This page has been archived and commenting is disabled.

100 Years Of Success? - Fed 'Inflation' Style

Tyler Durden's picture





 

Money is only as useful as to what it can purchase. The Fed has created a system where debt is now equal to money.  This is why big purchases like cars, housing, and even going to college are only feasible by mortgaging your future for many decades. Since the payments are broken down into tiny monthly installments many people pay little attention to the true cost of things over their lifetime. Yet, as MyBudget360 shows, over time, the U.S. dollar has lost a tremendous amount of purchasing power due to inflation. Inflation slowly eats away at your purchasing power yet having access to debt has given the middle class the false impression that they are still protected from the unraveling impacts of inflation. They are not...

As MyBudget360.com goes on to note,

Someone sent over a photo posted over on the popular Reddit website that shows the cost of living for people back in 1938.  You would think that people in 2013 would have more purchasing power than those living through the Great Depression.  Adjusting for inflation you would be surprised what has happened in the last 75 years.

 

The cost of living between 1938 and 2013

The picture in question has prices for living from 1938.  It includes important items like a new home, income, new car, rent, and extreme purchasing examples like tuition for Harvard:

cost of living

Source:  Reddit

You can normalize costs over time through adjusting for inflation.  Back in 1938 a new home cost about two times the annual average income.  A new car was only about one-third the cost of the annual average income.  These figures are important because back in 1938, using credit was only a small factor in purchasing goods.  The middle class didn’t start blossoming until after World War II so you would expect that things were still tough for regular households.  What we find though is that compared to the typical income, buying a new home or buying a car was relatively doable for most households.

Now adjusting all these figures for inflation shows how much more expensive things have become and how dependent we now are to financing purchases with debt (created by the banking system):

inflation and actual prices

 

This chart shows the impact of inflation and the declining purchasing power of the US dollar.

For example, a new home adjusting for inflation (using the BLS calculator) should cost around $64,597 per year.  The current cost of a new home?  $245,800.  The average income has stayed about the same normalizing for inflation (doesn’t say much since we are going back to the Great Depression here).  A new home today costs nearly 10 times the annual average income of a worker.  The two income trap has largely hidden this inflation since it now takes two households to accomplish what one income was able to do 75 years ago.  On top of that, people now need to go into massive debt just to purchase a home. 

 

Take a look at the cost of a new car as well.  In 1938 a worker was able to purchase a new car with one-third of their annual income.  Today a new car is more expensive than the annual average income.  This is why in 2013 one of the top growing consumer debt sectors was with automobile loans.

 

If things stayed the same, the cost of attending Harvard for one year in 2013 would be closer to $7,000 per year (the current tuition is $54,496 per year).  It isn’t only Harvard charging incredibly high tuition around the country.  Of course the higher education bubble is one of the most pressing issues around creating a $1.2 trillion student debt market

 

Rent, movie tickets, and even gasoline are much more expensive today adjusting for inflation.  This puts a heavier strain on the pocketbook of most Americans.  It also has created a dependency on debt.

 

We do have stronger safety nets so we don’t have the “in your face” poverty of the Great Depression.  Yet we still have close to 48 million Americans on food stamps.  The area that has seen prices become more affordable is with food.  This however is largely derived from better access to food and products and the mass production of this commodity.  Yet the bigger costs of living in housing, cars, rent, and going to college are all much more expensive today.  It may feel cheaper to some if they only look at their monthly debt payment but the true costs have increased.

As Jim Quinn (of The Burning Platform blog) so eloquently sums up,

Who benefits?

 

Bankers!!!!

 

Debt peddlers win when income doesn’t keep up with costs and media propagandists convince the masses they must have what they can’t afford.

 

Has the Federal Reserve created inflation benefited you in any way whatsoever? Lucky for Ben, Janet and the rest of the Wall Street cabal the average American can’t make change from a one dollar bill, let alone grasp the concept of inflation. The government education system has done its job, just as our owners desired.

 

Remember – inflation is well contained. Ben is still worried that it is too low.

Know your enemy.

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 12/26/2013 - 18:13 | Link to Comment ZerOhead
ZerOhead's picture

100 years of fighting the 'good fight' against deflation, jobs and the American people...

Thu, 12/26/2013 - 18:40 | Link to Comment Pairadimes
Pairadimes's picture

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” - Henry Ford

Thu, 12/26/2013 - 18:55 | Link to Comment ZerOhead
ZerOhead's picture

“Control oil and you control nations; control food and you control the people.”

