It cracks me up when some government schmuck says that inflation is lower. What they really mean is that the rate of inflation isn't as high as it was. Trump is no inflation magician as many would believe.
I no longer trust the stats especially since they have jury-rigged the inflation calculations going back decades to avoid having to pay higher inflation-adjusted raises in many social programs.
I think for the basis of measuring inflation, it should start when you get your first job or become a regular consumer. Then you can see what is really going on. The general quoted rate of inflation is meaningless since every consumer actually experiences a different rate of inflation according to what they consume in relation to their income and spending habits.
In some markets for some products, prices do revolve around supply and demand. Therefore they can go down but are seldom reflected in the government's stats.
Even though the dollar is still the currency of choice around the world, it has been deflated by about 98% by the Fed over the last 100 years. Your dollar today would by 2 cents worth of goods in 1920.
Only an academic would believe current price inflation is currently at 1.4% annually, meaning 1.4 cents per dollar at an annual rate. Clearly, they don't live in the real world. No way is food inflation anywhere near that. Let's not forget the inflation formula has been changed in true Argentina-style, so we cannot compare it to the late 70s/early 80s inflation.
When we have $37 Trillion dollars of Debt and a $1 Trillion Interest Payment each year, not to mention the massive amount of dollars floating around the world, how reasonable is it to back each one of those dollars with gold? What happens when gold goes higher or when everyone wants the gold in lieu of the dollars? Unfortunately, the time for gold backing of any kind was destroyed by Nixon who inflated through both war (Vietnam) and butter (Great Society) and whose bluff was called by the French government. Nixon closed the "gold window temporarily" but this was the end of any gold backing and the era of fiat currency began.
PS; There's a typo spellcheck would not catch: "Slamming the breaks . . ." Should be "brakes."
I happened to have lunch one day with a high level employee of the Fed. I asked him a question I have often pondered; why is the Fed target 2% instead of 0% which would seem to make sense to me? His answer was the the Fed wants people to keep buying and they will tend to buy earlier if they think inflation will raise their prices. So 2% is enough to encourage that but not enough to cripple us. i think they have some nerve if that's the real reason.
Interesting. I always assumed prices never go down because companies like the insane profits.
For example, if you remember the fuel surcharges companies, tacked on back in 08 when gas prices went sky high, never actually went away after gas prices went back down.
TVs and computers were more expensive (in past dollars) than now especially with the new features you get. Technology should give a deflationary environment as productivity per person increases. See Jeff Booth “The Price of Tomorrow”.
End inflation=abolish the Fed. End high interest=abolish the Fed. End most up and down economic periods=abolish the Fed. End crazy government spending and borrowing=abolish the Fed. Re-invigorate the middle class=abolish the Fed.
Depends on what you mean by "abolish the Fed". Do you mean "abolish the Fed along with the fiat money it manages"? Which would be good if painful in the short term.
Or do you mean "abolish the Fed and let the politicians manage the money printer directly"? Which would be even worse than what we have now.
The problem with saying "abolish the Fed" is that while we mean the first, we may end up with the second.
The Fed has not done anything right (for the people and the economy) in its history. They serve the BIS and other central banks, not the country. I would rather take my chances with the US Treasurer, who is answerable to the country.
Love this whole thread—feels like we just walked into the economists’ version of Fight Club, except instead of fists, we're throwing charts, history books, and righteous indignation. Let’s go. 💥📉📚
Crixcyon nailed it out the gate: the rate of inflation slowing doesn’t mean prices are going down. It's like saying, “Don’t worry, the house fire is spreading slower now.” Gee, thanks, I’ll just roast my groceries over it since everything costs double.
And don’t even get me started on those inflation formulas—they’ve been “adjusted” so many times they should qualify for the Witness Protection Program. If CPI were a person, it’d be wearing fake glasses and hiding out in Vegas under the name “Consumerino P. Illusion.”
RedBaron brings up the real elephant: fiat fantasyland. Forty-something trillion in debt and a trillion a year just to service the interest? We’re not running a country, we’re financing a Ponzi scheme with WiFi.
