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<p>[QUOTE=&quot;Cloudsweeper99, post: 1160200, member: 3011&quot;]One thing to keep in mind is that prices are NEVER stable in a free market.&nbsp; This goes for the price of gold, oil, food, and even the dollar.&nbsp; So you will never get to a proper understanding of the inflation rate [or devaluation of the dollar, whichever term you prefer] by watching the price of gold or by watching the DXY.&nbsp; Both can be clues to what is happening, but are not accurate measures the way a thermometer measures the temperature because there are too many moving parts. Inflation is an increase in the supply of money that exceeds the increase in demand for money.&nbsp; If both sides are not taken into consideration, you won&#039;t get to the correct answer.&nbsp; And it isn&#039;t that easy to measure, which is why alternative measures are popular [and perhaps necessary].&nbsp; Right now, IMO, the supply of money is increasing fairly rapidly, but so is the demand for money [a lot going to recapitalize the financial system].&nbsp; Much of the new money isn&#039;t making its way into the general economy, and prices of things like food and gasoline seem to be rising due to an increase in world demand relative to world supply, and not necessarily because people have more dollars in their wallet to bid up the price.&nbsp; Anyone who was around in the 70s will intuitively know the difference.&nbsp; Back then, the increasing supply of money was evident as companies were easily able to increase prices without hurting unit demand, handed out pay raises in the 7-10% range, and folks ran to the store and bid up or supported the higher prices by their spending more dollars.&nbsp; Now, people don&#039;t have more dollars to spend each year, and a case can be made that they have less.&nbsp; So a case can be made that we actually have a combination of deflationary forces in the US economy combined with rapidly increasing demand for things like food and oil out of Asia.&nbsp; You can call this &quot;inflation&quot; if you want, but I would argue that the problem is a little different and more difficult to understand or measure.</p><p><br /></p><p>As usual, everyone is free to accept or reject any or all of the above.&nbsp; I&#039;m just sharing what I know.[/QUOTE]</p><p><br /></p>

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