and comments, seem to miss that the real issue is changes in inflation. Wen inflation is constant, it gets built into wages and prices, and the effects more or less wash out. Inflation is really “high” only when inflation becomes higher than expected, and only “low” when it becomes lower than expected. And changes in inflation, whether up or down or even when they more or less balance out, introduce an uncertainty which is bad by itself – economic actors of all kinds get conservative, slowing the economy, and spend significant energy (and wealth) on trying to read the tea leaves.
The “sweet spot” is really about keeping a stable inflation rate, which will have to be at least a little above 0% to avoid deflationary weirdness.

By: Mitch

Mitch — Tue, 22 Sep 2009 17:02:54 +0000

mgroves: Complaining about labor unions as monopolies is a mistake that would be easier to spot if, for instance, Starbucks cried foul when coffee farmers started selling their beans through collectives. Employers are inherently monopolies, they are just hard to notice. If BigCo is negotiating wages collectively with BigCo’s Union, the union can only be a monopoly in the same way the company always was; the union may have a monopoly on the labor available at that workplace, but the employer necessarily has a monopoly on the jobs available at that workplace. Because the employer’s monopoly is unavoidable, it is easy to miss, but unionizing can only – at most – even out the scales in that negotiation.

By: Bob

Bob — Tue, 18 Aug 2009 18:48:40 +0000

Sorry, I stopped reading after the first major mistake I found. It is at the top, when you show that a return of 4% during a 3% inflationary period will yield you a positive return. It won’t. You see, there will be taxes. Income taxes. And a tax of 25% will leave you with no gain. For most people who have money to put aside like this, the combined rate of tax will often leave them with a negative return. Nearly all “safety of principle” vehicles, like savings accounts, cds, and money market funds, are guaranteed losses. Between price inflation and taxes, they will loose purchasing power every year.

It is true that to borrow during inflation is considered a good idea. Loan your government money.

By: Nathan Hallmark

Nathan Hallmark — Tue, 23 Jun 2009 21:12:34 +0000

Mint is so off the cool list for this BS. “Sweet Spot” ? WTF? But, I guess if you told the truth, someone might have to have a talk with you *ahem*.

By: JDub

JDub — Tue, 23 Jun 2009 18:42:23 +0000

This is awesome! A great visual reference for how inflation works. Well done with the graphics and colors!

By: Vishnu

Vishnu — Sat, 16 May 2009 07:24:13 +0000

Very nice!

I spent my 15 minutes here, and it’s a great experience!

If it was plain text, I wouldn’t have read it!

Really thankful for your effort. Now i understand what’s it!

By: Laura Variarts

Laura Variarts — Thu, 07 May 2009 06:32:25 +0000

genius ideas
great way to learn commercial iterms

By: Uncle B

Uncle B — Thu, 23 Apr 2009 01:11:24 +0000

Funny how the Yankee fools see the original government propaganda from their high school texts, and scoop it up, whole turd at a time, swallow it with great ease and take greater comfort in their proletarian poverty and debt in the dark, all the while, certain that somebody understands, there is reason, and Anarchy does not reign! If all this bullshit were even based in truth, nobody in America would go hungry, need drugs to be happy, have only a tent to live in, have mortgages that rape them, live in concrete jungles like caged animals, watch planned obsolescence eat their life’s savings! Bull shit! The system is rigged, the Uber-rich eat our souls for breakfast, and we toil in their factories and mines for stale crumbs on our tables, and they despise us and denigrate us for our humanity and compassion as they slam down shyster rules limiting our very existence!Walk through modern day Detroit City and show me how this well propagandized nonsense works!