INFLATION, OR HOW THE WORLD BLEW UP!

By Robert Farmilo

INFLATION, OR HOW 

THE WORLD BLEW UP!
(I hope you like charts and comparisons...this blog-post is jammed full of details...PLUS, extra cool bonus round, at the very end...your own inflation calculator!)

 
 Sweeping up the banknotes from the street after the Hungarian pengő was replaced in 1946.
 (Source:  Wikipedia)

Hello!  It's ME!

 In Ottawa, Ontario, Canada, there is a 

restaurant, Louis' Restaurant & Pizzeria ...

181 McArthur Avenue

Ottawa, ON K1L 6P8, Canada

Louis' Restaurant & Pizzeriamore info‎

...AND I like to go there and look at a copy of a menu they have on the wall.  The menu is from some years ago.  I like to look at the prices of stuff and compare to the prices of today.  It brings a smile to my face.  I look in wonder, and I wonder how did the price of more or less the same thing change so much. What is the magic force that makes the cost of the same (more or less) steak dinner...go up?

What is this MAGIC force?

Don't get me started!  If you want to take a trip with geezers like me, just ask how much a Wagon Wheel candy cost back in 1965.  Oh, it was 5 cents.

AND in 1965 a gallon of gas (American gallon) was .31 cents, oh yeah, Baby!

(Image courtesy of http://thecostofliving.com/index.php?id=110&a=1)

The average house cost $20,556
Equivalent today: $151,847

The average car cost $2,600
Equivalent today: $19,206

The average wage was $4,007
Equivalent today: $29,600

(Courtesy of http://thecostofliving.com/index.php?id=110&a=1)

1900 Milwaukee Steam Car

  

 (photo: Ch. Falkensteiner)

The average house cost $5,092
Equivalent today: $136,873

The average car cost $1,000
Equivalent today: $26,880

The average wage was $432
Equivalent today: $11,612

  
1900
Eastman
Kodak

Price: $1. Equivalent today: $27
Leatherette covered cardboard; 6 exposure film
(2.25 x 2.25"): 15 cents; Detachable finder: 25 cents

Brownie

The following price comparisons 

are for the U.S.of A., for 1962 / 2011

(Courtesy of http://www.buzzfeed.com/melismashable/now-and-then-20-prices-that-will-blow-your-mind)

 

 

http://www.buzzfeed.com/melismashable/now-and-then-20-prices-that-will-blow-your-mind

Here is another chart to look at and study:
  