~ Nobel Peace Prize Winner Dr. Henry Kissinger

 

" Control the Federal Reserve and you control the planet."

Thu, 12/26/2013 - 19:03 | Link to Comment economics9698
economics9698's picture

The Zionist dirt bag (Kissinger) wanted the USA dependent on Middle East oil so we would be vested in the region to PROTECT ISRAEL.

Everything the mf says is bull shit. A total pos if there ever was one.

Thu, 12/26/2013 - 18:49 | Link to Comment negative rates
negative rates's picture

We need perspective here, back then public education was about the same as now. What's different is that today we can put diamonds on the head of a needle and save a life with type A blood. Back then you had 3 stooges denistry, one to hold you down, one to try to drill into a #9 hardness with a #7 hard bit, and one to knock you out if things got rough. Or you would just pull the tooth and be on your way to your suffering reward. Inflation yes, better health for the private sector, it's matter of timing, in the dental fifties, it was considered to be the end.     

Thu, 12/26/2013 - 19:09 | Link to Comment All_Your_Base
All_Your_Base's picture

"We need perspective here, back then public education was about the same as now."

off topic but here is a link to pass eigth grade in the 30's

http://www.washingtonpost.com/wp-srv/education/v/tests.pdf

 

Thu, 12/26/2013 - 20:00 | Link to Comment Uber Vandal
Uber Vandal's picture

I disagree on the public education being the same as now.

For example, within the last few months, I have had people in their teens to early twenties try to tell me that Virginia is near Washington STATE or WEST of our geographic location (No, it is not, and it is EAST of us), and another had no clue where Minneapolis was, but did think it was somewhere "near Chicago" at least.

Another fine example was a cash register display was turned to where I could see the display that was facing the cashier, and the amount owed me in change was 67 cents. It showed the 67 cents not as $0.67, but two quarters, a dime, a nickel, and two cents.

If this is what our schools are turning out, we are so screwed.

Thu, 12/26/2013 - 21:43 | Link to Comment All_Your_Base
All_Your_Base's picture

poverty of the mind

Fri, 12/27/2013 - 01:08 | Link to Comment BraveSirRobin
BraveSirRobin's picture

The data indicates inflation actually has been vastly under-reported.

 

 

Thu, 12/26/2013 - 18:18 | Link to Comment AUD
AUD's picture

The Fed has created a system where debt is now equal to money.

Bullshit. The Fed has created a system where you think debt is equal to money. There is a difference, it's called a Ponzi scheme.

Thu, 12/26/2013 - 18:42 | Link to Comment disabledvet
disabledvet's picture

here's what happened to one of the biggest MLP's (master limited partnerships...tax free businesses basically) when the Fed announced Taper: http://seekingalpha.com/article/1913121-kinder-morgan-energy-partners-un... this is what happens when yield hungry investing heads south. Interesting write up...this has been one of the stocks powering the market higher this month. Yet...they don't pay taxes. "Ponzi" indeed.

Thu, 12/26/2013 - 19:38 | Link to Comment AUD
AUD's picture

Does this company pay a dividend?

Thu, 12/26/2013 - 18:22 | Link to Comment USA USA
USA USA's picture

But......Look at all of the cool things we have today!

Those poor deprived folks that lived in the dark ages (my parents).

They were middle class and we did very well, as far as I knew. Both worked and we were well taken care of.

But we had to play street ball, kick the can, hide the switch, ride bike with cards in the spokes and eventually watch a 5" B&W TV with the neighbors.

Thu, 12/26/2013 - 18:44 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Yes, life without an iPhone, Facebook and Twitter is not worth living.

Thu, 12/26/2013 - 18:52 | Link to Comment akak
akak's picture

I thought I was poor because I had no iPhone5S, until I met a man who had no iPhone5.

Thu, 12/26/2013 - 18:22 | Link to Comment MillionDollarBogus_
MillionDollarBogus_'s picture

Am cornfused.

The thread on Chinese buying gold starts out with; While the US consumer is rushing to spend what little savings they have left...

This thread talks about buying on credit.....

Which is it..???

Thu, 12/26/2013 - 18:27 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Savings, credit, who cares? It all spends the same!

Thu, 12/26/2013 - 19:02 | Link to Comment caShOnlY
caShOnlY's picture

Which is it..???

