Dollar Devaluation

Reverse intergenerational Appeal to Authority. Neat.

The single best way to value a dollar is by measuring the effort it takes to get one, now, at this moment. Not when dollars were measured in gold, not when George Washington threw one across the Potomac, not when they were all Spanish and featured the image of an inbred Bourbon king on one side.

 

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I don't think the economic measures are reliable anymore, so your opinion that it is mostly guesswork is right on the mark. Every measure is flawed these days, maybe by intent. I basically look at what everything I use cost ten years ago compared to today and make an estimate from that. Based on this method, my personal estimate is that the inflation/dollar devaluation rate has been no less than 5% annually.

The wildcard is that the Fed and Treasury have been pumping new money into the economy at a far higher rate than this. The only reason it hasn't been inflationary is that much of the increase has been offset by declining asset prices and a lower spending multiplier. Whether this eventually turns into hyperinflation or severe deflation depends on policy decisions that haven't been made yet.

 

I somehow feel gasoline prices cause a lot of our inflation. I look at the price of basic food when gas was 1.60 and try and compare it with today's price of 2.90. However it's calculated, Japan seems to have the right idea. Harness the free electricity from wave driven dynamos. Build with electric robotics and drive electric powered cars. Then the population can afford to buy gold and silver instead of putting all that money into energy related costs. IMHO

 

Good point. Now all we have to do is figure out how to normalize the effort of:

mopping floors for ten minutes

working on a computer for one or two minutes

sitting at a big mahogany desk for a few seconds

waiting for one of the above workers to walk out the back door, and sticking a gun in his/her face

 

Or guess which team will win and by how many points.

 

Higher gas prices are an effect, not a cause.

 

That doesn't tell you anything about whether the value is changing or the rate of change. In a stable world you would be correct.

 

Prices have not been stable since somebody in Lydia first stamped a value on a piece of metal.

Prices will never be stable until everybody can have as much of everything as he wants, i. e., never.

 

I don't want the world. I just want your half.

 

How much inflation would there be if energy was free ? I understand that Japan is experiencing a problem with deflation. I wonder how much of this is caused by their wave powered dynamos ? Of course, since they are harnessing the ocean to produce energy, the number of electric vehicles and robotics there has soared.

I think that fuel costs and inflation are hand in hand, however, it can be considered a "chicken or egg" argument I guess. But since OPEC established price controls, costs of basic food items has risen greatly. IMHO

 

Energy prices are going to continue to rise, as more people in the world can aspire to owning cars (or at least mopeds) and having electricity, not to mention running water.

The problem is that the decades of cheap energy retarded research and development of non-fossil fuels and other sources (as, of course, has the titanic global fossil fuel industry). So more people want fossil fuels, and as there aren't fully developed alternative sources, fuel prices rise.

Eventually, it should be possible to provide everybody access to energy that comes from clean and renewable sources, but vested interests are going to make that much harder and more expensive than it should be.

 

It's complex. There are two components to rising energy prices. One is the fact that demand is increasing faster than supply, which is just the normal response in a free market economy and not inflation. The other is the fact that the money itself is losing value because the change in supply of money exceeds the change in demand for money. You have to compare the deltas to determine whether or not there is inflation. As Milton Friedman pointed out, "inflation is always and everywhere a monetary phenomenon." The premise of free energy is absurd, but if it was free, it would have no impact on inflation because the changes in the money supply would just transfer its impact to all other goods and services. Once you understand that inflation is not caused by rising prices, but that rising prices are sometimes part of the normal supply/demand equasion, and sometimes the visible effect of inflation, you will begin to understand. I hope that helps clarify it.

 

Not having to pay for their own army/navy/national defense probably helps a bit too.

 

I'd have to agree with that because you have to. The actual physical currency being used hasn't changed. Some wording has changed and the illustrations have changed a bit but a $20 bill in 1950 could have been saved in 1950 and spent on a dinner today. Even though people brought home much less in pay back then and it would have gone further back then, the fact that it could be saved and spent at face today is the problem. It doesn't really matter that somebody in their 20s gets paid more today than somebody in their 20s was making in the 1950s, if what they're attempting to save for retirement will be worthless in the future.
I believe saving anything but the bare minimum in cash form is a losing game that is only getting worse.

 

Economists always get inflation right after it occurs.

 

Without a doubt ! But I fear their jump ahead on renewable energy is going to have us playing catch-up. Even China has funded stem cell research. The more we wait, the fewer patents our companies will have, IMHO

gary

 

LOL and they never can spot a recession until the unemployment lines are greater than the states can handle. Go figure ?

 

Economists are like weathermen, you don't have to be right and you still keep your job....

 

Or Doctors.

 

At least with doctors they "can" face a malpractice lawsuit.....