And yeah, I’m with PH—companies are addicted to profit like it’s crack. Prices only go one way: up. Gas surcharges, shrinkflation, subscriptions to your own car’s heated seats—I mean, come on. If they could bill us for oxygen, they would.
Also, Tom Curtis is on fire—if banks are “insolvent” yet still building new branches, then I guess I’ll just open a lemonade stand with negative cash flow and call it macroeconomic growth. 🍋📉
But here’s the real kicker: the Fed’s 2% target isn’t just a number, it’s a behavioral control mechanism. "Buy now before your money melts!" It’s the economic version of a limited-time sale at a store that never closes. A psychological cattle prod.
It’s not just unsustainable—it’s insulting.
The truth? The dollar isn’t dying—it’s being murdered in slow motion by a thousand cuts, and the ones holding the knife are giving press conferences about "price stability."
Anyway, keep your ledgers sharp and your gold shiny, folks. This circus ain’t over yet. 🧮💰🎪
Where did the Fed actually get their initial funding? Certainly those from Jeckyl Island all poured in cash to get the Fed started?
Everything that's going on is a distraction away from the Fed. Wars, entertainment, social media (especially arguing), riots, etc. ALL just to keep us from looking behind the curtain.
$37 trillion in debt and what do we have to show for it? How much of our infrastructure is out of date and crumbing? Is our electrical grid able to withstand an EMP? Where'd all that "money" go?
Until we can force a divorce of congress from the Fed...we're DOOMED!!!
I searched recently to find out what the reserve % is for banks these days. 0%!!!!! Might not be accurate, but even 1%? 2%? NUTS!!!!
I know of at least four banks under construction in my area right now!!! Banks are the only business I know that build new locations when they are completely insolvent.
The nuttiest part is when they loan us money and demand that we pay interest on money that doesn't exist.
There is also a third solution which has been intentionally ignored throughout the hundreds of decades this great Ponzi pyramid scheme/grift/slavery System of Systems has been in existence.
One that can actually stop this in its tracks from ever happening again, once it's is taken down. Which WILL happen.
It's unsustainability will not allow it to continue without force, PLUS, the adults are back in charge.
The third solution is to educate the children, in fundamental ways early on, and then progress that education to its fullest comprehension by time these young uns graduate High School. From there they choose their own career path, whatever that might be, with full knowledge and open eyes of how real money in the real world should actually work, exactly.
Back in the day, after my graduation, I was asking:
What's the difference between all these "assets"?
What's the difference between all these "liabilities"?
When is a credit a debit and a debit a credit and why?
What??
How many columns do ya really need to keep a ledger?
What the hell is a ledger?
Compound interest? What the feck is that?
HOW does one "balance one's cheque book" when one never knows what [they're] taking out of it, ever?
Debt ceiling?
Good gravy, never knew I was THIS dumb at math!
I hereby do declare that I like words better.
(Let me introduce you to through, threw, there, their, they're, adjectives, descriptive adjectives, superlative adjectives, indefinite adjectives, adverbs, adverbs of time, adverbs of place, adverbs of frequency, nouns, proper nouns, common nouns, concrete nouns, verbs, translative verbs, static verbs, linking verbs... run on sentences 🤭😎😂)
Oh for crying in the sink!!
Anyhoo, back to money, math and economics, That was back when calculators were NOT allowed in class.
Then they became not only mandatory, they had to be scientific even.
But ya still had to know what number to put in, and when, and where.
Guess [they] allowed a small bit of critical thinking to still exist.
[They] intentionally made this one of THE most obfuscated, confusing subjects ever.
Glad we have people like you Peter, to spell it out for those of us who were never good at "math."
It cracks me up when some government schmuck says that inflation is lower. What they really mean is that the rate of inflation isn't as high as it was. Trump is no inflation magician as many would believe.
I no longer trust the stats especially since they have jury-rigged the inflation calculations going back decades to avoid having to pay higher inflation-adjusted raises in many social programs.