 Modern And Ancient Gold Price History

Closing Annual Historical Gold Prices For Over 210 Years Since 1792

Year	Close	% change	Year	Close	% change	Year	Close	% change
			1995	$387.00	0.98%	1974	$183.77	72.59%
			1994	$383.25	-2.17%	1973	$106.48	66.79%
			1993	$391.75	17.64%	1972	$63.84	43.14%
			1992	$333.00	-5.71%	1971	$44.60	14.65%
2012	$1,664.00	8.68%	1991	$353.15	-8.56%	1970	$38.90	-5.12%
2011	$1,531.00	7.80%	1990	$386.20	-3.69%	1969	$41.00	-5.75%
2010	$1,420.25	30.60%	1989	$401.00	-2.23%	1968	$43.50	22.54%
2009	$1,087.50	25.04%	1988	$410.15	-15.69%	1967	$35.50	0.28%
2008	$869.75	3.97%	1987	$486.50	24.46%	1966	$35.40	-0.28%
2007	$836.50	31.59%	1986	$390.90	19.54%	1965	$35.50	0.42%
2006	$635.70	23.92%	1985	$327.00	6.17%	1964	$35.35	0.28%
2005	$513.00	17.77%	1984	$308.00	-18.95%	1963	$35.25	-0.28%
2004	$435.60	4.40%	1983	$380.00	-14.99%	1962	$35.35	-0.42%
2003	$417.25	21.74%	1982	$447.00	11.75%	1961	$35.50	-2.74%
2002	$342.75	23.96%	1981	$400.00	-32.76%	1960	$36.50	3.55%
2001	$276.50	1.41%	1980	$594.90	29.61%	1959	$35.25	0.00%
2000	$272.65	-6.06%	1979	$459.00	120.57%	1958	$35.25	0.00%
1999	$290.25	0.54%	1978	$208.10	29.17%	1957	$35.25	0.14%
1998	$288.70	0.57%	1977	$161.10	20.43%	1956	$35.20	0.14%
1997	$287.05	-22.21%	1976	$133.77	-3.96%	1955	$35.15	-0.28%
1996	$369.00	-4.65%	1975	$139.29	-24.20%
1954	$35.25		1940	$34.50		1926	$20.67
1953	$35.50		1939	$35.00		1925	$20.67
1952	$38.70		1938	$35.00		1924	$20.67
1951	$40.00		1937	$35.00		1923	$20.67
1950	$40.25		1936	$35.00		1922	$20.67
1949	$40.50		1935	$35.00		1921	$20.67
1948	$42.00		1934	$35.00		1920	$20.67
1947	$43.00		1933	$32.32		1919	$20.67
1946	$38.25		1932	$20.67		1918	$20.67
1945	$37.25		1931	$20.67		1917	$20.67
1944	$36.25		1930	$20.67		1916	$20.67
1943	$36.50		1929	$20.67		1915	$20.67
1942	$35.50		1928	$20.67		1914	$20.67
1941	$35.50		1927	$20.67		1913	$20.67
1912	$20.67		1897	$20.67		1882	$20.67
1911	$20.67		1896	$20.67		1881	$20.67
1910	$20.67		1895	$20.67		1880	$20.67
1909	$20.67		1894	$20.67		1879	$20.67
1908	$20.67		1893	$20.67		1878	$20.69
1907	$20.67		1892	$20.67		1877	$21.25
1906	$20.67		1891	$20.67		1876	$22.30
1905	$20.67		1890	$20.67		1875	$23.54
1904	$20.67		1889	$20.67		1874	$23.09
1903	$20.67		1888	$20.67		1873	$22.74
1902	$20.67		1887	$20.67		1872	$23.19
1901	$20.67		1886	$20.67		1871	$22.59
1900	$20.67		1885	$20.67		1870	$22.88
1899	$20.67		1884	$20.67		1869	$25.11
1898	$20.67		1883	$20.67		1868	$27.95
1867	$27.86		1852	$20.67		1837	$21.60
1866	$28.26		1851	$20.67		1836	$20.69
1865	$30.22		1850	$20.67		1835	$20.69
1864	$47.02		1849	$20.67		1834	$20.69
1863	$31.23		1848	$20.67		1833	$19.39
1862	$27.35		1847	$20.67		1832	$19.39
1861	$20.67		1846	$20.67		1831	$19.39
1860	$20.67		1845	$20.67		1830	$19.39
1859	$20.67		1844	$20.67		1829	$19.39
1858	$20.67		1843	$20.67		1828	$19.39
1857	$20.71		1842	$20.69		1827	$19.39
1856	$20.67		1841	$20.67		1826	$19.39
1855	$20.67		1840	$20.73		1825	$19.39
1854	$20.67		1839	$20.73		1824	$19.39
1853	$20.67		1838	$20.73		1823	$19.39
1822	$19.39		1807	$19.39		1792	$19.39
1821	$19.39		1806	$19.39	`
1820	$19.39		1805	$19.39
1819	$19.39		1804	$19.39
1818	$19.39		1803	$19.39
1817	$19.39		1802	$19.39
1816	$19.84		1801	$19.39
1815	$22.16		1800	$19.39
1814	$21.79		1799	$19.39
1813	$19.39		1798	$19.39
1812	$19.39		1797	$19.39
1811	$19.39		1796	$19.39
1810	$19.39		1795	$19.39
1809	$19.39		1794	$19.39
1808	$19.39		1793	$19.39

Okay, this next link is insane...and VASTLY entertaining...GREAT animation...and brisk presentation of part of the story behind inflation...and how money works...definitely part of the SECRET OF MONEY...

 Click here for THE AMERICAN DREAM!  

ME, AGAIN:

I remember going to my local 

movie theatre (The Mayfair)...

Mayfair Theatremore info‎

1074 Bank Street Ottawa, ON K1S 3X3, Canada (613) 730-6552 mayfairtheatre.ca‎ 21  21 reviews

Street vie

...when I was a kid, back in 1965.  The Saturday Matinee, two movies, cartoons, the all-important Coming Soon, and at the very beginning of the show, two short little films, back-to-back:  the National Anthem, and God Save The Queen.  And if you didn't stand for those two short films, well, you were really, really a tough guy and very, very BAD!

 Cost for this extravagance was 15 cents.

Okay, I went away to another country for 2 years.  My family and I moved to Deepest Darkest Africa.  And when I came back, I went to the same local theatre, for the Saturday Matinee.

 I was kind of excited to be back.  And the lady at the cash recognized me and commented on not having seen me around for awhile.  And I handed her my 15 cents.  And she told me the price was now 25 cents, and that I didn't have enough money to get in, and to give her 10 more cents.  And I was shocked.

 SHOCKED!

 I couldn't believe it!

.25 cents!

How, what, who, huh?

But it was true, and she was very nice about it, too.  She let me in, and told me to make sure that next time I had enough money to pay the entire price for the ticket.  I must have looked like my whole life had ended.  Anyway, she let me in for 15 cents.

Gee! Gosh! Golly!

 
I don't remember what films were playing that day, but I sure do remember THE SHOCK of coming face-to-face with INFLATION!

 This one event made the concept real for me, and kept it real for the rest of my LIFE!

