A couple of things I have been pondering. The dollar is still the King, and I don't see a competitor in the foreseeable future. The Euro is having trouble sustaining itself because of the weaker economies involved in the Union. They are having some of the same troubles we experience here with state rights vs. the US govt. Except the European Union has a 1000 years of internal strife to overcome. Where else are people going to put their money? So all this talk about a cratering dollar is just that. Talk. I can't see a threat on the horizon. If we can just get back a little sense of fiscal responsibility you will see a flood of people rushing back into the friendly confines of the dollar. It will be interesting to see how this plays out in the next 10-20 years. I just can't see inflation on the horizon?

Is that a joke? You can't see any inflation on the horizon?

(02-18-2010 09:10 AM)Machiavelli Wrote:  A couple of things I have been pondering. The dollar is still the King, and I don't see a competitor in the foreseeable future. The Euro is having trouble sustaining itself because of the weaker economies involved in the Union. They are having some of the same troubles we experience here with state rights vs. the US govt. Except the European Union has a 1000 years of internal strife to overcome. Where else are people going to put their money? So all this talk about a cratering dollar is just that. Talk. I can't see a threat on the horizon. If we can just get back a little sense of fiscal responsibility you will see a flood of people rushing back into the friendly confines of the dollar. It will be interesting to see how this plays out in the next 10-20 years. I just can't see inflation on the horizon?

The dollar has approximately 1/20th of its buying power it had before we ended gold convertability for good in 1971.

You'll be lucky to avoid a similar decline over the next 20 years. That's the beauty of the current system. Most people don't know they're being robbed ever so slowly.

Why isn't oil skyrocketing then?

(02-18-2010 09:37 AM)Machiavelli Wrote:  Why isn't oil skyrocketing then?

It was 10 dollars a barrel a decade ago. It's 8 times that now.

Gold has tripled.

(02-18-2010 09:41 AM)bubbapt Wrote:  

(02-18-2010 09:37 AM)Machiavelli Wrote:  Why isn't oil skyrocketing then?

It was 10 dollars a barrel a decade ago. It's 8 times that now.

Gold has tripled.

That boiling frog method works well on people like Mach.

I used to pay .15 cents a gallon. Full service. Free give-aways. I believe gas has gone up a hell of a lot.

(02-18-2010 09:29 AM)Rebel Wrote:  Is that a joke? You can't see any inflation on the horizon?

He is frolicking in Liberal Utopia, where the Money Tree grows bountifully.

(02-18-2010 09:10 AM)Machiavelli Wrote:  A couple of things I have been pondering. The dollar is still the King, and I don't see a competitor in the foreseeable future. The Euro is having trouble sustaining itself because of the weaker economies involved in the Union. They are having some of the same troubles we experience here with state rights vs. the US govt. Except the European Union has a 1000 years of internal strife to overcome. Where else are people going to put their money? So all this talk about a cratering dollar is just that. Talk. I can't see a threat on the horizon. If we can just get back a little sense of fiscal responsibility you will see a flood of people rushing back into the friendly confines of the dollar. It will be interesting to see how this plays out in the next 10-20 years. I just can't see inflation on the horizon?

But we're not going to get back a little sense of fiscal responsibility. At least not as long as democrats or republicans are in charge.

And what you aren't considering is the additional drain on the dollar from our balance of trade deficit, which approximates that of the federal deficit.

The advantage of the dollar and being off of the gold standard (or any other hard good) is that everything else is impacted by the dollar as opposed to impacting the dollar.... hence our measure of inflation has to do with the price of gasoline and how much we use, not simply a barrel of oil. Alternative resources and things like public transportation or a decrease in air travel will cause inflation to remain tame, despite a huge rise in commodity prices

Our buying power of hard goods has clearly declined. It has been significantly offset by reductions in labor costs and efficiencies.... but the dollar is clearly worth MUCH less in terms of "base natural resources".

(02-18-2010 11:53 AM)Hambone10 Wrote:  The advantage of the dollar and being off of the gold standard (or any other hard good) is that everything else is impacted by the dollar as opposed to impacting the dollar.... hence our measure of inflation has to do with the price of gasoline and how much we use, not simply a barrel of oil. Alternative resources and things like public transportation or a decrease in air travel will cause inflation to remain tame, despite a huge rise in commodity prices

Our buying power of hard goods has clearly declined. It has been significantly offset by reductions in labor costs and efficiencies.... but the dollar is clearly worth MUCH less in terms of "base natural resources".

