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Guest Post: Inflation Since The American Revolution

Tyler Durden's picture




 

Via Michael Krieger of Liberty Blitzkrieg blog,

As is clear by this chart, inflation was virtually unheard of until the Creature from Jekyll Island (the Federal Reserve) took over.  However, more importantly, things didn’t really start to get bad until the 1970?s right after Nixon took the nation off the gold standard in 1971.  Since that time, America has seen a period of non-existent real wage growth and a huge gap grow between the rich and the poor ever since.  Nothing like livin’ the debt slave dream!

 

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Mon, 01/07/2013 - 18:44 | 3130966 maxmad
maxmad's picture

Thats one helluva Boehner!!

Mon, 01/07/2013 - 18:49 | 3130993 TruthInSunshine
TruthInSunshine's picture

Essay by Carmen Reinhart & Ken Rogoff

Shifting Mandates: The Federal Reserve’s First Centennial

It is probable that in 1913, while financial panics were not uncommon, high inflation was still largely seen by the founders of the Fed as a relatively rare phenomenon associated with wars and their immediate aftermath. Figure 1 plots the US price level from 1775 (set equal to one) until 2012. In 1913 prices were only about 20 percent higher than in 1775 and around 40 percent lower than in 1813, during the War of 1812. Whatever the mandates of the Federal Reserve, it is clear that the evolution of the price level in the United States is dominated by the abandonment of the gold standard in 1933 and the adoption of fiat money subsequently.    One hundred years after its creation, consumer prices are about 30 times higher than what they were in 1913. This pattern, in varying orders of magnitudes, repeats itself across nearly all countries.

Mon, 01/07/2013 - 18:54 | 3131004 Freddie
Freddie's picture

+1

See how the inflation started to take off after 1913. 

Mon, 01/07/2013 - 19:08 | 3131044 TruthInSunshine
TruthInSunshine's picture

Krugman clearly believes Rogoff & Reinhart are lunatics and that the abandonment of the gold standard correlating with episodes of unprecedented inflation is an arbitrary, purely coincidental relationship.

Mon, 01/07/2013 - 19:19 | 3131071 Stackers
Stackers's picture

I wonder why it starts really shooting up in 1971 ???

Mon, 01/07/2013 - 19:30 | 3131096 The Navigator
The Navigator's picture

1- Costs of Vietnam War

2- August 1971 Nixon takes us off the gold standard

3- 1965, silver removed from OUR* coins

Just to name 3.

*That's OUR money - government/Fed only prints it, neither produce ANYTHING that results in the creation of money/wealth. But thanks to their manipulation of it (along with the wars), they've been fucking us over for way way too long.

Mon, 01/07/2013 - 20:20 | 3131195 Enslavethechild...
EnslavethechildrenforBen's picture

We're all left holding sacks of paper and the Bankers own everything. Go figure.

Tue, 01/08/2013 - 01:00 | 3131865 saturn
saturn's picture

Looks like the whole USA is a bubble ready to pop.

Tue, 01/08/2013 - 04:11 | 3132146 TruthInSunshine
TruthInSunshine's picture

Stackers stated: "I wonder why it starts really shooting up in 1971?" (sarcastically, as he knows the real reason, I'm confident).

On August 15, 1971, the United States unilaterally terminated convertibility of the dollar to gold. As a result, "[t]he Bretton Woods system officially ended and the dollar became fully fiat currency, backed by nothing but the promise of the federal government." This action, referred to as the Nixon shock, created the situation in which the United States dollar became the sole backing of currencies and a reserve currency for the member states. At the same time, many fixed currencies also became free floating.

The Non-Federal Reserve-less Non-Bank is just the latest entity & iteration of the literal Ponzi scam that perpetuates pure fiat monetary systems (see remarks/footnotes below regarding Plaza Accord and Nixon Shock, which closed the Bretton Woods pact) that some refer to as fractional reserve banking (see Modern Monetary Theory as described and admitted to in their own publication, 'Modern Money Mechanics' - Modern Money Mechanics is a booklet produced and distributed free by the Public Information Center of the Federal Reserve Bank of Chicago; MODERN MONEY MECHANICS*) , whereby this non-bank entity and front for The Money Masters uses taxpaying slaves, many of whom ostensibly believe they are free and sovereign citizens of a sovereign "nation," as collateral, to conjure what they claim is 'money,' but that which is really debt (since there is nothing of inherent value backing it), from thin air, leveraging it up by many multitudes (money multiplier/deposit multiplier, derivative contracts and other forms of leverage can ratchet this debt up by a magnitude of a thousand times or more from the point of inception/creation), getting a nation to endorse it as monopolistic fiat (and enforce the monopolistic recognition of it as such for the payment debt, both public and private, via codified law and corollary enforcement agencies). 

 * The Federal Reserve Bank of Chicago, describing, by their own words, the ruse of Modern Money Mechanics (quote from Page 6, last paragraph):

"What they [banks] do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise by [the amount of the "loan"]."

When was the last time you lent money to a friend and suddenly found you had more funds? 

Theoretically, and just for illustration purposes, even if 95% of loans go bad (or more), the fractional reserve bankers lose nothing. They created this fiat money from nothing and received the protection of the nation in distributing fiat monopoly currency. Not only do they lose nothing, they actually gain any real assets that were pledged as collateral to securitize most of the loans that went 'bad' - Harvest.

Repeat this process of Harvest by first inflating the money supply, getting people deeply indebted (many of whom weren't indebted before), and soon enough, with enough cycles of harvest, what belonged to many will be concentrated in the hands of a few, all via the sham that is fractional reserve banking.

It's the biggest scam in the history of mankind.

Once a person grasps this basic concept, they'll understand why events have taken place as they have (Bretton Woods*; Plaza Accord; Federal Reserve Act of 1913; closing of the gold standard in 1971*, etc.), and they'll finally grasp how a select few have rigged the game to be able to harvest assets continually, and concentrate wealth and power, by doing nothing other than maintaining Deep Capture of a nation's legislative and judiciary branches (and executive, in the case of the U.S.) of government.

Mon, 01/07/2013 - 19:58 | 3131150 Cathartes Aura
Cathartes Aura's picture

Tricky Dicky & his pal Hank Kissenger, opening China to the "global" market right after removing any semblance of sound money aka world reserve currency fiat exponential moonshot yaddayadda. . .

