Major Inflation In the Near Future

[Still_Small_Voice]

Anybody else watching what is going on? The United States is printing loads and loads of dollars. Major inflation is likely in the near future.

[Guest JHM-in-Bountiful]

Glenn Beck has been discussing the problem on his radio and television shows. He is encouraging people to make purchases now of things you may need a few years down the road. For instance a coat for a child. The child would be big enough to use the coat when they are bigger. I'm currently doing that on clothing and medicine. The type of inflation is called hyper-inflation.

John

[Still_Small_Voice]

I am going to spend another $100 on food storage items. I hear once the prices start soaring the United States government will try to implement price controls on food. There will then be panic and food shortages.

[rastler000]

Think of the upside, it will take care of our outrageous deficit.

[a-train]

Think of the upside, it will take care of our outrageous deficit.

That outrageous deficit is the facilitation of the inflation. Inflation will wipe out the middle class. There will be no middle class. When the dollar goes, we all go. Support Ron Paul and the effort to restore sound money. Go to:

Campaign For Liberty — Home

and

Ludwig von Mises Institute - Homepage

We can make a difference. God bless!

-a-train

[funkymonkey]

Support Ron Paul and the effort to restore sound money. Go to:

Campaign For Liberty — Home

and

Ludwig von Mises Institute - Homepage

We can make a difference. God bless!

-a-train

Isn't this type of stuff against the rules?

[a-train]

Isn't this type of stuff against the rules?

If a link to a political education site and an economics institute is against the rules, then let me know. Did you take a look at either? The Campaign for Liberty is not a political party or any particular political candidacy, it is a group that endeavors to educate and motivate the masses toward liberty. Yes, it does give information about various races in U.S. politics, but it is not a campaign site for any particular party or candidate. The Mises Institute site has tremendous information on free market economics.

-a-train

PS Am I the only person that finds the notion of federal regulation of speech through tax law a wee bit UNCONSTITUTIONAL!? Also, is there really any risk of a public forum losing it's non-profit status for allowing unaffiliated and unknown guests to say something in support of some candidacy?

[rastler000]

That outrageous deficit is the facilitation of the inflation. Inflation will wipe out the middle class. There will be no middle class. When the dollar goes, we all go. Support Ron Paul and the effort to restore sound money. Go to:

Campaign For Liberty — Home

and

Ludwig von Mises Institute - Homepage

We can make a difference. God bless!

-a-train

For awhile. We get what we get. I am looking forward to having the company of a lot of people who have no health care, and don't get to retire. They get to enter my world.

[a-train]

For awhile. We get what we get. I am looking forward to having the company of a lot of people who have no health care, and don't get to retire. They get to enter my world.

That will be all of Generation X and forward. Even if we get social security, it will be worthless.

-a-train

[WANDERER]

Reports of turned away ships from China full of exports. Oz. In this news article here

We won't panic, Rudd tells Australian business people

[pam]

For awhile. We get what we get. I am looking forward to having the company of a lot of people who have no health care, and don't get to retire. They get to enter my world.

Hmm are you related to a Scott Gallan?

[Moksha]

I hear once the prices start soaring the United States government will try to implement price controls on food. There will then be panic and food shortages.

When President Nixon did this, it worked out pretty well and there was no panicking. However, I would panic if a loaf of Grandma Sycamores' bread went for 20 bucks.

:)

[rastler000]

Hmm are you related to a Scott Gallan?

Who?

[Still_Small_Voice]

I was just reading this thread again. I'm glad we are not seeing hyper inflation presently. We are seeing bad inflation though. I think at least 10 to 15 percent per year. My paycheck doesn't ever seem like enough to cover everything.

[JodyTJ]

You guys should move to Canada. :) We have a conservative government in power (at least until 2015, unless they get another majority after that), and it is taking steps to keep Canada's economic health in check. Though, I think it's time the American people voted for a true conservative Republican to lead the nation, and cut spending. If I were American I would vote for Rick Perry or Mitch Daniels.

[Still_Small_Voice]

As you know JodyTJ America's fiscal policies are horrific. We have secret combinations trying to destroy the American dollar. I heard we are printing 85 billion dollars per month presently.

I did these calculations to see how much 1 billion actually is.

A stack of $100,000 in 100 dollar bills is 6.25 inches.

A stack of 1 million dollars in one hundred dollar bills is 62.5 inches high.

A stack of one billion dollars is 5208.33 feet high. That is almost 1 mile high.

[annewandering]

I hear that fear mongering is a great business move. Especially for survival things like gold, guns, etc. Unfortunately the economy is improving and the gold market is collapsing so we must get out there and fear monger better. Poor old Beck will go bankrupt otherwise.

[Still_Small_Voice]

What are Congress is doing is immoral (encouraged by our current President). We have 17 trillion in debt and counting. Our spending rate is unsustainable. If you would study the history of countries that have done this you would know what happens when out of control spending occurs. Get past the politics and into reality.

17 trillion dollars in one hundred dollar bills is very close to 16,769 miles high.

[LittleWyvern]

We are seeing bad inflation though. I think at least 10 to 15 percent per year. My paycheck doesn't ever seem like enough to cover everything.