My guess from what I see with nothing but Credit Card SLAMS everywhere, the amount of credit card apps hitting mailboxes in the last 3 months, Car loans blowing over 8 years .........  it's all credit.   Income residual = savings.  Credit residual = debt.  simple. 

The average moronic consumer buys on credit and services the debt(minimum payment) with the paycheck, just like ol' uncle sammy.  Now sammy has to borrow to service the debt.  Pretty soon we will see card balance flipping as they increase credit levels to keep the game going just a bit longer for the old 'sumer.   One Bid con, AmeriCON. 

A big game of smoke and mirrors to disguise the declining standard of living.  When this game crashes the blowback will be probably fatal to some.  Stock up!! Bullets, booze, beans, butter and some bitchez, bitchez!!

Thu, 12/26/2013 - 19:22 | Link to Comment El Vaquero
El Vaquero's picture

This is entirely possible.  Here are links to lists of investor prospectuses for credit card securitization by several CC issuers:

 

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000921864...

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000922869...

http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001174821...

 

Notice that for the first two, they weren't doing a while lot of securitization between 2009 and sometime in 2013.  Now they're pulling their old tricks for more credit at somebody else's expense.  I expect that we'll see some of that QE come leaking out into the real economy if the securitization getting fired back up is any indicator.  I wonder if they're getting sick of 0.25% IOER.

Thu, 12/26/2013 - 18:26 | Link to Comment RockRiver
RockRiver's picture

Bankers win??? I am shocked.

Thu, 12/26/2013 - 18:28 | Link to Comment blindman
blindman's picture

Wednesday December 25 12:00pm
Gary Null - The Natural Living Show
.
Wednesday December 26 12:00pm
Gary Null - The Natural Living Show
.
http://archive.wbai.org/#ankor30
.
linked for the purpose of general edification,
this one too.
.
Thursday December 26 3:00pm
Sojourner Truth

Thu, 12/26/2013 - 18:33 | Link to Comment WhackoWarner
WhackoWarner's picture

I have never advocated violence, being of the "seeking refuge in the Dharma" crowd..

But sometimes I wish I had a method to bring dissatistfaction into the mainstream.  I can understand why monks and nuns in Tibet took to measures dissimilar to their belief system.  When you see complete disregard and intentional suffering/cruelty being inflicted to all beings around you; to all life; to the planet itself.

Hey Annie get your gun.

Thu, 12/26/2013 - 19:46 | Link to Comment Ban KKiller
Ban KKiller's picture

When there is a whole class of people with nothing to lose...watch out! See Middle East. 

I used to wonder where the suicide vest folks came from and how did they get so desparate that they would sacrifice their lives? Nothing to lose, plenty to gain.  

Thu, 12/26/2013 - 18:35 | Link to Comment FieldingMellish
FieldingMellish's picture

No wonder USPS makes a loss. They need to follow Harvard's lead and charge more for postage.

Thu, 12/26/2013 - 18:44 | Link to Comment disabledvet
disabledvet's picture

"honey...we're gonna have to stop going out to the movies now. we've gotta cut back."

Thu, 12/26/2013 - 18:43 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

I assume this article will not be included in Dr. Krugman's syllabus for the Spring 2014 term at Princeton.

Thu, 12/26/2013 - 20:01 | Link to Comment AlaricBalth
AlaricBalth's picture

"avoid at all costs. he routinely came to class unprepared, clearly had thought little about what he was to teach that day (much less how), and broadcast the impression that he was showing up only to justify his professor's salary. universities hire people like krugman as "prestige" professors and con't care whether they actually can teach."

"He's deadwood, not an active researcher. Princeton students deserve more than a newpaper columnist, no matter what are his political beliefs. This was the home of Einstein and krugman is a disgrace to this legacy. "

http://www.ratemyprofessors.com/ShowRatings.jsp?tid=243005

Thu, 12/26/2013 - 20:08 | Link to Comment akak
akak's picture

You simply have to love all the postively glowing, and obviously fraudulent sock-puppet, reviews Krugman received in the link above.  It reminds me, in fact, of all the similarly obvious, and fake, five-star product reviews on Amazon.com for clearly inferior products and merchandise.

Thu, 12/26/2013 - 18:47 | Link to Comment ShrNfr
ShrNfr's picture

You should remember that FDR did some very serious distortion of food prices in his effort to support the farmers.