Mon, 01/07/2013 - 20:23 | 3131207 Enslavethechild...
EnslavethechildrenforBen's picture

And you wonder why Precious metal prices are where they are...

Tue, 01/08/2013 - 00:09 | 3131731 SmittyinLA
SmittyinLA's picture

public policy shift, the state allowed mass criminal Socialist invasion of millions of tax parasites. Tens of millions of tax parasites have liabilities. No nation can afford millions of tax parasites. America went from a place where everybody carried their own weight to a place where half ride for free..

Mon, 01/07/2013 - 19:24 | 3131087 The Miser
The Miser's picture

Krugman only needs to look in a mirror to see a true lunatic.

Mon, 01/07/2013 - 20:02 | 3131156 Freddie
Freddie's picture

Evil moron Krugman is advocating Obama's Mugabe Platinum Coin idea. 

Apparently, the Tylers wre lukewarm to the idea.  ;-)

Mon, 01/07/2013 - 20:23 | 3131204 SILVERGEDDON
SILVERGEDDON's picture

Well, we all got fucked by the boys at the top.

Skull and Croosbones style.

Real good.

You gotta admit - the French did their house cleaning right during the Revolution.

One large Gillette razor stroke to the neck, and another bankster became cat food.

Oh, as for Krugman ?

He is so far up the Royal Establishment's ass, all you can see is the soles of his shoes.

Little Paul Shit Sock Puppet Krugman. 

Mon, 01/07/2013 - 22:23 | 3131509 Strnj1
Strnj1's picture

My grandfather said it best, "A WHOLE dollar..."  He was exclaiming the shock at what the dollar would buy in the Seventies vs. the dollar he had been familiar with for most of his life...

Mon, 01/07/2013 - 22:34 | 3131530 SilverDOG
SilverDOG's picture

No crap !

I could buy 4 candy bars and still have change in the END of the Seventies.

I should have been buying silver and gold damn it.

Stupid parents, I'll blame them. lol

 

Tue, 01/08/2013 - 00:51 | 3131844 MeBizarro
MeBizarro's picture

Yeah because the French Revolution had such beneficial effects and after nearly 30 years the French almost did a complete 360 after the Congress of Vienna and the restoration of the French monarchy. 

Mon, 01/07/2013 - 20:47 | 3131274 Stuck on Zero
Stuck on Zero's picture

The Fed has done a wonderful job and the chart shows it.  Up until the Fed took over there were ups and downs.  See thos little squiggles.  Since then it has only been up and up with no looking back.  That's success.

 

Mon, 01/07/2013 - 18:54 | 3131006 francis_sawyer
francis_sawyer's picture

Clearly ~ the more joobux, the better...

Mon, 01/07/2013 - 19:07 | 3131042 Rainman
Rainman's picture

Millionaires have quintupled and are now the new lower middle class. All hail the Bernank as he enters the second century of repression !

Mon, 01/07/2013 - 20:54 | 3131295 cynicalskeptic
cynicalskeptic's picture

Plenty of millionaires in Zimbabwe a few years back - damn near the whole population..... of course most of them couldn;t even afford the next day's food.......

 A million $US now is no big deal if you're in high cost NY or CA.  A 'starter house' around her is still almost $500,000 - with $20,000 a yera in property taxes.  Plenty of people paid $500,000 a year are covering expenses, saving nothing (yes they SHOULD learn to cut back but am dumbfounded at how many people at theat level saved NOTHING for their kid's college).   If you're pulling in 6 figures as a wage slave you're paying MAXIMUM taxes all arouund, probably workign 60-80 hours a week and don't ever take all your vacation.  If smart you're saving like mad because you're gonna get fired at age 50 and replaced by a cheaper version of yourself.  When I got out of college in the late 70's ten times your age was a killer income.  No longer.

This may sound preposterous to those in fly over country but the US is two VERY differnt countries now.  Living outside nYC, the house i paid MEDIAN price for 20 years back - just over $300,000 (with and 8 1/2% mortgage at the time) is now worth over a million (over $30,000 a year in property taxes) is comparable to my brothers place in NC which is worth $200,000 - HIS taxes are $2000 a year and he has more property.  Family in NC, SC, Ohio, Nevada an AZ own places that are worth $100-200,000.  A million dollars in Iowa or NC or AZ is worth a lot more than a million in NY or CA.   

And don't say 'move' - I'd love to but no jobs elsewhere - the work is here.  One of the reasons things are so much cheaper elsewhere.

Mon, 01/07/2013 - 22:17 | 3131493 Silver Garbage Man
Silver Garbage Man's picture

FYI your house cost you 833 ounces of gold 20 years ago...today @ $1.1 million it is worth 647 ounces of gold. Food for thought. It is obvious that with unlimited money printing that trend will continue. Got gold and silver?

Mon, 01/07/2013 - 22:36 | 3131536 SilverDOG
SilverDOG's picture

+1 

... in Your FACE!

Tue, 01/08/2013 - 00:58 | 3131861 cynicalskeptic
cynicalskeptic's picture

I think I might have had some - but in one of those all too common boating accidents any that I had it is now all gone - compounded by complete traumatic memory loss caused by the stress of that accident that leaves me without any memory of how or where or why that accident occurred....  

I DO remember where the copper jacketed lead is though.....

Mon, 01/07/2013 - 22:41 | 3131545 HedgeHammer
HedgeHammer's picture

I can't take it anymore with these so called experts and their G-D D--M'd essays not to mention that most everyone who has an opinion on the economy today either thinks we need to print more paper or go back to the gold standard, or are of the opinion that coming off the gold standard was the cause of our problems to day. cough..cough.co.. bulsh1t. I mean no offense to anyone accept those whose intentions are to deceive.

Most all of the gold held by the people is roughly 1 percent of all the above ground gold existing in vaults today. Who the hell has been buying the most gold is a question everyone should be exploring before committing to a gold standard. China, Russia, and many of the Central banks have been buying up the gold and you want to go to a gold standard ha. With the world population in control of a mere 1 percent while the rest is controlled by the central banks and the biggest holder of gold being the BIS, Bank of International Settlements. that sounds just wonderful don't ya think [sarc]. Now don't get me wrong I am an advocate of people buying and holding as much of the yellow and white metals as they can along with real assets.

