A Visual Guide to Inflation

[Starving Steve]

Re: A Visual Guide to Inflation

I think we've had this conversation before, and it will again go nowhere. But I will say that asserting that we are stealing from grandchildren is not a solid argument:

http://baselinescenario.com/2009/04/...grandchildren/

I found-out first-hand how inflation cheats future generations when I worked as a substitute teacher full-time at $110 per day in California, and nevertheless I was confronted and confounded there by $700,000 and $800,000 and million dollar house prices---- not for McMansions but for middle class homes. Our parents got rich owning those homes (buying them for a pittance and selling-out at those inflated prices). Inflation helped our parents immensely, but inflation and inflation remedies for the economy have hurt those who were born in the post-war baby-boom as well as those who were born after the baby-boom.

Are you talking in your economics classes about what inflation has done to young kids? No amount of solar energy or green solutions or education of any kind is going to really solve this problem of poverty that our kids are suffering now.

Partly we got into this mess because wages were held-down to remedy inflation, but you let prices run wild, especially in real estate. So my thesis stands: Our kids are paying-the-piper for Keynsian economics.

[Starving Steve]

Re: A Visual Guide to Inflation

I do not think inflation is a cure all - far from it. I think the lack of savings is more due to lack of real wage gains coupled with leveraged-induced asset bubble and the desire to maintain a certain standard of living.

The lack of savings and the lack of the desire to save is due to central bank policies which have kept interest rates near or at ZERO, year-in and year-out.

Daaaaaaaaaaahhhhhhhhhhhhhhhhhhhhhhhhhhhh !

I would never go back to the banks after being treated like this. Again, this is Keynsian economics: savers are held for suckers.

[Starving Steve]

Re: A Visual Guide to Inflation

But this pro-inflation or pro-"some" inflation insanity--- this Keynsian rubbish--- is exactly what is being taught in the economics departments of our major univerisites. This inflation rubbish plus econometric modelling is exactly what is being taught. Witness, if you will: Mugave (sp?) who has run Zimbabwe thru inflation-hell is a graduate of the London School of Economics.

I could not help but notice one of the signs that the protestors held-up on April 1st in London in front of the Royal Bank of Scotland. The sign which I saw on TV read: "Economic fools' day" ..... So appropriate!

[WildspitzE]

Re: A Visual Guide to Inflation

The visual is basically monetarist propaganda.

Sweet spot? LOL.

[WildspitzE]

Re: A Visual Guide to Inflation

... if it delved into the details of how the CPI is massaged to meet the magic number of "a little inflation is good".

The whole thing is pretty much about price inflation, and they start by putting their credence on CPI. Given that it's meant to be a simplistic guide, they can get away with not opening up all of the can of worms that they describe in it.

"...any concept of average price level involves adding or multiplying quantities of completely different units of goods, such as butter, hats, sugar, etc., and is therefore meaningless and illegitimate. Even pounds of sugar and pounds of butter cannot be added together, because they are two different goods and their valuation is completely different" (Rothbard - Man, Economy, and State, p. 734).

[cjppjc]

Re: A Visual Guide to Inflation

with respect, the analogy you mention is hardly on point, i.e., a grandparent or parent for that matter spends on their grandchildren and children are self-directed and deliberate responsible acts overseeing their assets and the use thereof and having a direct impact on their direct progeny (who by the way they are their responsibility). To extend this analogy to that of society as a whole spending for the next generation, particularly in the context of what we're seeing with the present spendthrift and entitlement generation is sort of ridiculous IMO.

think of the U.S. as the family farm wherein the current generation has consumed most of the seed corn to live like kings and has sold off the back acres as well, and hasn't tended the land (read manufacturing) and now recognizes it's lifestyle is threatened. Let's take the rest of the seed corn, mortgage the rest of the farm and buy the magic beans that will grow a beanstalk and we'll discover a castle with hidden gold and a golden goose ... yes that's it we need a golden goose ...

Yes, That's a little closer to the truth. History will not be kind to the generations that built all these debt castles.

[MarkL]

Re: A Visual Guide to Inflation

I just wonder if people who promote inflation as the cure for all economic woes ever wonder why we have no savings. They can't seem to make the connection.

The reason for our lack of savings is because we (both individually and collectively) spend more than we earn. Credit cards and home equity loans have done this on a personal level, and government deficits have done this on a collective level.

Inflation isn't the culprit in the USA not having any savings, particularly as "savings" don't have to be held in paper currency. Savings can be (and usually are) held in property, stocks, commodities, and many other items that generally keep pace with inflation.

The culprit, plain and simple, is a failure to spend less than we make.

[ThePythonicCow]

Re: A Visual Guide to Inflation

Yes, That's a little closer to the truth. History will not be kind to the generations that built all these debt castles.

Unfortunately, some of us here are of that generation,and history seems to be coming up on us faster than our departure from this life.

[flintlock]

Re: A Visual Guide to Inflation

The reason for our lack of savings is because we (both individually and collectively) spend more than we earn. Credit cards and home equity loans have done this on a personal level, and government deficits have done this on a collective level.

Inflation isn't the culprit in the USA not having any savings, particularly as "savings" don't have to be held in paper currency. Savings can be (and usually are) held in property, stocks, commodities, and many other items that generally keep pace with inflation.

The culprit, plain and simple, is a failure to spend less than we make.

While a lot of what you say is true, no doubt, there is also very little incentive to save due to zero or negative real returns on REASONABLE investments. People have been forced into the stock market casino looking to make something above inflation, and get burned again and again. Its no accident. I think its part of the plan. Wall Street gets rich off it.