Thu, 12/26/2013 - 19:00 | Link to Comment arkady
arkady's picture

Love the premise of the article, but some numbers are definitely off.

The most important one, average income. 

Median income is: 50k (source: http://www.mybudget360.com/how-much-do-americans-earn-what-is-the-average-us-income/)

Housing prices, obviously differ from state to state.  

If we were to really take an average, it is around 150k.  (source: http://www.statisticbrain.com/home-sales-average-price/)

So house multiple is 3x.

In 1938 the multiple was: 2.2x   

Similarly, the average car price looks accurate - but that means roughly 60% of average income goes to buy a new car.  Compared to 1938 where it was about 50%.   

Already quite a difference there...so forth and so on. 

Thu, 12/26/2013 - 19:48 | Link to Comment NickVegas
NickVegas's picture

I don't know, the list by State for 2011 diverges significantly from the average. Georgia at number 36 is listed at an average price of 150K. There is no urban / rural breakout, nor is there a breakout for mobile homes, so your statistics are, uhm, damn lies, there I said it. 50k is a funny number too, so if I make 10 million a year and you make a dollar, then my average income is 5 million and 50 cents. Just average in the 1%, and it all looks reasonable. Those food stamps hoards must be hiding income as they purchase houses for $150K.

Banks are crooks. They are robbing and looting this country and have been for years. Let me correct that, they are total control at this point, so this country is the banker's country. They own it, lock, stock, and barrel. Anyone who defends the banks is most likely a banker at this point, and POS in my book. This missive defends the banks with bullshit statistics.

Thu, 12/26/2013 - 20:10 | Link to Comment bonin006
bonin006's picture

Don't forget about taxes. Back in "38 people got to use almost all of what they earned as they saw fit. Now with income taxes, FICA, sales taxes, property taxes, you probably lose up to half your income in taxes.

Fri, 12/27/2013 - 06:11 | Link to Comment MickV
MickV's picture

Median income for a two earner houshold may be 50K. In 1938 it was almost always a single breadwinner.

Fri, 12/27/2013 - 11:03 | Link to Comment SeattleBruce
SeattleBruce's picture

While rising incomes (wages) have helped offset the ravages of inflation, why do you suppose the double income household arose? And now that that has become a necessity for most average folks, with it's attendant devestation to the nuclear family, we're seeing household income compression through the PT replacing FT, huge drops in labor participation rates and huge decreases in take home pay (compared with 1938).

Kudos to the article to get us to think through arguments related to inflation and income.

Thu, 12/26/2013 - 18:57 | Link to Comment J S Bach
J S Bach's picture

These charts and comparisons are amazing.  The Housing and Higher Education sectors are the most striking.  The Harvard tuition today is 8 times the rate of 1938 (adjusted for inflation!).  Usury is theft - pure and simple.

Thu, 12/26/2013 - 19:07 | Link to Comment Freewheelin Franklin
Freewheelin Franklin's picture

C'mon. You people are soooooooooooooo negative. Look at the good the Fed has done. it has effectively "collectivized" everyone's debt. 

 

/sarc

Thu, 12/26/2013 - 19:10 | Link to Comment A Lunatic
A Lunatic's picture

As long as you don't borrow money, have children, get a higher education, eat, buy a home, shop, drive a car, own property, consume energy or pay taxes, you will be largely unaffected by FED policies.......

Thu, 12/26/2013 - 19:09 | Link to Comment CunnyFunt
CunnyFunt's picture

B-b-b-but Kruggie says inflation in too low!

Thu, 12/26/2013 - 19:16 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Waahhh, the FED constantly "fights" to maintain an inflation rate of at least 2% and most Americans applaud that effort and nod their heads, Yes, yes, yes.....  The horror, the horror....

http://www.youtube.com/watch?v=VKcAYMb5uk4

 

Thu, 12/26/2013 - 19:20 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

an oldie but goodie...............

 

..............''Only the very intelligent understand the mathematical inevitability of usury.  The stupid simply see the rich getting richer without working while the poor work harder and harder and go backwards.  Institutional Usury lets money "make" money without work and it INEVITABLY bankrupts the poor and stupid...this is why it and its purveyors have been reviled as con artists throughout history.

Usury mathematically leads to bankruptcy and liquidation.  Once the machine of geometric compounding is set into motion, there is a very short window to get out, after which it CANNOT be stopped and will proceed to its final, foredestined outcome.''

from trav7777.......August 2010

Thu, 12/26/2013 - 19:26 | Link to Comment orangegeek
orangegeek's picture

It's just enslavement, that's all.

