Economics / Inflation
Jul 08, 2014 – 10:48 AM GMT
In the end game, truth is found only at the margins
In Time of the Vulture: How to Survive the Crisis and Prosper in the Process(2007, 2012 3rd edition), I wrote about inflation and its root cause:
In a credit-money system, over time the constant infusion of increasing amounts of credit will inevitably lead to higher and higher rates of inflation. Because common knowledge of this fact is not in the best interests of those benefiting from the system, it is hidden away. And in the US, hiding the real rate of inflation is done the old-fashioned way, by lying about it.
Prior to the 1990s, the cost of a basket of standard goods and services was compiled. This was called the consumer price index, the CPI, and any rate of increase was considered to be the actual rate of inflation. However, in the early 1990s, this began to change.
Perhaps the old method of tracking inflation seemed outdated or quaint, much like the Geneva Accords [which outlawed torture], to Alan Greenspan and Michael Boskin, the chief economist under President Bush Sr., and a newer way of calculating the CPI was needed.
What was needed was a way that would show a slower rate of increase rather than the actual rate, a way that would save the US government money by lowering social security payments and Medicare benefits tied to the CPI, a way that would convey to global investors that all was well in America, that inflation was under control.
Changing the way inflation is calculated
Irrespective of what the newly reconstituted CPI says about inflation, its effects cannot be hidden. Remember Motel 6? A low cost motel chain started in Santa Barbara, California in 1962 whose advertised price was a part of its name, $6.00 per night for accommodations.
I recently checked the prices Motel 6 charges, forty-four years later. The current room rates of Motel 6 at three different locations in Santa Barbara are:
Motel 6 location #1 $6.00 $105.99 an increase of 1,767 %
Motel 6 location #2 $6.00 $82.99 an increase of 1,383 %
Motel 6 location #3 $6.00 $61.99 an increase of 1,033 %
Home prices are also higher as advertised in Morris County New Jersey.
Three bedroom home $15,900.00 $399,900.00 an increase of 2,515 %
Four bedroom home $19,000.00 $624,900.00 an increase of 3,289 %
Marijuana also shows a similar increase in price since the 1960s.
One lid of pot $10.00 $250.00 an increase of 2,500 %
The cost of attending college at the University of Minnesota also rose.
Cost per unit $8.25 $183.00 an increase of 2,218 %
THE DIFFERENCE IN PRICES
BETWEEN THEN AND NOW
IS DUE TO INFLATION
INFLATION IS THE INCREASING COST
OF GOODS AND SERVICES CAUSED
BY THE CONSTANTLY DECLINING
VALUE OF PAPER MONEY OVER TIME
THE MORE MONEY YOU PRINT
THE LESS IT’S WORTH
ECONOMICS – SHILL OR SCIENCE