The problem is that the government borrows every dollar from the fed at interest as the fed reserve notes are debt based currency. IT MATTERS NOT WHAT YOUR CURRENCY IS BACKED BY as long as the people agree to use whatever as a means of exchange. We the people must take back the printing and the issuing of our own DEBT FREE currency. Look into Colonial Script and as to why it worked so well. Money was never intended to cost you anything it is only meant to facilitate trade and issued by the State by the people for the people. I would urge you all to study up on Andrew Jackson and as to why he earned the nickname of Old Hickory. He knew the dangers of a of a privately owned Central Bank. This man is imo one of the greatest noble man in the history of the US of A. Please learn the truth before you go plastering crap across the airwaves. It's allready confusing enough without having us shoot our ownselves in the foot.

 

Tue, 01/08/2013 - 03:36 | 3132118 SeattleBruce
SeattleBruce's picture

"IT MATTERS NOT WHAT YOUR CURRENCY IS BACKED BY as long as the people agree to use whatever as a means of exchange. We the people must take back the printing and the issuing of our own DEBT FREE currency."

Yes, Yes, Yes!  Hear, hear...It's all in the Constitution.  The application of that document will lead us back to sanity, if we let it.  This will take a huge upheaval - maybe only happen - if we're smart - during the reset.  It's going to be rough before then.

Mon, 01/07/2013 - 22:42 | 3131547 HedgeHammer
HedgeHammer's picture

not sure how this double posted.

 

Mon, 01/07/2013 - 23:17 | 3131548 HedgeHammer
HedgeHammer's picture

removed dble post

Mon, 01/07/2013 - 19:05 | 3131034 mikmid
mikmid's picture

It's one to cry over!!!

 

Tue, 01/08/2013 - 04:54 | 3132170 ricky2
ricky2's picture

August 15th, 1971. A day that will live in infamy.

Mon, 01/07/2013 - 18:44 | 3130967 Catflappo
Catflappo's picture

Good that the various wars are noted...    very relevant indeed....

Mon, 01/07/2013 - 19:04 | 3131015 francis_sawyer
francis_sawyer's picture

Study your history more closely...

~~~

- The War of 1812 began PRECISELY when the 1ST BANK OF THE UNITED STATES (joobux) ended it's charter

- The Civil War was funded by 'greenbacks' (not joobux because Lincoln refused to fund the war under USURY terms & because Andrew Jackson had help crush the [joobux] of the 2ND BANK OF THE UNITED STATES 25 years earlier ~ dodging a bullet himself in the process)... By AMAZING coincidence, Lincoln got a bullet in his head shortly before the Civil War ended, which, by the way, he had intended to CONTINUE with 'greenbacks', much to the dismay of the jew bankers... His Treasury Secretary SEWARD, also caught a bullet...

- The US involvement in WWI began shortly after the Federal Reserve was established (for the benefit of jew banking families)... Ostensibly ~ US involvement was initiated under a false flag [Lusitania], evn though Americans were vehemently opposed to getting involved up until that point...

Mon, 01/07/2013 - 19:07 | 3131039 Uber Vandal
Uber Vandal's picture

Don't forget how the US national debt was nearly zero for two years (under $40,000 per year) when Andrew Jackson revoked the Bank of the United States Charter.

http://suite101.com/article/andrew-jacksons-bank-war-a202709

 

Mon, 01/07/2013 - 19:33 | 3131046 francis_sawyer
francis_sawyer's picture

It becomes an unpleasant & dangerous world [for politicians] when JOOBUX aren't 'legal tender'...

~~~

Edit: Oh sorry... I forgot... It was the 'Luciferians', 'Askenazi's', 'Zionists', 'Trekkies', 'Birders', & 'Zumba Enthusiasts'... Jews are 12 parsecs removed from culpability [& therefore, francis_sawyer must be junked at will for not knowing that]...

Mon, 01/07/2013 - 19:36 | 3131114 walküre
walküre's picture

around here you get down voted for talking joobux.

try jooconfetti instead

Mon, 01/07/2013 - 20:22 | 3131202 Enslavethechild...
EnslavethechildrenforBen's picture

Joogle is watching you, be careful

Mon, 01/07/2013 - 20:57 | 3131211 francis_sawyer
francis_sawyer's picture

No fucking shit... I dropped comments in multiple threads today & the only ones JUNKED were the ones that had JOOBUX in them... [which ~ I suppose I can understand... After all, JOOBUX = 'worthless little piece of shit denomination printed on cotton paper that some 'Trekkie', 'Birder', or 'Zumba Enthusiast' wants to con you into trading your gold for']... As for me, I can hardly stand to touch them... The only purpose they serve for me is that there are idiots out there who want to give me food, lumber, & other supplies for them... SUCKAS!