I think for the basis of measuring inflation, it should start when you get your first job or become a regular consumer. Then you can see what is really going on. The general quoted rate of inflation is meaningless since every consumer actually experiences a different rate of inflation according to what they consume in relation to their income and spending habits.
In some markets for some products, prices do revolve around supply and demand. Therefore they can go down but are seldom reflected in the government's stats.
Even though the dollar is still the currency of choice around the world, it has been deflated by about 98% by the Fed over the last 100 years. Your dollar today would by 2 cents worth of goods in 1920.
Yes. I have even heard people who know better say prices are falling when they mean the rate of increase is slowing.
Only an academic would believe current price inflation is currently at 1.4% annually, meaning 1.4 cents per dollar at an annual rate. Clearly, they don't live in the real world. No way is food inflation anywhere near that. Let's not forget the inflation formula has been changed in true Argentina-style, so we cannot compare it to the late 70s/early 80s inflation.
When we have $37 Trillion dollars of Debt and a $1 Trillion Interest Payment each year, not to mention the massive amount of dollars floating around the world, how reasonable is it to back each one of those dollars with gold? What happens when gold goes higher or when everyone wants the gold in lieu of the dollars? Unfortunately, the time for gold backing of any kind was destroyed by Nixon who inflated through both war (Vietnam) and butter (Great Society) and whose bluff was called by the French government. Nixon closed the "gold window temporarily" but this was the end of any gold backing and the era of fiat currency began.
PS; There's a typo spellcheck would not catch: "Slamming the breaks . . ." Should be "brakes."
Go back to the actual creation of the Fed..
I happened to have lunch one day with a high level employee of the Fed. I asked him a question I have often pondered; why is the Fed target 2% instead of 0% which would seem to make sense to me? His answer was the the Fed wants people to keep buying and they will tend to buy earlier if they think inflation will raise their prices. So 2% is enough to encourage that but not enough to cripple us. i think they have some nerve if that's the real reason.
It's disgusting.
Interesting. I always assumed prices never go down because companies like the insane profits.
For example, if you remember the fuel surcharges companies, tacked on back in 08 when gas prices went sky high, never actually went away after gas prices went back down.
TVs and computers were more expensive (in past dollars) than now especially with the new features you get. Technology should give a deflationary environment as productivity per person increases. See Jeff Booth “The Price of Tomorrow”.
End inflation=abolish the Fed. End high interest=abolish the Fed. End most up and down economic periods=abolish the Fed. End crazy government spending and borrowing=abolish the Fed. Re-invigorate the middle class=abolish the Fed.
Get the message?
Depends on what you mean by "abolish the Fed". Do you mean "abolish the Fed along with the fiat money it manages"? Which would be good if painful in the short term.
Or do you mean "abolish the Fed and let the politicians manage the money printer directly"? Which would be even worse than what we have now.
The problem with saying "abolish the Fed" is that while we mean the first, we may end up with the second.
The Fed has not done anything right (for the people and the economy) in its history. They serve the BIS and other central banks, not the country. I would rather take my chances with the US Treasurer, who is answerable to the country.
> The Fed has not done anything right (for the people and the economy) in its history.
Yes, it has. One need only compare the status of the US dollar to many other currencies to see that.
With Trumps AI surveillance system being initiated, I wonder if we should keep the Fed.
If we dump the Fed, where would the free money come from, the political class would create another way to print money.
Love this whole thread—feels like we just walked into the economists’ version of Fight Club, except instead of fists, we're throwing charts, history books, and righteous indignation. Let’s go. 💥📉📚
Crixcyon nailed it out the gate: the rate of inflation slowing doesn’t mean prices are going down. It's like saying, “Don’t worry, the house fire is spreading slower now.” Gee, thanks, I’ll just roast my groceries over it since everything costs double.
And don’t even get me started on those inflation formulas—they’ve been “adjusted” so many times they should qualify for the Witness Protection Program. If CPI were a person, it’d be wearing fake glasses and hiding out in Vegas under the name “Consumerino P. Illusion.”
RedBaron brings up the real elephant: fiat fantasyland. Forty-something trillion in debt and a trillion a year just to service the interest? We’re not running a country, we’re financing a Ponzi scheme with WiFi.
