Inflation and Our Money Supply

I've had a couple of people email me about inflation and our money supply and asking me how come a guy as ridiculously handsome and charming as me can be such a kook when it comes to the dollar. (Kerri, this means you)

Well, needless to say, the headlines about the declining dollar keep piling up and things are looking to get much worse in 2008. England is looking to surpass us in standard of living for the first time since the 19th Century. Anyway, here is a good explanation of the money system and why inflation isn't just rising prices (which is what most people think it is). It does get a little X-fileish in explaining how the Federal Reserve Bank system was formed but it's the simplest explanation I've found as well.

Grandfather Inflation Report

How much inflation have we seen since the 50's?:


Inflation in my adult years increased average prices 1,000% or more:

example 1: a postage stamp in the 1950s cost 3 cents; today's cost is 41 cents - 1,266% inflation;

example 2: a gallon of 90 Octane full-service gasoline cost 18 cents
before; today it is $3.05 for self-service - 1,870 % inflation;

example 3: a house in 1959 cost $14,100; today's median price is $213,000 - 1,400% inflation;

example 4: a dental crown used to cost $40; today it's $1,100 - 2,750% inflation;

example 5: an ice cream cone in 1950 cost 5 cents; today its $2.50 - 4,900% inflation;

The chart below shows CPI since 1800:




It is only since we moved completely off of the gold standard in 1971 that the CPI rocketed upward. The curve is probably steeper since the methodologies in computing CPI have changed in recent times.

The day is fast approaching when people are going to be buying loaves of bread with wheelbarrows of cash.

Pilfered from dailypaul.com