Who could possibly like something like that?... I may have to take to junking myself for these comments...

~~~

@Enslave

& fuck 'Joogle'... Come get me & toss me into the gulag by order of the 'PRE-CRIME division of the 'thought police'... It'll only serve to crystalize & confirm my thesis... [the fact that you even SUGGEST so all but makes it real as we speak]...

I ain't warming up no ovens & I ain't spraypainting no swastikas on no synagogues... I just don't like JOOBUX [which ~ unfortunately for me ~ is prolly the highest form of treason]...

Tue, 01/08/2013 - 09:33 | 3132446 GMadScientist
GMadScientist's picture

You mean "The Panic of 1837"?

Mon, 01/07/2013 - 19:51 | 3131136 centerline
centerline's picture

Come on... someone step up and draw an asymptote on that chart!  +/- a few years - where that put ya?

Mon, 01/07/2013 - 21:09 | 3131349 cynicalskeptic
cynicalskeptic's picture

'To INFINITY - and beyond.....!'     

good things most $US are electronic... no enough paper on the planet to print the physical currency.    Side note - $20 US gold coins were rarely carried and not often seen in circulation - they sat in bank vaults 

In 1860, (from http://www.choosingvoluntarysimplicity.com/what-did-things-cost-in-1860/)  land was selling for $3 to $5 an acre, and a laborer’s wage without board was 90 cents a day.

Wheat flour — $7.14/barrel
Rice — 7 cents/pound
Granulated sugar — 8 cents/pound
Roasting beef — 11 cents/pound
Soup beef — 4 cents/pound
Cheese — 13 cents/pound
Eggs — 20 cents/dozen
Hard wood — $6.49/cord
Rent for 4 rooms — $4.45/month
Room and board for men — $2.79/month
Room and board for women — $1.79/month

Even in my youth, in 1960, $20 was a LOT of money.   The house I grew up in was worth around $20,000 (up from $14,000 a dozen years earlier when my grandparents bought it - my parents would pay $28,000 for it another 9 years later). 

Notice how the US has yet to print denominations larger than $100 for general circulation (am ignoring special notes for bank only use).  Even the EU issued 500 Euro notes.   We still have the penny and $1 bill when other nations have dumped the pence and gone to dollar/Euro/whatever coins.  This is all about PERCEPTION.  Start issuing $500 and $1000 bills and people start to notice inflation.

Mon, 01/07/2013 - 22:21 | 3131504 Miss Expectations
Miss Expectations's picture

My supermarket has blue cheese for $28.00/lb.

Mon, 01/07/2013 - 23:40 | 3131657 RockyRacoon
RockyRacoon's picture

Wonder why women were cheaper to board?  I guess they didn't get drunk and bust up the parlor furniture as much, eh?

Tue, 01/08/2013 - 01:19 | 3131909 Tom Green Swedish
Tom Green Swedish's picture

The highest denomination the $100 dollar bill was worth $2213 in todays money in 1913.  In theory the average american could get paid their entire months check with one piece of paper money in 1913.  This is a slow version of hyper inflation.

Mon, 01/07/2013 - 20:15 | 3131182 Doctor Faustus
Doctor Faustus's picture

For Christ's sake (another Jew), lighten up Francis on the Jews. Your boogeyman of choice is as cliched as ever.  

 

Mon, 01/07/2013 - 20:32 | 3131231 francis_sawyer
francis_sawyer's picture

Stockholm Syndrome [the 'Doctor' suffers from]...

Mon, 01/07/2013 - 21:23 | 3131385 CH1
CH1's picture

It makes him feel powerful.

Mon, 01/07/2013 - 21:39 | 3131417 Doctor Faustus
Doctor Faustus's picture

Nope. That's what the guns are for. 

Tue, 01/08/2013 - 03:51 | 3132129 SeattleBruce
SeattleBruce's picture

I didn't realize it but all evil bankstas are pure Jews.  There's no other ethnicity represented - at all!  And that aint no exaggeration!! /sarc

Tue, 01/08/2013 - 13:43 | 3133349 Orange Pekoe
Orange Pekoe's picture

Government would have had its own competing currency and bankers cannot have competition. One group of sociopaths against another.

Mon, 01/07/2013 - 18:44 | 3130969 CrockettAlmanac.com
CrockettAlmanac.com's picture

If that lasts longer than 4 hours, call a doctor.

Mon, 01/07/2013 - 18:47 | 3130980 JPM Hater001
JPM Hater001's picture

Are you kidding?  If it last longer than 4 hours I told my wife she's going to have to call a friend.

Mon, 01/07/2013 - 19:19 | 3131073 a growing concern
a growing concern's picture

I'm sure that proposal will really put her in the mood...

Mon, 01/07/2013 - 19:52 | 3131140 centerline
centerline's picture

Worth a try I suppose.  lol.

Mon, 01/07/2013 - 21:10 | 3131345 Esso
Esso's picture

What if it's her boyfriend she calls? Eeeek!

Mon, 01/07/2013 - 23:48 | 3131671 DaveyJones
DaveyJones's picture

what do her enemies look like

Mon, 01/07/2013 - 18:48 | 3130988 willwork4food
willwork4food's picture

What if I still have..ah, company?

Tue, 01/08/2013 - 09:40 | 3132477 GMadScientist
GMadScientist's picture

Tell him to go home.

Mon, 01/07/2013 - 18:46 | 3130974 JPM Hater001
JPM Hater001's picture

Can't wait to see the return to baseline.

Mon, 01/07/2013 - 18:53 | 3131001 The Shootist
The Shootist's picture

Is that a bubble? What with fools using paper debt for commerce?

Mon, 01/07/2013 - 19:03 | 3131022 Landotfree
Landotfree's picture

They have been using paper for commerce for hundreds of years of, if not thousands of years based on verbal words.  

The problem is one of attaching interest to your medium of exchange, not one of paper.     The real problem is this.

http://2.bp.blogspot.com/--RkLZLRlRi8/UGAGOUg7fNI/AAAAAAAAABs/HHgMlfUYP2...

When creation stops is when the real problems begin, as the system must collapse.

Mon, 01/07/2013 - 19:56 | 3131144 centerline
centerline's picture

Same chart as on HT's site.  So far, his work frame's things better than most in general terms.

This is the baseline answer to why we see bubble after bubble, stupid move after stupid move, no real punishment, etc.  It is credit creation at any cost now.  In plain sight for all to see.  

Mon, 01/07/2013 - 18:47 | 3130975 TruthInSunshine
TruthInSunshine's picture

 Yesterday at the American Economic Association's 2013 Annual Meeting, Carmen Reinhart and Ken Rogoff offered a paper titled Shifting Mandates: The Federal Reserve’s First Centennial.

The paper included a cool chart of inflation since 1775.  The authors argue that inflation didn't take off until the U.S. went off the gold standard in 1933.

Mon, 01/07/2013 - 19:04 | 3131032 Landotfree
Landotfree's picture

Hogwash.   Interest is the rate of the increase of the money supply.   To say the money supply was not increasing from 1775 is pure hogwash.   

Mon, 01/07/2013 - 19:14 | 3131055 auric1234
auric1234's picture