And yeah, I’m with PH—companies are addicted to profit like it’s crack. Prices only go one way: up. Gas surcharges, shrinkflation, subscriptions to your own car’s heated seats—I mean, come on. If they could bill us for oxygen, they would.
Also, Tom Curtis is on fire—if banks are “insolvent” yet still building new branches, then I guess I’ll just open a lemonade stand with negative cash flow and call it macroeconomic growth. 🍋📉
But here’s the real kicker: the Fed’s 2% target isn’t just a number, it’s a behavioral control mechanism. "Buy now before your money melts!" It’s the economic version of a limited-time sale at a store that never closes. A psychological cattle prod.
It’s not just unsustainable—it’s insulting.
The truth? The dollar isn’t dying—it’s being murdered in slow motion by a thousand cuts, and the ones holding the knife are giving press conferences about "price stability."
Anyway, keep your ledgers sharp and your gold shiny, folks. This circus ain’t over yet. 🧮💰🎪
Where did the Fed actually get their initial funding? Certainly those from Jeckyl Island all poured in cash to get the Fed started?
Everything that's going on is a distraction away from the Fed. Wars, entertainment, social media (especially arguing), riots, etc. ALL just to keep us from looking behind the curtain.
$37 trillion in debt and what do we have to show for it? How much of our infrastructure is out of date and crumbing? Is our electrical grid able to withstand an EMP? Where'd all that "money" go?
Until we can force a divorce of congress from the Fed...we're DOOMED!!!
I searched recently to find out what the reserve % is for banks these days. 0%!!!!! Might not be accurate, but even 1%? 2%? NUTS!!!!
I know of at least four banks under construction in my area right now!!! Banks are the only business I know that build new locations when they are completely insolvent.
The nuttiest part is when they loan us money and demand that we pay interest on money that doesn't exist.
Wonderful straight forward article Peter.
There is also a third solution which has been intentionally ignored throughout the hundreds of decades this great Ponzi pyramid scheme/grift/slavery System of Systems has been in existence.
One that can actually stop this in its tracks from ever happening again, once it's is taken down. Which WILL happen.
It's unsustainability will not allow it to continue without force, PLUS, the adults are back in charge.
The third solution is to educate the children, in fundamental ways early on, and then progress that education to its fullest comprehension by time these young uns graduate High School. From there they choose their own career path, whatever that might be, with full knowledge and open eyes of how real money in the real world should actually work, exactly.
Back in the day, after my graduation, I was asking:
What's the difference between all these "assets"?
What's the difference between all these "liabilities"?
When is a credit a debit and a debit a credit and why?
What??
How many columns do ya really need to keep a ledger?
What the hell is a ledger?
Compound interest? What the feck is that?
HOW does one "balance one's cheque book" when one never knows what [they're] taking out of it, ever?
Debt ceiling?
Good gravy, never knew I was THIS dumb at math!
I hereby do declare that I like words better.
(Let me introduce you to through, threw, there, their, they're, adjectives, descriptive adjectives, superlative adjectives, indefinite adjectives, adverbs, adverbs of time, adverbs of place, adverbs of frequency, nouns, proper nouns, common nouns, concrete nouns, verbs, translative verbs, static verbs, linking verbs... run on sentences 🤭😎😂)
Oh for crying in the sink!!
Anyhoo, back to money, math and economics, That was back when calculators were NOT allowed in class.
Then they became not only mandatory, they had to be scientific even.
But ya still had to know what number to put in, and when, and where.
Guess [they] allowed a small bit of critical thinking to still exist.
[They] intentionally made this one of THE most obfuscated, confusing subjects ever.
Glad we have people like you Peter, to spell it out for those of us who were never good at "math."
And Gold +++!
God's money.
*Tips hat
Much Love
end the unconstitutional Fed
Not sure where you got the 1.4% inflation number.
Some things do effectively become cheaper, due to technology improvements. Computing power, for example.
Otherwise, excellent article with a clear and simple explanation of inflation and deflation.