 

The way to take these fuckers down is to stop spending.

 

Stop with what is not necessary - booze, confectionary, that 10th pair of shoes, trend purchases, the fourth ipad.

 

Bankers will choke and die if spending grinds to a halt.

Thu, 12/26/2013 - 19:53 | Link to Comment Hobbleknee
Hobbleknee's picture

I buy new shoes once every 5 years, and I wear my clothes until they get holes in them.

Thu, 12/26/2013 - 20:14 | Link to Comment Xanadu_doo
Xanadu_doo's picture

Agreed, except for the part about booze being non essential.

Thu, 12/26/2013 - 21:01 | Link to Comment el Gallinazo
el Gallinazo's picture

 

Well, I agree with your statement practically, but not theoretically.  We have a debt based money system which means that the interest to pay the debts must be borrowed from the future.  If the debt does not increase continuously, then the money to pay the interest is not created, defaults start to occur, and the system crashes.  Many people, such as yourself, are smart enough to cut back in hard times and not borrow unless forced to for virtual survival.  The way our owners circumvent out better instincts is to force us to increase the debt involuntarily and collectively through increased government borrowing and to encourage personal borrowing for malinvestments like college tuition (after which most graduates fortunate enough can get a job at Wal-Mart of flipping Big Macs) and Twitter stocks by the mind control matrix of the MSM.  The only reason that the system hasn't crashed already from a hypercritical Minsky moment is the suppression of interest rates through the Exchange Stabilization Fund, started by FDR in 1934, and a part of the Department of the Treasury.  It colludes with the TBTJ banksters to buy and sell tens of trillions of nominal dollars of OTC interest rate derivative swaps to suppress the rates.  This is actually a much bigger deal than what the Fed is doing, in the sense that if interest rates were not suppressed, the system would explode in a NY minute and the Fed could not continue to eat its own vomit with QEinf. The real purpose for the astronomical rise in government spending and Fed printing is to create the money to pay the interest to the TBTJ banks and prevent their default and collapse.  They will do this until they can't.  Then we get martial law, a really big war, and a Third Reich "final solution" of people who can think clearly.

Thu, 12/26/2013 - 19:29 | Link to Comment Seasmoke
Seasmoke's picture

Jesus warned about usury 2013 years ago.

Thu, 12/26/2013 - 19:32 | Link to Comment Seasmoke
Seasmoke's picture

I just knew I was getting a great deal on Forever Stamps.

Thu, 12/26/2013 - 19:37 | Link to Comment asteroids
asteroids's picture

The FED inspired 2% inflation over 100 years is meant to cover the gambling losses of its member banks. Unusual losses like 2007 require gigantic raises in inflation.

Thu, 12/26/2013 - 19:43 | Link to Comment Quaderratic Probing
Quaderratic Probing's picture

I make 57.77 times the 1938 worker. When you went to the store you only had milk and eggs and whatever was coming off the fields. Food from all over the World is there now. My car has computers and crush zones and airbags more horsepower and better gas mileage.

I have noticed the same people who don't want inflation in prices want their houses to rise and their stocks to rise and their wealth to increase, If they own Gold they want it's price to rise exponencially.

Has anyone noticed that the Kennedy's were millionaires back then and their wealth was not inflated away? Money is a dynamic thing it does not sit and watch the clock.

Instead of wasting time on what things were, put your energy into finding the next place to put your money to make more.

Thu, 12/26/2013 - 20:00 | Link to Comment NickVegas
NickVegas's picture

Inflation, usury, it's all a con game, so those who don't work, can siphon off value from those that do. Not that that list is complete. It's called modern slavery, and I work in their mines, and yes, all those around me who should be solidly middle class, are debt slaves, living absolutely paycheck to paycheck. These are educated people in solid middle class jobs, yup, living completely paycheck to paycheck. Can you say global ponzi, but instead of tracking them down like dogs, they have become the controlling force in our society.

Thu, 12/26/2013 - 21:44 | Link to Comment Quaderratic Probing
Quaderratic Probing's picture

I work in a smelter and people around me live check to check, but they have a 3/4 ton truck and 40 ft trailors and boats and ATVs and cottages and Mexico every winter along with huge houses and every toy you can put in one. Nobody put a gun to their head to get into debt and you still have to sign your life away all by yourself. When we feel inflation we negotiate a raise and move on

Thu, 12/26/2013 - 22:25 | Link to Comment J S Bach
J S Bach's picture

QP...