I looked up the USD inflation rate out of curiosity, and it's currently at 1.8% for 2013. In 2012 it was 1.7%.

[Lakumi]

Jeez I was considering moving to the US... doesn't sound like the best idea now

[Still_Small_Voice]

I looked up the United States D inflation rate out of curiosity, and it's currently at 1.8% for 2013. In 2012 it was 1.7%.

That is not correct data. The cost of food is going up at a much higher rate than that along with other items. Ask anyone who pays attention to the cost of food in the United States and they will confirm. At least 15 percent higher prices every year on most food items.

[LittleWyvern]

That is not correct data. The cost of food is going up at a much higher rate than that along with other items. Ask anyone who pays attention to the cost of food in the United States and they will confirm. At least 15 percent higher prices every year on most food items.

The inflation rate is a derived percentage from the Consumer Price Index, which uses a variety of goods and services to perform its calculations. The price of one or several goods may be increasing faster than the inflation rate, but the inflation rate views a wide spectrum of goods and services in order to purposely eliminate local trends or spikes. I'd have to see if there's a similar index that only uses food prices, but saying that yearly inflation is 10%-15% is completely false.

EDIT: Or maybe you think the BLS is deliberately falsifying their numbers, and if that's the case then I give up.

[yjacket]

I looked up the USD inflation rate out of curiosity, and it's currently at 1.8% for 2013. In 2012 it was 1.7%.

Always fighting the last war.

The most important charts are below:

MZM Money Stock (MZM) - FRED - St. Louis Fed

Velocity of MZM Money Stock (MZMV) - FRED - St. Louis Fed

The "inflation" rate is a combination of a lot of things. If we measure inflation as a measure of prices, then those prices are affected by 4 factors. The supply/demand of the good and the supply/demand of money. The two charts above illustrate the current supply (MZM) and demand (MZM velocity) of money.

In a theoretical world with a set supply of money, the prices of goods would gently fall over time. This is because of productivity gains as humans become more efficient at producing whatever good they are consuming. This is easily seen in computer/technology prices. Over time prices fall as technology improves and we get better at producing higher quality goods.

Over the past 10-15 years, the world has undergone a massive transformation, IMHO greater than the industrial revolution. The massive amount of productivity gains over the last 15 years is astronomical. As such we should expect prices of things to fall, demand is increasing but the supply of the goods increasing much more due to scaling.

In fact, we should expect prices to have fallen far greater than they have. Let's say in a world with no increase in the money supply prices would be falling at 5% a year, instead they are increasing around 1% a year. We think of that as "low" inflation, but in reality we actually have a high distortion of prices amounting to about 6% a year. No one gets up in arms about it, but it is a high distortion nonetheless.

Now back to the supply/demand of money. The supply of money has exploded over the last 5 years, however at the same time the demand for money has also exploded (i.e. low velocity of money). People want cash on hand b/c they need to pay debts, they have low cash reserves, need to pay bills, etc. So while the Fed is printing like mad, it doesn't have as large of an effect as it could b/c people are in essence taking that money and stuffing it under a mattress or paying of debts (and the money disappears) and so it doesn't affect pricing.

The velocity of money is at the lowest it's been in 60 years. It could always go lower, but the probability that the velocity of money will increase from here is pretty good. That will mean that in the future we will have high supply of money and lower demand for money which will translate into higher inflation.

When it happens is anyone's guess but personally I highly doubt the stock market is a true reflection of the economy . . .

Edited August 10, 2013 by yjacket

[yjacket]

I hear that fear mongering is a great business move. Especially for survival things like gold, guns, etc. Unfortunately the economy is improving and the gold market is collapsing so we must get out there and fear monger better. Poor old Beck will go bankrupt otherwise.

Well it depends. If one is buying survival things out of fear b/c Beck says so then those individuals will eventually end up getting burned. If one is buying b/c they understand the workings of the monetary system then probably not.

I buy, but I stopped buying about 2 years ago when things started going parabolic, I've only recently starting buying again, but not b/c anyone was telling me to buy.

I'll say this much, I'd sure rather be buying gold right now vs. buying stocks. The risk/reward on gold is much better than stocks at their current respective prices.

[yjacket]

The inflation rate is a derived percentage from the Consumer Price Index, which uses a variety of goods and services to perform its calculations. The price of one or several goods may be increasing faster than the inflation rate, but the inflation rate views a wide spectrum of goods and services in order to purposely eliminate local trends or spikes. I'd have to see if there's a similar index that only uses food prices, but saying that yearly inflation is 10%-15% is completely false.

EDIT: Or maybe you think the BLS is deliberately falsifying their numbers, and if that's the case then I give up.

I don't think BLS is deliberately falsifying their numbers, but I do believe they put a little "black magic" into their numbers.

We know they hedonistically adjust their pricing, i.e. if a newer television this year is priced the same as last years model but has new features then they adjust the price down to account for the new features. How they actually calculate how much say an internet connected TV is worth in this years model vs. a non-internet connected TV in last years model at the same price is beyond me . . .