How about you?

 You must have had ONE epic experience of INFLATION ENLIGHTENMENT.

What was it?

Please write me and let me know what it was, okay?

I'd love it if you would. 

Fact #364: March 21, 2005
Historical Gas Prices, 1919–2004

On average, the price of gasoline was higher in 2004 than it has ever been before; however, when adjusted for inflation (constant dollars), gasoline cost more in 1981 than it does today.

Average Annual Gasoline Pump Price, 1919–2004

Source: Energy Information Administration

Supporting Information:

Average Annual Retail Price of Gasoline, 1929 - 2011

Year	Gasoline Price (Current dollars/gallon)	Gasoline Price (Constant 2011 dollars/gallon)
1929	0.21	2.29
1930	0.20	2.21
1931	0.17	2.10
1932	0.18	2.51
1933	0.18	2.56
1934	0.19	2.57
1935	0.19	2.52
1936	0.19	2.57
1937	0.20	2.53
1938	0.20	2.55
1939	0.19	2.47
1940	0.18	2.40
1941	0.19	2.35
1942	0.20	2.31
1943	0.21	2.20
1944	0.21	2.16
1945	0.21	2.09
1946	0.21	1.90
1947	0.23	1.90
1948	0.26	2.02
1949	0.27	2.09
1950	0.27	2.07
1951	0.27	1.93
1952	0.27	1.93
1953	0.27	1.92
1954	0.29	1.99
1955	0.29	1.98
1956	0.29	1.92
1957	0.30	1.91
1958	0.31	1.94
1959	0.30	1.88
1960	0.31	1.86
1961	0.31	1.87
1962	0.31	1.83
1963	0.31	1.80
1964	0.30	1.76
1965	0.30	1.73
1966	0.31	1.73
1967	0.32	1.72
1968	0.33	1.71
1969	0.34	1.65
1970	0.35	1.62
1971	0.36	1.58
1972	0.36	1.55
1973	0.36	1.45
1974	0.39	1.43
1975	0.53	1.80
1976	0.57	1.81
1977	0.59	1.77
1978	0.62	1.74
1979	0.63	1.62
1980	0.86	2.03
1981	1.19	2.58
1982	1.31	2.68
1983	1.22	2.40
1984	1.16	2.19
1985	1.13	2.08
1986	1.12	2.01
1987	0.86	1.50
1988	0.90	1.52
1989	0.90	1.46
1990	1.00	1.57
1991	1.14	1.73
1992	1.13	1.67
1993	1.11	1.60
1994	1.11	1.58
1995	1.15	1.59
1996	1.23	1.68
1997	1.23	1.65
1998	1.06	1.40
1999	1.17	1.52
2000	1.51	1.93
2001	1.46	1.83
2002	1.36	1.67
2003	1.59	1.92
2004	1.88	2.20
2005	2.30	2.60
2006	2.59	2.84
2007	2.80	2.99
2008	3.27	3.41
2009	2.35	2.43
2010	2.79	2.85
2011	3.53	3.53
Notes: Retail price includes Federal and State Taxes. Price is for Regular Leaded Gasoline until 1990 and for Regular Unleaded Gasoline thereafter. Constant dollars calculated using the Gross Domestic Product Inflation Index. Source: Energy Information Administration, Annual Energy Review, Table 5.4 and Monthly Energy Review, Table 9.4.

The Bizarre & Strange:

 Currency Inflation

Germany, 1923: banknotes had lost so much value that they were used as wallpaper.

In countries experiencing hyperinflation, the central bank often prints money in larger and larger denominations as the smaller denomination notes become worthless. This can result in the production of some interesting banknotes, including those denominated in amounts of 1,000,000,000 or more.

• By late 1923, the Weimar Republic of Germany was issuing two-trillion Mark banknotes and postage stamps with a face value of fifty billion Mark. The highest value banknote issued by the Weimar government's Reichsbank had a face value of 100 trillion Mark (100,000,000,000,000; 100 million million).^[12][13] At the height of the inflation, one US dollar was worth 4 trillion German marks. One of the firms printing these notes submitted an invoice for the work to the Reichsbank for 32,776,899,763,734,490,417.05 (3.28 × 10¹⁹, or 33 quintillion) Marks.^[14]
• The largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for the amount of 100 quintillion pengő (100,000,000,000,000,000,000, or 10²⁰; 100 million million million) image. (There was even a banknote worth 10 times more, i.e. 10²¹ (1 sextillion) pengő, printed, but not issued image.) The banknotes however did not depict the numbers, "hundred million b.-pengő" ("hundred million trillion pengő") and "one milliard b.-pengő" were spelled out instead. This makes the 100,000,000,000,000 Zimbabwean dollar banknotes the note with the greatest number of zeros shown.
• The Post-World War II hyperinflation of Hungary held the record for the most extreme monthly inflation rate ever — 41,900,000,000,000,000% (4.19 × 10¹⁶% or 41.9 quadrillion percent) for July 1946, amounting to prices doubling every 15.3 hours. By comparison, recent figures (as of 14 November 2008) estimate Zimbabwe's annual inflation rate at 89.7 sextillion (10²¹) percent.,^[15] which corresponds to a monthly rate of 5473%, and a doubling time of about five days. In figures, that is 89,700,000,000,000,000,000,000% (Courtesy:  Wikipedia)