This only applies to unpayable debt. In a limited world, you can repay your debt with interest by offering the resulting surplus of goods and services that you obtained thanks for your indebtment.

 

Mon, 01/07/2013 - 19:22 | 3131080 XitSam
XitSam's picture

Please note the chart is CPI. So it is price inflation being talked about.

Mon, 01/07/2013 - 21:44 | 3131412 cynicalskeptic
cynicalskeptic's picture

Inflation is when the money supply increases FASTER than the value of the goods and services produced by the economy

If the money supply increases at the same rate as the economy expands you have NO inflation.  Only when the money supply increases faster then the value of the goods and services in an economy do you have inflation.

One of the problems in the US during 1700's and early 1800's was a LACK of 'money' - gold and silver coins were often in short supply - this 'good money' going to pay for imported items.  The patchwork banking system - where banks printed their own notes - led to a situation where counterfeits on 'good' banks were valued higher than real notes from 'bad' banks.  A given note was worth less and less the farther you got from the issuing bank.  'Panics' were a regular occurrence - and easily created when banks lent out a large amount of money getting people in debt then demanding repayment (in gold).  Thge lack of 'money' was a regular complaint.  Farmers couls be wealthy in land and crops but hard pressed to come up with cash to pay taxes (one of the reasons famrers backed the 'free silver' movement (a movement which was also inflationary).

In the past the amount of gold and silver in an economy increased slowly - roughly at the rate an economy expanded.   When the supply of precious metals expanded quickly (as after the Spanish conquest of the New World) - faster than the economy, you had inflation.  the discovery of gold in CA and silver in Nevada contributed to inflation BUT the gold from CA took time to enter the economy AND the economy grew quickly during that period.  MASSIVE silver supplies in Nevada threatened to undermine the US money supply but in 1873, the US demonetized silver to stop the 'arbitrage' between cheaper silver and gold - coining silver and swapping it for gold.

In Colonial America, states issued paper money to grease the wheels of commerce when money was in short supply and times were good BUT withdrew it from circualtion when the economy slowed.  Sadly governments rarely possess such self control and are far more prone to continually issue more and more money.

Inflation is reflected in the reduced buying power of money - when money is based on gold or silver it is also reflected in the debasement of that money - a decrease in the actual gold or silver content in coins.  This is shown clearly in Roman coins.

http://gregnguyen.blogspot.com/2011/05/decline-in-silver-content-of-roma...

In 200 years, the sliver content of Roman coins dropped to almost 0 - from 100%   Note - the US ceased issuing 90% silver coins in 1964.  A silver dollar is now worth $23.32 in melt value.   That $20 gold double eagle is worth $1600 in melt value today (.9675 troy oz. of gold)

Even our base metal coins - old copper pennies and nickels are worth MORE for their metal value (3 cents in copper for an old pre 1983 penny and 7 cents for a nickel).

Even now Treasury is discussing reformulating coins because our zinc based pennies are rapidly beccoiming worth moere for their metal content.

Mon, 01/07/2013 - 18:47 | 3130979 willwork4food
willwork4food's picture

Yea, but did they have those cool Iphone's back in the 1970s???I think not.

Clearly, we are better off without a silly gold standard because we have cool Iphones now.

Mon, 01/07/2013 - 18:48 | 3130984 ShrNfr
ShrNfr's picture

Remind me what happend in the early 1970s and 1965. Oh yeah, that's right, we went off silver and gold and full force into fiat. Realistically though, you should use a log scale for these things. It would be less deceptive.

Tue, 01/08/2013 - 01:06 | 3131880 cynicalskeptic
cynicalskeptic's picture

That's NOT a log scale?   Seems like we're understating it then 'cause if they're using CPI numbers we've so manipulated THAT statistic since 1980 that the past 30 years of inflation are vastly understated by 'official' numbers.

Mon, 01/07/2013 - 18:48 | 3130985 Stoploss
Stoploss's picture

You're on it Mike, keep going, your getting closer.  Much closer.

Mon, 01/07/2013 - 18:48 | 3130986 Mentaliusanything
Mentaliusanything's picture

Tricky "Dick" ...... The President that keeps on giving

Mon, 01/07/2013 - 18:56 | 3131011 Freddie
Freddie's picture

LBJ's Vietnam War and "War on Poverty" had something to do with it as well.  LBJ got very very wealthy off of his "wars."

Mon, 01/07/2013 - 21:04 | 3131329 DavosSherman
DavosSherman's picture

Whose the fucking dick giving Freddie a thumbs down for tellin the truth?

Mon, 01/07/2013 - 22:37 | 3131532 hairball48
hairball48's picture

Many more than LBJ got rich back then. I was in the Med with the 6th Fleet, mostly drinking and chasing "real" whores :) when Nixon closed the gold window in August 1971.

Nixon was forced to close it, or give away all the gold in Fort Knox...assuming it was actually there :)

Investors abroad realized that the USA was trying to finance 1) Viet Nam war, 2) Space program 3) all the new "social programs" by borrowing. DeGaulle, of all people, called Nixon and the Treasury on it by demanding gold for their bonds...and that was that. No more gold convertability...even for central banks.

Congress then saw the opportunity to spend without restraint(deficits didn't matter)...and they been doing so ever since.

That's the way I remember it, but I'm just a poor, uneducated redneck.

Mon, 01/07/2013 - 19:17 | 3131060 thatthingcanfly
thatthingcanfly's picture

...and Nixon, who was not so bad a President, by the way, probably had no choice in '71 but to put the final nail in the barbarous relic by ending gold foreign exchangeability. The damage from the disaster that was FDR's Presidency was already done; Nixon's only alternative would have been to allow De Gaulle et al to empty Ft. Knox. Not palatable.

Mon, 01/07/2013 - 19:56 | 3131146 Ayn NY
Ayn NY's picture

I suspect if he would have threatened to withhold all debts owed to the US that France incurred from two world wars and the Marshall Plan, De Gaulle may have not been such a dick.

Mon, 01/07/2013 - 20:38 | 3131243 francis_sawyer
francis_sawyer's picture

Why weren't there any 'GENIUSES' back then thinking about minting Platinum coins?

