Posted on 05/28/2008 6:45:06 AM PDT by Dick Bachert
Everyone knows the actual rate of inflation is at least ten points higher. Except anyone buying or selling bonds, that is. ;)
Those printing presses have been running non-stop for the last 5 years. Looks like 3.5% annual growth. We're doomed!
Inflation is worsening, and it’s not hard to understand why. M3, the total quantity of dollars, is now growing by 17% per annum. Weimar inflation has arrived in America.
The Fed doesn't control M3.
Do you know off the top of your head how much money changes hands daily in the Treasury bond market? I’m trying to get a handle on the general level of negligence/incompetence of the traders.
*As of December 31, 2006 (1) Primary Dealer activity Source: Federal Reserve Bank of New York Content Categories: > Govt/Agency
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EVERYTHING'S GOING TO HELL!
All jokes aside, what’s up with that? It doesn’t make any sense. Treasury has recently limited the number of - get this - US savings bonds to $5,000 per; by purchasing both electronic and paper versions, and both EE and I Series, I guess one could purchase $20,000 in any one calendar year. The limit prior would have been $15,000.
Doesn’t the government, ah, need money? Further, the inflation-adjusted I Series now pays Zero percent on the fixed-for-the-life-of-the-bond rate on those sold in the next six months. So the rate is currently 4.28 per cent on those bonds anyone buys for the next six months. The ones I bought back in the 90s are now paying over 8 per cent.
That’s better, but I only bought them as a sort of enforced savings plan for *cash*; government bonds aren’t really an “investment” but anyone depending on them for their retirement is gonna be in a world of hurt?
It all depends on the investment strategy.
Actually this is what is happening in Zimbabwe where they have introduced a half-billion dollar bill and the money has a 2 month-expiration date stamped on it.
Don't be so sure. Most of today's high schoolers couldn't even find Germany on a map, let alone describe the Weimar Republic or define hyperinflation.
5year graph US dollar vs Zimbabwe dollar (they lopped several zeros off, that explains the change in the graph).
Currently 1US dollar = 30,000 Zimbabwe dollars
In early 1983, I wrote Senator Sam Nunn of Georgia
to ask about the redeemability of Federal Reserve
Notes. His reply arrived on March 11 and read (in
part) as posted below.
It would APPEAR that either:
1. Sam Nunn ACTUALLY gets it about what happens when man
(or certain men) play God with “money;”
2. Nunn DOESN’T get it — and some staffer sent this out
without actually READING it or running it by the boss (in
which case said staffer now works for the DC Sanitation
Department.
3. None of the above. Because nearly every American is an
economic illiterate, what possible harm could it do to send it?
In which case, you economic illiterates who read this will mutter
“So what?” and flip back to MTV.
In any event, for the edification of you non-economic illiterates
out there, here it is.
“Dear Richard:
Thank you for your letter requesting information on
redeemability of Federal Reserve Notes for lawful
money. I have enclosed information from the
Congressional Research Service that I hope will be of
assistance.”
The enclosure was 4 pages from something called
“The Gold Standard: Its history and record against
inflation. A Study prepared for the use of the
Subcommittee on Monetary and Fiscal Policy of the Joint
Economic Committee, Congress of The United States.” It
was printed September 18, 1981. I was sent only the
England and U.S. portions of the study. What they
revealed was most interesting. From the England study:
(Emphasis added)
“England has had 350 years of experience with
various forms of the gold standard. She first went on
the gold coin standard, de facto, in 1717. This was
done by Sir Isaac Newton, then Master of the Mint (and we all know what a dumb ass HE was). It
was done by pricing gold at the mint more favorably,
relative to silver, than in the marketplace. An Act of
Parliament in 1816 gave formal recognition to this
‘new’ monetary standard that had been operational for a
century in promoting England to a world power.
“Between 1797 and 1821, England temporarily
suspended the gold standard because of the economic
disruptions of the Napoleonic Wars. With no gold
backing to the currency, the supply of money had no
discipline except that imposed by the Board of
Governors of the Bank of England (analogous to our Fed
of today).
The result was that wholesale commodity prices shot up
nearly 50% in 4 years-a momentous inflation.
The ‘Bullion Committee’ was formed by parliament
to investigate. Their findings read in part as follows:
‘The suspension of cash payments has had the
effect of committing into the hands of the Directors of
the Bank of England, to be exercised by their sole
discretion the immediate charge of supplying the
country with that quantity of circulating medium which
exactly proportioned to the wants and occasions of
the Public. In the judgment of the Committee, that is
a trust which it is unreasonable to expect that the
Directors of the Bank of England should ever be able to
discharge. The most detailed knowledge of the actual
trade of the Country, combined with the profound
Science in all principles of Money and circulation,
would not allow any man or set of men to adjust, and
keep always adjusted, the right proportion of
circulating medium in a country to the wants of trade.’
“Gold convertibility of the currency was resumed
in 1821. It is a matter of record that wholesale
prices came back down immediately to the level
preceding the hiatus in the gold standard.
“England was again off the gold standard between
1919 and 1925. When she resumed gold convertibility it
was on a gold bullion standard where she remained until
1931, when she went off the gold standard altogether in
the midst of the Great Depression.”
Under the United States, we find the following:
“The long period of the gold standard in the
United States was not an economic nirvana. The most
severe inflationary period reaching completion under
the gold standard was from 1897 to 1920. But from
trough to peak, the average annual compound rate
was 5.4%—mild by present experience. And most of this
occurred from 1914 to 1920 when the European war and
its aftermath bore so heavily on the domestic economy.
If we look at the period between 1897 and 1914, the
average annual rate of inflation was 2.6% — enviable
from the perspective of today.”
John Williams can fool a few people into parroting his secret proprietary scam, but the rest of us see it for what it is, a cheap number fudge.
OK, it might pass with a few on these threads but it's worthless for anything to do with actual business/money decisions.
Like saying the average inflation since the time of the Roman Empire is 1% --true and meaningless..
The fact is that averages aren't worth a damn if day to day prices swing all over the place --"enviable" my tush!.
This article epitomizes the phrase “Idiots On Parade.”
Anyone who is predicting inflation is telling you that home prices are rising, by extension.
Numskulls...
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