 COMRADE MUGABE'S ENORMOUS EGO 

INFLATES AN ENTIRE CURRENCY

Zimbabwe

Main article: Hyperinflation in Zimbabwe

The 100 trillion Zimbabwean dollar banknote (10¹⁴ dollars), equal to 10²⁷ (1 octillion) pre-2006 dollars

Hyperinflation in Zimbabwe was one of the few instances that resulted in the abandonment of the local currency. At independence in 1980, the Zimbabwe dollar (ZWD) was worth about USD 1.25. Afterwards, however, rampant inflation and the collapse of the economy severely devalued the currency. Inflation was steady before Robert Mugabe in 1998 began a program of land reforms that primarily focused on taking land from white farmers and redistributing those properties and assets to black farmers, which disrupted food production and caused revenues from export of food to plummet.^[53][54][55] The result was that to pay its expenditures Mugabe’s government and Gideon Gono’s Reserve Bank printed more and more notes with higher face values.

Hyperinflation began early in the 21st-century, reaching 624% in 2004. It fell back to low triple digits before surging to a new high of 1,730% in 2006. The Reserve Bank of Zimbabwe revalued on 1 August 2006 at a ratio of 1 000 ZWD to each second dollar (ZWN), but year-to-year inflation rose by June 2007 to 11,000% (versus an earlier estimate of 9,000%). Larger denominations were progressively issued:

1. 5 May: banknotes or "bearer cheques" for the value of ZWN 100 million and ZWN 250 million.^[56]
2. 15 May: new bearer cheques with a value of ZWN 500 million (then equivalent to about USD 2.50).^[57]
3. 20 May: a new series of notes (“agro cheques”) in denominations of $5 billion, $25 billion and $50 billion.
4. 21 July: “agro cheque” for $100 billion.^[58]

Inflation by 16 July officially surged to 2,200,000%^[59] with some analysts estimating figures surpassing 9,000,000 percent.^[60] As of 22 July 2008 the value of the ZWN fell to approximately 688 billion per 1 USD, or 688 trillion pre-August 2006 Zimbabwean dollars.^[61]

Date of redenomination	Currency code	Value
1 August 2006	ZWN	1 000 ZWD
1 August 2008	ZWR	1010 ZWN = 1013 ZWD
2 February 2009	ZWL	1012 ZWR = 1022 ZWN = 1025 ZWD

On 1 August 2008, the Zimbabwe dollar was redenominated at the ratio of 10¹⁰ ZWN to each third dollar (ZWR).^[62] On 19 August 2008, official figures announced for June estimated the inflation over 11,250,000%.^[63] Zimbabwe's annual inflation was 231,000,000% in July^[64] (prices doubling every 17.3 days). For periods after July 2008, no official inflation statistics were released. Prof. Steve H. Hanke overcame the problem by estimating inflation rates after July 2008 and publishing the Hanke Hyperinflation Index for Zimbabwe.^[65] Prof. Hanke’s HHIZ measure indicated that the inflation peaked at an annual rate of 89.7 sextillion percent (89,700,000,000,000,000,000,000%) in mid-November 2008. The peak monthly rate was 79.6 billion percent, which is equivalent to a 98% daily rate, or around 7× 10¹⁰⁸ percent yearly rate. At that rate, prices were doubling every 24.7 hours. Note that many of these figures should be considered mostly theoretic, since the hyperinflation did not proceed at that rate a whole year.^[66]

At its November 2008 peak, Zimbabwe's rate of inflation approached, but failed to surpass, Hungary's July 1946 world record.^[66] On 2 February 2009, the dollar was redenominated for the fourth time at the ratio of 10¹² ZWR to 1 ZWL, only three weeks after the $100 trillion banknote was issued on 16 January,^[67][68] but hyperinflation waned by then as official inflation rates in USD were announced and foreign transactions were legalised,^[66] and on 12 April the dollar was abandoned in favour of using only foreign currencies. The overall impact of hyperinflation was 1 ZWL = 10²⁵ ZWD.