~~~

Dime store fucking analysis...

HANK PAULSON (2008 bazooka) = KISSINGER [in different secretary role ~ on the point to 'advise' Nixon to renig on Bretton Woods for& on behalf of his buddies... Think Nixon though of that shit on his own?]... I welcome all competing syntheses [otherwise: STFU]...

Mon, 01/07/2013 - 20:51 | 3131284 dick cheneys ghost
dick cheneys ghost's picture

Didnt Henry work for the Rockefellers before he worked for Nixon? I think he did........and dont forget that the petrodollar was born while the nation was "enbroiled in Watergate"......how convienent (see yom kipper war)

Mon, 01/07/2013 - 21:02 | 3131321 A Nanny Moose
A Nanny Moose's picture

What about the debt we were incurring, while failing to bail the Frogs out of their SE Asian Cluster fsck?

Mon, 01/07/2013 - 20:16 | 3131189 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

http://www.youtube.com/watch?v=i-g2iGskFPE

DE GAULLE predicted the US monetary crisis in 1965

vive la France

Mon, 01/07/2013 - 21:59 | 3131455 earleflorida
earleflorida's picture

George H.W. Bush #41 via Nixon & Ford

http://beijing.usembassy-china.org.cn/highlevel.html

Mon, 01/07/2013 - 18:48 | 3130989 negative rates
negative rates's picture

The cost of inflation is that we need to everything available all the time. It does not cost any more to grow a broccoli, or teach a student, than it did at our founding.

If we acually took our time and did stuff right from the start, we would not go broke having to fix, or maintain, things all the time. 

Mon, 01/07/2013 - 19:12 | 3131050 Salon
Salon's picture

It actually requires less input of value (labor plus capital) to do those things now due to productivity.

High education costs are due to rent seeking and subsidy. The cost of the product is not a good measure of the actual resources used to produce one unit of education or brocolli

Mon, 01/07/2013 - 19:15 | 3131059 liszt
liszt's picture

Sure. However, this world is over. 

Amos 2:14 The swift will not escape, the strong will not muster their strength, and the warrior will not save his life.

http://bible.cc/ecclesiastes/9-11.htm

 

 

 

 

Mon, 01/07/2013 - 20:16 | 3131187 negative rates
negative rates's picture

See ya, refer to my Nugent post in a prior article. 