Anybody know how much the 1965 mustang cost originally? Was it even $2,500?

(02-18-2010 12:03 PM)bubbapt Wrote:  

(02-18-2010 11:53 AM)Hambone10 Wrote:  The advantage of the dollar and being off of the gold standard (or any other hard good) is that everything else is impacted by the dollar as opposed to impacting the dollar.... hence our measure of inflation has to do with the price of gasoline and how much we use, not simply a barrel of oil. Alternative resources and things like public transportation or a decrease in air travel will cause inflation to remain tame, despite a huge rise in commodity prices

Our buying power of hard goods has clearly declined. It has been significantly offset by reductions in labor costs and efficiencies.... but the dollar is clearly worth MUCH less in terms of "base natural resources".

Anybody know how much the 1965 mustang cost originally? Was it even $2,500?

How much would it have cost w/ today's standard features of CD player, keyless remote, air bags, anti-lock brakes, fuel injection, etc?

How much did long distance cost in 1971?

Or a TV?

Or a stereo?

A PDP-11?

Light bulbs?

Aspirin?

Breakfast cereal?

Microwave ovens?

Compare the price of Pd in 1968 (Au standard) vs 1977 (w/o Au standard).

Or the price of Pt in 1968 to that in 1972, immediately after leaving the Au Standard.

There's nothing magical about the gold standard. Leaving it may have contributed to initial spikes in some goods, but I suspect there were other factors involved.

Generally, it's an arbitrary date to compare too, and if you look hard enough you'll find prices of good and services changed both up and down from that date.

And how much was the median income in 1971?

Most importantly, people earn more dollars, so while the buying power may be down, people have more to buy with.

(02-18-2010 12:31 PM)DrTorch Wrote:  

(02-18-2010 12:03 PM)bubbapt Wrote:  

(02-18-2010 11:53 AM)Hambone10 Wrote:  The advantage of the dollar and being off of the gold standard (or any other hard good) is that everything else is impacted by the dollar as opposed to impacting the dollar.... hence our measure of inflation has to do with the price of gasoline and how much we use, not simply a barrel of oil. Alternative resources and things like public transportation or a decrease in air travel will cause inflation to remain tame, despite a huge rise in commodity prices

Our buying power of hard goods has clearly declined. It has been significantly offset by reductions in labor costs and efficiencies.... but the dollar is clearly worth MUCH less in terms of "base natural resources".

Anybody know how much the 1965 mustang cost originally? Was it even $2,500?

How much would it have cost w/ today's standard features of CD player, keyless remote, air bags, anti-lock brakes, fuel injection, etc?

How much did long distance cost in 1971?

Or a TV?

Or a stereo?

A PDP-11?

Light bulbs?

Aspirin?

Breakfast cereal?

Microwave ovens?

Compare the price of Pd in 1968 (Au standard) vs 1977 (w/o Au standard).

Or the price of Pt in 1968 to that in 1972, immediately after leaving the Au Standard.

There's nothing magical about the gold standard. Leaving it may have contributed to initial spikes in some goods, but I suspect there were other factors involved.

Generally, it's an arbitrary date to compare too, and if you look hard enough you'll find prices of good and services changed both up and down from that date.

And how much was the median income in 1971?

Most importantly, people earn more dollars, so while the buying power may be down, people have more to buy with.

In general, technological innovations have entered the market at a premium, and have been reduced in price dramatically as the technology is mass produced and commoditized. VCRs, computers, GPS systems all seem to follow this trend.

The original post has expressed some surprise that price inflation hasn't been as noticeable as people feared. Most of us have responded by pointing out that monetary inflation has been a characteristic of the post-Bretton Woods system. Given the monetary policy of the country today, it's just a matter of time before the velocity of money increases again, and we begin to see it manifested in higher prices.

And the Producer Price Index over the past three months seems to be providing a signal. PPI rose 1.4% in January, 0.4% in December, and 1.5% in November. That's putting us at an annual price inflation rate of 15.4%!