Start and End Date: Mar. 2007- Mid-Nov. 2008

Peak Month and Rate of Inflation:Mid-Nov. 2008, 7.96 billion percent^[69]

^{(Courtesy:  Wikipediea)}

U.S. Inflation Rate Forecast

Year Over Year Change in Consumer Price Index Percent

Month	Date	Forecast Value	50% Correct +/-	80% Correct +/-
0	Feb 2013	1.98	0.0	0.0
1	Mar 2013	1.6	0.2	0.4
2	Apr 2013	1.6	0.3	0.6
3	May 2013	2.0	0.3	0.8
4	Jun 2013	2.4	0.4	0.9
5	Jul 2013	2.7	0.4	1.0
6	Aug 2013	2.4	0.5	1.1

Updated Sunday, March 24, 2013 (Courtesy:  http://www.forecasts.org/inflation.htm)

The following is snippets of a blog 

by Dr. Don Boys.  Full credits follow the excerpts.

 Nobel Prize winning economist Robert Mundell declared, “We’ve never been in this unstable position in the entire currency history of 3,000 years.” And make no mistake; this disaster will not be confined to the U.S. but will be worldwide. Fearful of getting caught with U.S. dollars when the music stops, China and other nations are buying gold. Why add almost worthless U.S. dollars to the astounding hoard of dollars they already possess? They know that our dollar is flopping on the deck like a dying fish.

With so many citizens out of work who cannot pay taxes, the government will receive less and less money while expenditures grow more and more. Without money to pay the interest on our national debt, the only way out is to print more money resulting in hyperinflation. That is reminiscent of Zimbabwe where in recent years three eggs cost one hundred billion dollars and hamburgers cost fifteen million dollars. Almost everyone in Zimbabwe is a millionaire. They are starving to death but they are millionaires. Watch out America. Here we come.

Without money, the U.S. Government will have to default on payments to seniors, vets, disabled, etc. No more checks from the Feds! When the old folks, disabled, and veterans storm the Capital in desperation, that will be the government’s justification for the military to keep order contrary to the law. The military will be ordered to keep the peace (in direct opposition to the Posse Comitatus Act of 1878 that prohibits the use of U.S. military forces to perform the tasks of civilian law enforcement). Authorities will say, “but disaster is ahead, so it’s necessary just this time.”

Copyright 2012, Don Boys, Ph.D.

(Dr. Don Boys is a former member of the Indiana House of Representatives, author of 14 books, frequent guest on television and radio talk shows, and wrote columns for USA Today for 8 years. Three years ago, the second edition of ISLAM: America's Trojan Horse! was published, and his new eBook, The God Haters is available for $9.99 from www.thegodhaters.com. These columns go to newspapers, magazines, television, and radio stations. His other web sites are www.cstnews.com and www.Muslimfact.com. Contact Don for an interview or talk show.) (Courtesy of:  http://www.freerepublic.com/focus/f-religion/2898744/posts)

HELLO...ME, AGAIN:

 Of course, the American government is printing money.  Please read my blog post about fiat currency.  The "quantitative easement" will continue until, well, forever.  And with this printing of currency will come the INSANE inflation that will produce active hallucinations in everyone.  Money is a drug.  First and foremost, let's keep this in mind.  Money is an upper and a downer.  It is...a feel-good drug, the more you have, the better you feel.  And it is the ultimate bottom, too.  IF you wake up without any money, and no real prospect to have any money, well, you have hit bottom.

Most of us are addicted to money.  We need it to feel...good.  The idea of money is enough to change your physiology:  Raise your heart-beat, increase your blood pressure, and so on.

Thing is that in recent times, wages have NOT kept up with inflation.  This means that it costs more to buy stuff, and you have less money to buy the stuff that now costs more. 

And you also have to pay more taxes with money that is worth less, and with less money. 

Fun! 

So, what are my realistic predictions? 

First, a story about how you can make more money by fooling people with a dark-side, black-hat TRICK. 

This is a total scam! 

And it might be used on you.

So, heads up! 

Here is how it works. 

I am a stock broker.

I want more business. 

So I send out the following prediction to 10 thousand people: 

X Stock will go up this week! 

And to another, separate group of 10 thousand people, I send out this prediction: 

X Stock will go down this week! 

And you know, X Stock is going to go up...or down. 

So I am going to look pretty good to 10 thousand people. 

And I don't care about the other 10 thousand people. 

Okay, now I send out another prophecy. 

Stock Z is going up this week! 

Ooops, hmmmm, Stock Z is going to go down this week! 

Now, pay attention! 

I split the 10 thousand people I gave the "correct" prediction into 2 separate groups of 5 thousand each. 

I send Stock Z going up to group one, 

and 

Stock Z is going down, I send that to group two. 

Once more I am "correct" to one of the groups! 

I keep doing this splitting of the groups.  Next time it is 2500 people get a "correct" prediction.

And then it is 1250. 

Then it is 625. 

After that, it is 312.5 people. 

Keep on sending out "correct" predictions, this time to 156.25 people. 

So this is, what, 7 times I've been 100% "correct." 

Looking pretty good here! 

Along the way, I keep pointing out that I was "correct." 