Mon, 01/07/2013 - 20:44 | 3131268 francis_sawyer
francis_sawyer's picture

 "If we acually took our time and did stuff right from the start, we would not go broke having to fix, or maintain, things all the time"

~~~

Yeah ~ but how then would the jews get their cut for sitting on their ass & doing nothing?... A noble (but IMPRACTICAL) dream...

Mon, 01/07/2013 - 20:45 | 3131269 francis_sawyer
francis_sawyer's picture

...SPACE RESERVED (for something PITHY)

Mon, 01/07/2013 - 19:01 | 3131013 fuu
fuu's picture

They did it all for the stabilitease.

Mon, 01/07/2013 - 19:02 | 3131025 Racer
Racer's picture

And that's under reporting the reality as well!

Mon, 01/07/2013 - 19:03 | 3131027 liszt
liszt's picture

Oh yeah, and since 2000 before Cristi the inflation rose a lot more !

 

Mon, 01/07/2013 - 19:10 | 3131037 Getting Old Sucks
Getting Old Sucks's picture

One thing I learned here is that credit creates money.  Looking at the chart, when our dollars were no longer backed by silver, it went straight up from there.  That's when the banks took over our money supply.

 

BTW, shouldn't a government control it's money?  Of course but slow as I am sometimes, it just dawned on me that the US of A.  Apparently, it hasn't dawned on our government yet though. 

Mon, 01/07/2013 - 19:16 | 3131063 auric1234
auric1234's picture

I wouldn't trust my government to control money. Why would you?

 

Mon, 01/07/2013 - 19:31 | 3131101 Getting Old Sucks
Getting Old Sucks's picture

Cause all the one, two and a half, three, five, ten, twenty, fifty dollar, gold pieces I have use to legally represent those amounts.  That was real money.  Even the silver certificates, redeemable for silver was real money.  The governmant gave that away to the banks.  Jackson's saying is coming alive about banks controlling money.

I still gave you an up arrow cause now you are right :-)

Tue, 01/08/2013 - 17:46 | 3134208 auric1234
auric1234's picture

I don't see why do we need government to dictate anything about money. The hell with useless nominal values. 1 ozt of gold is 1 ozt of gold, period. There's no point in pegging dollar with gold and call it a "gold dollar" whatsoever.

 

Mon, 01/07/2013 - 19:07 | 3131040 mikmid
mikmid's picture

The bankers are in control now but when it crashes and everyone gets really pissed I don't know if the drones (man and machine) are going to protect them.

Mon, 01/07/2013 - 19:15 | 3131061 Salon
Salon's picture

People will be told it was Bush's fault, or the fault of the free market.

"if we only had a few more laws and more government control this wouldnt have happened. For the sake of our children and our future we have to do the right thing"

Sheeple will eat it up. Bankers get off scot-free

Mon, 01/07/2013 - 19:12 | 3131051 dbTX
dbTX's picture

Talk about a hockey stick!!

Mon, 01/07/2013 - 19:53 | 3131139 wee-weed up
wee-weed up's picture

Al-jazerra Gore porn!

Fap... fap... fap...

Mon, 01/07/2013 - 19:14 | 3131057 Never One Roach
Never One Roach's picture

Looks like the price of dark chocolate also...sky high in the past 4 years!

(Anyone notice the price of gas creeping up again? Very Bullish!)

Mon, 01/07/2013 - 19:16 | 3131066 TrustWho
TrustWho's picture

The Reinhart and Rogoff paper must be interesting read, because they had to support the Fed's role. What was the paper's conclusion?

Mon, 01/07/2013 - 19:20 | 3131075 DavosSherman
DavosSherman's picture

CPI?

Fuck that noise.

Paging John Williams.

 

Mon, 01/07/2013 - 19:24 | 3131088 grekko
grekko's picture

Isn't the Federal Reserve supposed to control inflation?  I guess the Bernank and his Splunge-Bob Protection Team have been asleep at the wheel.  Or did Mr. Crab have his hands in the till? I know that everyone here gets it, but why are over 90% of the people in this country not out screaming in the streets.  Oh, I forgot, they took public education seriously...we woke up.

 

Totally believing and worshipping at the koolaide punch bowl.  Not for me, I'm a Mogambo Junior Ranger and I'm packing gold, silver, and lots of bullets.  As for my guns, they can have them, just as soon as I run out of the bullets (unless I decide to use them as a clubs next).  Maybe I should invest in Casey Sluggers, just in case the guns with the plastic stocks made by Mattell break.

 

Anyway, everyone here is cool, else you wouldn't be here.  I think you are all great, and wish the best for everyone here when TSHTF.  The Austrian School will be the only one left standing after that great destruction of wealth.

 

Cheers everyone!

Mon, 01/07/2013 - 20:03 | 3131157 centerline
centerline's picture

They did a heck of a job controlling it allright!  This party has gone on longer than anyone could have imagined.  The power of complexity, computers, globalization, etc.  Who could have seen that 100 years ago?  No way in hell.  They managed to take a dying system and kick new life in it for 30 years+... and now playing out a prolonged zombie phase on the incredible resillience of the system.  At the same time, the stakes are higher than ever.  Never before has the game "reset" with this much baggage in tow.  Uncharted waters for sure.

Mon, 01/07/2013 - 19:25 | 3131092 earleflorida
earleflorida's picture

Gross Domestic Product - 'GDP'... whatever that is? --- correlated to Gross Public Debt - 'GPD'... what it was, and is now-- a 'Petrified Oligarchy Brimstone' with nowhere to hide?

1975 GDP @ $1.6 trillion --- 1975 GPD @ $541 billion ~3:1 ratio

2012 GDP @ $15.6 trillion --- 2012 GPD @ $16.4 trillion ~ 1:1 or in reversal mode!

ref: http://www.usgovernmentspending.com/year1975_0.html

*just plug scroll year

Mon, 01/07/2013 - 19:32 | 3131108 walküre
walküre's picture

100 years is longer than the cabal probably ever imagined in their wildest dreams. The men who started the scam have long died. Who knows what their endgame was? Their proteges are still at it today due to our collective "turbo paralysis".

"old money" my ass. It was all stolen, looted, grabbed and exploited from the ignorant plebs.

100 years and counting. The FED should have been ended by now not elevated to ever higher controls and more power.

It all started with the FED and it will end with the FED.

End the FED.

Mon, 01/07/2013 - 19:45 | 3131126 magpie
magpie's picture

My dear, precisely the FED will guarantee that the USA will drift and stay around like an empty shell

Mon, 01/07/2013 - 20:05 | 3131161 Totentänzerlied
Totentänzerlied's picture

Greed like that, it doesn't have an "endgame". It only knows one thing: more.

Mon, 01/07/2013 - 19:55 | 3131142 SelfGov
SelfGov's picture

What year did the US peak in oil production? Anybody remember?

Mon, 01/07/2013 - 20:06 | 3131166 balz
balz's picture

Bingo.

 

Tue, 01/08/2013 - 01:07 | 3131883 MeBizarro
MeBizarro's picture

'73 and your right that it was this along with combination of the 'Great Society', Vietnam & Cold War spending, and other spending. 

Historians are going to look back in 50 years and realize that both the US and the Soviet Union actually lost the Cold War.  Soviet Union only lost sooner.

Mon, 01/07/2013 - 20:01 | 3131155 Totentänzerlied
Totentänzerlied's picture

What is ... the greatest wealth transfer in human history, Alex?

Mon, 01/07/2013 - 20:08 | 3131168 BeerBrewer09
BeerBrewer09's picture

Consider yourself lucky if you are reading this, because the likelihood is high that you own something of real value such as commodities, PMs, food, water, guns & ammo, alcohol, land, etc. If not you had better trade your paper and digital numbers for something tangible.

I just got back from the grocery store. Everything has gone up drastically in price. A few of the things that stuck out to me were:

BREAD - you can't buy 2 loaves of any decent whole wheat for less than $3.99, and that's the stuff that's on sale. Most of them are at least $2.50 for a single loaf.

SOUR CREAM - Cheapest pint (store brand) is $2. The Breakstone version is $2.29. I remember pints being $1.09 just two years ago.

LAUNDRY DETERGENT - They want at least $2.99 for the cheapest bottle of stuff that does 25 loads. Most people probably don't pay attention and use a whole cap full.

OJ - $3.99 for a 56oz bottle of Tropicana. Not even half a gallon.

CEREAL - $3.69 for a box of 13 ounces.

Fucking ridiculous, man. I'm going out tomorrow to buy some bulk rice & beans. FWIW, I live in Central PA.

Mon, 01/07/2013 - 20:21 | 3131198 negative rates
negative rates's picture

That's why, it's a COLD state.

Mon, 01/07/2013 - 20:23 | 3131205 BeerBrewer09
BeerBrewer09's picture

I heat my basement and first floor with a wood stove. They haven't figured out a way to tax me on that yet.