Just can't look any better, unless I was telling the truth, and it was for-real, honest, come-true predictions. 

What's the point? 

How does this move in to inflation? 

Well, here's the thing. 

You and I have been lied to about inflation by those with vested interests. 

They have been using flat-out deceptions to take away the truth and give us a false belief system. 

Like the fake stock predictions. 

Very much like the fraudulent stock-broker who is lying to get new business.

WHAT HAPPENS WHEN INFLATION COMES TO TOWN?

Is Detroit the Future of America?

So, what can you do about any of this?

Well, I recommend you get this book and read it cover-to-cover!

Headline Reads:  "GOD WRITES NEW BOOK!"
Click here>>>GET YOUR FREE COPY, NOW!<<<

MMMMM...I DO LOVE FOOD!

Here is a sample menu from 1963...I love food, and I love eating in good restaurants...no surprise I want you to see something as KINETIC and EXCITING as this menu from 1963...and with it...my question is raging...how, why, where, when...what is...the magic force that drives prices up?
 






  

Here is Warren Buffet...talking 

about what-the-bleep you can do!                

Those of you who have read some of my previous blogs ABOUT HOW MONEY WORKS will recognize the very complex term I use:  What-The-Bleep.

This is a very technical term, and it is ONLY used by highly sophisticated analysts like myself.  It is VERY deep.  And I hope as we go forward together, in the gullness, I mean, fullness of time, you will come to understand this VERY advanced term.  And that you will really be able to grasp the full meaning and implications of What-The-Bleep, and what-the-bleep it means...to you, and your loved ones.

Here are some books and resources that might help you:

And there is a lot more, too!  I want you to have some advice and insight about all of this stuff.  So I am going to be writing more blogs about what is REALLY going on, and what you can about it BEFORE you are swept away by the storm!

Here is another great article to read.  Make sure you come right back, 'cuz I will be waiting here for you!

ttp://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=1&_r=1&smid=fb-shareSundown in Americawww.nytimes.comEight decades of bipartisan Keynesian spending and Federal Reserve money-printing have left us exhausted and bankrupt.

So, did you come 

back for some more?

I hope so!

CHECK OUT THE INFORMATION THAT FOLLOWS...IT REALLY IS IMPORTANT:

Worst hyperinflations in world history

Highest monthly inflation rates in history[74]
Country	Currency name	Month with highest inflation rate	Highest monthly inflation rate	Equivalent daily inflation rate	Time required for prices to double
Hungary	Hungarian pengő	July 1946	4.19 × 1016 %	207.19%	15 hours
Zimbabwe	Zimbabwe dollar	November 2008	7.96 × 1010 %	98.01%	24.7 hours
Yugoslavia	Yugoslav dinar	January 1994	3.13 × 108 %	64.63%	1.4 days
Republika Srpska	Republika Srpska dinar	January 1994	2.97 × 108 %	64.3%	1.4 days
Germany	German Papiermark	October 1923	29,500%	20.87%	3.7 days
Greece	Greek drachma	October 1944	13,800%	17.84%	4.3 days

HANG ON TO YOUR NOW FASHIONABLE HATS...YOU NEED TO READ THIS NOT-TOO-LONG ARTICLE BECAUSE IT WILL MAKE YOU SMARTER ABOUT INFLATION!

Click here>>>Forbes Article by John T. Harvey<<< 

 

John T. Harvey, Contributor

I want to explain how things work, not what you should believe.

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5/30/2011 @ 3:48PM |80,697 views

What Actually Causes Inflation (and who gains from it)

I made a post two weeks ago in which I explained that the popular view of inflation (wherein it is caused by money growth) depends critically on assumptions that do not hold in the real world. Money comes into existence when someone adds it to her portfolio of assets. This occurs either when she borrows money (which creates new cash from reserves) or sells securities to the Federal Reserve (which injects new cash into the system). Neither of these scenarios allows the central bank to increase the supply of money beyond demand, the story told by those in the money growth ==> inflation camp. Instead, inflation happens first. This then means that agents need more cash for transactions, leading them to borrow more or sell government securities to the Fed. Thus, the money growth accompanies inflation, but it does not cause it. The original post can be found here:

Money Growth Does Not Cause Inflation!
What I did not answer there (except for a brief example) was what economic processes were actually responsible for the initial rise in the price level. I’ll fill that void here.
Inflation Defined
Inflation is simply a rise in the average price of goods and services in the macroeconomy. Which particular goods and services depends on the measure we are examining. Consumer price inflation is the one usually in the news, and it takes a weighted average of various items purchased by the typical household (the list being determined by survey and then updated periodically). The average can rise while some prices have actually fallen, and how much it reflects your personal situation is a function of how closely the basket of goods and services in the index matches your buying patterns. But, the bottom line is that we say that inflation has occurred when the average price of those goods and services has increased.


This does not happen by magic. It takes someone, somewhere making a conscious choice to charge more for the good or service they sell. The initial increase does not have to be in something that is being directly measured by the consumer price index. No household in my neighborhood, for example, buys barrels of oil; and yet when they become more expensive that sends a ripple throughout all related products. In the end, consumer prices jump as well.
Of course, that someone, somewhere who raises their price must also be in a position to make it stick. I could march into the Chancellor’s office here at TCU and demand that my salary be doubled, but that probably won’t accomplish a whole lot (other than to give me a chance to update my vita while I am cleaning out my office). Other factors must come into play. Many circumstances can cause inflation. I will focus on four.
Causes of Inflation: Market Power
First, the economic agent could have market power. This means they have the ability to avoid (at least to some extent) competitive pressures. It is the latter that forces firms to please consumers. Adam Smith wrote in 1776 that we cannot trust the undertakers of business to look out for anyone but themselves, and so we must handcuff them. But not with markets, per se, with competition, and the two do not always go hand in hand. The OPEC oil cartel in the 1970s and 1980s is a classic example of market power. Had there been other viable sources of what they sold, they could not have restricted supply and driven up prices as they did because the competition would not have allowed them to do so. We would have just bought oil (or a close substitute) from someone else. Up to late 1973, they lacked the political will to set strict quotas among the various exporters. But, once the motivation was provided by US involvement in the Yom Kippur War, they made a conscious decision to raise prices by cutting supply. And because they were able to avoid competition, it worked! Even though households do not buy barrels of oil, it caused terrible inflation. It drove up the prices of anything that used petroleum or petroleum-based products, it raised the price of gas and, therefore, anything that needed to be transported, and it caused inflation in other energy sources as users shifted to those products. Market power–not money growth–caused this inflation. The money supply only rose as a result of the fact that firms and consumers took out larger loans and sold assets for cash. The Federal Reserve acted as it should have done in these circumstances, accommodating this increased demand.
(Note that having market power does not give carte blanche to raising prices. Even monopolists can only charge so much before consumers stop buying their products. However, they have the incentive and ability to engage in periodic attempts to capture more income for themselves. I won’t go into the specifics of when and how they do so here, but this phenomenon is discussed in detail in Alfred Eichner’s classic study of the microeconomy, Megacorp and Oligopoly: Micro Foundations of Macro Dynamics, Cambridge U Press, 1976. Thought it’s a little dated, the basic lessons still apply.)
The impact of the inflation of the 1970s and 1980s was hardly even, and this is always the case. Remember that when you pay more for something, the person on the other side of the register is also getting more. It depends on individual buying patterns and particularly where you earn your salary. With the OPEC inflation, those in the oil industry, while facing the same rising prices at the gas pump, grocery store, etc., as everyone else, were actually better off than they had been before because their salaries and profits rose at a higher rate. This was especially true of those in the OPEC countries who controlled the oil supplies. The inflation process redistributed income towards them–that was the whole point, wasn’t it? This fact is exceedingly important to understand. Inflation never affects everyone equally. It shifts buying power from one group to another (even though the winners may still complain because they see themselves as hurt by the overall price increases–what they don’t understand is their role in causing the latter!). In fact, it is the very attempt to capture more income that is at the heart of the inflationary process under these circumstances. Money supply growth did not cause prices to rise, OPEC’s attempt to grab a larger income share did. No amount of controlling the money supply was going to eliminate the ultimate impact of rising oil prices: the redistribution of income towards those countries and the oil industry.
As a very quick aside, it’s worth pointing out that just because the market created a particular price, wage, profit rate, or income does not mean that it is somehow objectively “fair.” These numbers only quantify our existing social values. There are, of course, more purely economic forces at work, too. Gold is more valuable than silver because there is less of it. But can we truly justify the wages and incomes earned by African Americans in the 1950s as economically reasonable, simply a function of their productivity? The fact of the matter is that a free-market system in a racist society reflects and reinforces racist values. Markets are people, and the preferences of those people, for good or bad, end up in the prices we see. My point here is that there may be times when we would, as a nation, actually prefer to alter the outcomes created by competitive pressures. Desegregation interfered with the market mechanism and the forces of competition, as did movements aimed at creating safer workplaces. Furthermore, paying African Americans more and reducing the chances of on-the-job injuries caused inflation (because they raised costs) and redistributed income. Was this justifiable or not? Unfortunately, these are not simple questions.