Mon, 01/07/2013 - 20:28 | 3131222 Pareto
Pareto's picture

Wait till the force you to stick a fucking carbon emssions reader on your chimney.  Also, I have noticed that the "fees" have gone up exponentially the last 4 years since even though NATGAS is in the tank, I'm paying WAY more for gas and electricity than I ever did when NATGAS was $15/gig.  Really, does anybody really know what all those fees and transaction costs really are?  Its bullshit.

Mon, 01/07/2013 - 20:23 | 3131209 centerline
centerline's picture

If you haven't done so already, black beans and rice is a great mid-term way to go.  Buy a bunch and rotate inventory.  Start skimming off most of your inventory here and there to slowly build a decent store of basics too.

Mon, 01/07/2013 - 20:25 | 3131213 BeerBrewer09
BeerBrewer09's picture

I have 10 food grade buckets, 10 mylar bags and 10 oxygen absorbers. I've done my homework and should be able to get 20-30 years out of rice & beans.

Mon, 01/07/2013 - 20:51 | 3131285 centerline
centerline's picture

Be sure to check local grocery stores.  They throw out food grade buckets with lids all the time.  Just need cleaning up.  They look at me weird when I ask for them... I just say it is for some sort of school or boyscout thing.

Funny you posted tonight about this stuff since I am actually rotating some black beans... making a kick-ass black bean soup tonight.  This version is a little more exotic versus hard times since it has some bacon and beer in the recipe.  Great stuff.

Mon, 01/07/2013 - 22:26 | 3131513 RobD
RobD's picture

I use 55g food grade barrels I get from the local feed store for $25. You can store 300lbs of dry goods in 6 6gallon mylar bags with O2 obs and CO2. Much more effecent then buckets. Have stored over 3tons of rice, beans, corn and wheat this way.

Mon, 01/07/2013 - 22:35 | 3131533 weyes1
weyes1's picture

THREE TONS???? 

WTF??

This post has really pulled the varmints from the wood pile.

Mon, 01/07/2013 - 22:45 | 3131554 RobD
RobD's picture

Opps it is 9 6g Mylar bags per barrel, weyens replied before I could edit. As for the amount, I'm the only one in my extended family that has any money or the ability to prep. 16 mouths requires a lot of cals to keep alive for a year.

Mon, 01/07/2013 - 21:54 | 3131452 bunnyswanson
bunnyswanson's picture

Rice and beans!  Noodles too.  Don't forget spices, sauces and gravy (bullion cubes) which can make these 3 items taste so much better.  Experiment with various Chinese, Mexican and other recipes (hot, spicy, meaty flavor).  Check exp dates.  Buy a freezer to keep the beans and rice in and rotate so you don't discover bugs (or seal in air tight container).

Onions, garlic, salt (with iodine) go a long way. 

Tea bags, sugar, flour, coffee, booze also. 

Pet food.  I got antibiotics of every kind from online pharmacy and kit for medical care.  Pain meds, anti-inflammatory, toothpaste, shampoo and detergent also.

Powdered milk.  Spare glasses.

Mon, 01/07/2013 - 21:04 | 3131326 Bansters-in-my-...
Bansters-in-my- feces's picture

Compound Interest...bitchez.....

Kill you every time.

Mon, 01/07/2013 - 21:11 | 3131358 JR
JR's picture

I charge them... with... having conspired to transfer to foreigners and international moneylenders title to and control of the financial resources of the United States.” That was Louis McFadden, a courageous Congress who was speaking truth to power and identifying the financial takeover of the US by the Federal Reserve.

He who holds the power to control the growth of the money supply, to increase the money in circulation, has the power to destroy the free market.

Keynes and Lenin realized that inflation is an economic law.  Both realized that inflation has the power to destroy the free market. Both also realized that inflation serves as an income distribution system; and both realized that the only agency that could cause inflation legally was the State.

Here are highlights of McFadden’s attack on the Federal Reserve System from Chapter 16 of The Unseen Hand by A. Ralph Epperson when “even a casual observer after the Stock Market Crash of 1929 had to notice that the ownership of the banking system had changed”:

There weren't many who saw what was happening to the American people by these machinations of the bankers, but one who did was Congressman Louis McFadden, who was quoted as saying:

When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here.

A super-state controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure.

Every effort has been made by the Fed to conceal its powers but the truth is — the Fed has usurped the Government.

It controls everything here and it controls all our foreign relations. It makes and breaks governments at will.

After the stock market crash had run its course, Congressman McFadden charged that: "The money and credit resources of the United States were now in the complete control of the banker's alliance between J.P. Morgan's First National Bank group, and Kuhn, Loeb's National City Bank."

On May 23, 1933, McFadden brought impeachment charges against the Federal Reserve Board, the agency he thought had caused the Stock Market Crash of 1929, with these charges, amongst others:

I charge them... with having... taken over $80,000,000,000 (eighty billion dollars) from the United States Government in the year 1928....

I charge them... with having arbitrarily and unlawfully raised and lowered the rates on money... increased and diminished the volume of currency in circulation for the benefit of private interests..."

And then McFadden expanded his understanding of those who benefited in the crash to include the international bankers: "I charge them... with... having conspired to transfer to foreigners and international moneylenders title to and control of the financial resources of the United States…”

 He then ended with this statement that the cause of the depression was not accidental: "It was a carefully contrived occurrence... The international bankers sought to bring about a condition of despair here so that they might emerge as the rulers of us all."

McFadden had a price to pay for his attempts to explain the causes of the depression and the stock market crash: "On two occasions assassins attempted to kill McFadden with gunfire; later he died, a few hours after attending a banquet, and there is little doubt that he was poisoned.”

Mon, 01/07/2013 - 22:00 | 3131457 toomanyfakecons...
toomanyfakeconservatives's picture

I'm hoping to pay $1,100 tomorrow for a rifle that was worth $700 a little over two months ago.

 

It's a really sweet old rifle.

Mon, 01/07/2013 - 22:07 | 3131479 earleflorida
earleflorida's picture

sweet old rifle?

you can make your own at nearly nothing if you have the right tools, and knowhow...

Tue, 01/08/2013 - 01:01 | 3131866 Fix It Again Timmy
Fix It Again Timmy's picture

If it walks like a duck and quacks like a duck, then it is a ...

Tue, 01/08/2013 - 03:18 | 3132106 Lord Of Finance
Lord Of Finance's picture

Tyler forgot to spot the time on the graph when 'the creature from the great society' was given authority, who as soon as the C.I.C. was blown away, got started in gettin this debt machine a runnin by conducting a 'war on poverty', and exploding the size of government, which turned out to be more good intentions achieving even more horrific results. That is where(on the graph) our 'johnson' popped a serious 'Boehner.' 

 

   BTW, I know that Johnsons former boss did not help things either.

Tue, 01/08/2013 - 08:12 | 3132298 JoeSwede
JoeSwede's picture

The chart should have been a log chart. Not that it matters to the conclusion...

Tue, 01/08/2013 - 09:27 | 3132428 nantucket
nantucket's picture

lighthouses rule

Tue, 01/08/2013 - 12:19 | 3133042 Neo1
Neo1's picture

Use federal reserve notes and incur an Irrecusable obligation. The puzzle is complete!!!

A Banksters defeatism (realization of defeat) nightmare, Being forced to Return to Real Money=United States Note=Lawful Money, Use the Remedy within the Federal Reserve Act. Redeemed 12USC411, Refusal Penalty 12USC501a http://savingtosuitorsclub.net  Stop being a Slave!!!!!! This is Tax Free Money!!!!!!  http://stormthunder.com/

Convincing Congress to Abolish the Fed  http://www.silverbearcafe.com/

Wed, 01/09/2013 - 08:42 | 3135803 JiminGA
JiminGA's picture

The Fed is the primary cause of inflation. Anytime money is created by debt it insures inflation.  Debt requires interest, so one dollar of debt at 3% interest devalues that dollar by 3%.  Prior to the creation of the Fed in 1913 real inflation was virtually nonexistent.

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