What Actually Causes Inflation (and who gains from it)

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Causes of Inflation: Demand Pull
Another means by which inflation can take place is a rise in demand relative to supply. Say there is an increase in the demand for housing during an economic expansion. Bottlenecks may arise in certain building supplies like lumber. Contractors bid up these prices in an attempt to secure the materials they need; these price increases then ripple through the economy. Firms and consumers again desire a larger money supply to be able to operate, which the Fed presumably accommodates. The producers of lumber and bricks may also experience a rise in their incomes as part of this process–and why shouldn’t they? This is how a market system is supposed to work. Those selling goods and services in highest demand should see their profits and wages rise, even though by definition this will almost certainly cause inflation. This attracts others to sell these same goods and services, while some consumers go in search of substitutes. This is the greatest strength of a market system, it’s flexibility in the face of unanticipated changes.
Causes of Inflation: Asset Market Boom
Third and very relevant today, inflation can be injected from the asset market. The connection between the prices of goods and services and those of financial assets is tenuous. Sometimes there is practically none at all. Witness the 1990s, with a massive increase in stock prices but very little movement in the consumer price index. However, lines of causation can exist, particularly though commodities futures. I have already written about this at length in the context of gas prices:
Why You Are Paying So Much For Gas

15 Signs That Your Job May Be At Risk--And What To Do If It Is Jacquelyn Smith Forbes Staff

Why You Are Paying So Much for Gas

What Actually Causes Inflation, con't.

  John T. Harvey Contributor

The gist of the above is this. When speculative money bids up the price of a commodity future, this creates an incentive for those actually selling the commodity to withhold supply today in favor of the future (when prices will presumably be higher). The rising spot price then convinces the speculator that her bet had been correct, and she increases her position. This may drive futures prices even higher, and so on. Thus, a goods price is driven up by the price of a financial asset. The winners here are 1) those whose portfolios include those assets (of course, they can only realize their gain by selling) and 2)the producers of the commodities in question. Those producers often bear the brunt of the blame for these inflations, but they are not actually the source. As usual with inflation, it leads to a rise in the money supply as agents take out loans and sell government securities. The way to stop this inflation is not via blocking monetary growth, however, but to control the link between the asset market and the commodity price.
Causes of Inflation: Supply Shock
Last is a supply shock. If a storm rages through the Gulf of Mexico, taking out oil derricks and refineries along the way, this may well raise the price of oil and gas. As it should, for this creates incentives to build more derricks and refineries and for consumers to find alternate energy sources. Again, this is what capitalism is supposed to do. In terms of who wins with this sort of inflation, it’s obviously more complex since it depends on whose derricks were destroyed and who gets to build new ones. In any event, this, too, can lead to a rise in the money supply and there is no logical reason for the Fed to block this.
Conclusions
This is not an all inclusive list, but I would think that it covers the vast majority of what we have experienced since the end of WWII (today, we are most threatened by the link between financial markets and commodities). The bottom line is that there are a number of processes that can create inflation, none of which starts with, “the money supply increases.” Someone make a conscious decision to raise a price or wage, and they must be able to make this stick. Because every higher price you pay means someone is getting more income, inflation causes a redistribution of income. Sometimes it does so in a manner that we would endorse and sometimes not. But in any event, it causes a rise in the demand for money that the Fed will almost certainly accommodate–and rightfully so, for refusing to do so almost always serves to punish those already in the weakest position.
I’m afraid this more realistic perspective does not offer a nice, simple rule as in the money growth ==> inflation camp. That said, neither do they since that’s not how the world really works! In reality, monetary policy does not cause inflation, and it is not well placed to stop it. What it does do is very strongly and directly affect interest rates. But prices are determined elsewhere in the system.

 Here is another link for you to explore...this one from an interesting study done by The Federal Reserve Bank of San Francisco:
Click here>>>MORE INFO ON INFLATION,CAUSE/EFFECT<<<

And...as promised, your very own INFLATION CALCULATOR!
Click on the link below to find out how CRAZY the power of inflation really is:

 http://www.davemanuel.com/inflation-calculator.php 

Okay, it is bye-bye for now,  Don't forget to come back, and tell all your friends and loved ones and people you want to impress with being on the inside of things to come.   The next few blogs are going to be about the way life is going to be like in the future, and how you can get ready, and position yourself, your family, and the people you care about.

• >>>click this>>>THE SECRET OF GEORGE SOROS<<<
• >>>click here>>SLAVERY'S BIG COMEBACK<<<
• >>>click now>>>HOW TO MAKE MONEY ONLINE<<<
• SEA LEVEL RISE AND YOUR NEW BEACH FRONT PROPERTY
• WHAT A SEVERE DROUGHT CAN DO TO YOUR APPETITE
• HOW WILL IT BE TO LIVE UNDER MARTIAL LAW
• FORCED LABOUR CAMPS
• THE RETURN OF "THE POORHOUSE"
• CHARLES DICKENS HAS A GOOD LAUGH
• WHY DOOM AND GLOOM IS THE NEW PROFIT CENTER
• >>>click here>>>HOW TO AMASS A FORTUNE BEFORE THE MONEY IS WORTHLESS<<<
• >>>click me>>>FIAT CURRENCY or PAPER MONEY<<<

See you later!

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