 

Many of the luxuries we enjoy today are purchased on the debt of our children and grandchildren.  The only reason the Ponzi scheme of your imagined wealth has lasted as long as it has is because of the dollar's unique status of "reserve currency" to the world.  Our "wealth" would have long ago deteriated were it not for this fact.  But, as with all things... natural (and economic) laws will prevail.  Be prepared for an unpleasant wake-up call.

Fri, 12/27/2013 - 12:11 | Link to Comment withglee
withglee's picture

Many of the luxuries we enjoy today are purchased on the debt of our children and grandchildren.

This isn't true in any case I know of. But, on the other hand, all "government services" are trading promises (debt) that will never be delivered on (repaid). Broken government trading promises are what is being passed on to our children and grandchildren. It passes in the form of inflation because out Medium of Exchange is hopelessly mismanaged.

The problem can be fixed almost instantly, but in whose interest, besides mine, is it to fix it?

Fri, 12/27/2013 - 00:50 | Link to Comment samsara
samsara's picture

Isn't that spelled moar?

Fri, 12/27/2013 - 04:47 | Link to Comment A Nanny Moose
A Nanny Moose's picture

People want their stocks and homes, to go up because of inflation.

Productivity improvements exert naturally downward pressure on prices. The Fed is fighting natural market forces. The Fed will lose.

Thu, 12/26/2013 - 21:41 | Link to Comment JerseyJoe
JerseyJoe's picture

Correction: A first class stamp as of today - $.49.  Carry on. 

Fri, 12/27/2013 - 04:48 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Long "Forever Stamps"

Thu, 12/26/2013 - 21:49 | Link to Comment Mareka
Mareka's picture

Makes complete sense when our money supply is controlled by a cartel of private bankers.

The flow of wealth to the banks is maximized when everybody is maxed out on credit and sending their entire paycheck monthly for the minimum all interest payment on their loans.

If you don't want to play? too bad.  The price of everything you buy is being pumped up by all of the easy credit offered to everyone else. 

If you want that new Lexus IS350 convertible you need to offer at least as much as that welfare mom with the loan application in hand..... wow, that sounded a little bitter.

Thu, 12/26/2013 - 22:55 | Link to Comment falconflight
falconflight's picture

Our policy in the ME has been to protect the Family Saud and their various cousins....Hasemites in Jordon, Iraq, etc et. al. from Israel not the other way around. 

Fri, 12/27/2013 - 00:48 | Link to Comment samsara
samsara's picture

I have a sneaky suspicion that the $.10 a Gallon for Gas made the other things possible.

Fri, 12/27/2013 - 07:53 | Link to Comment straightlinelogic
straightlinelogic's picture

The Fed and fiat money are "Fools' Gold." See The Golden Pinnacle (historical novel), chapter 27. Everything that has happened since 1913--the depreciation of the currency, the consolidation of the banking cartel, and the accretion of power to the Fed was completely predictable before the legislation was passed, and indeed there were some who predicted it. The Fed's failure is predictable now, because you can't make an honest woman out of this political whore. The only sound monetary system would be privately issued, gold-backed money. 

Fri, 12/27/2013 - 08:13 | Link to Comment Balls Galore
Balls Galore's picture

The average cost of house, car and tuition has to be increased (when debt financed) by interest payments which, of course will increase with higher principle. This sucker is getting way too big, it's only a matter of time before it will go DOOOOWWWWWWWNNNN

Fri, 12/27/2013 - 09:27 | Link to Comment Buzz Hacksaw
Buzz Hacksaw's picture

I remember being told in 1975 that all this automation would relieve us of work. As it urns out they were were not lying. They, however, neglected to mention that it would also relieve us of income.

Fri, 12/27/2013 - 12:02 | Link to Comment withglee
withglee's picture

The Fed has created a system where debt is now equal to money.

Money is "a promise to complete a trade". It always has been ... it always will be. And debt is just "a promise in progress". So, of course, money "is" debt. But that's not bad.

And the "Fed" did not create the system. Rather, the Fed is our current manager of our Medium of Exchange (MOE). And it is an incompetent manager. Under Fed's management, inflation has averaged 4% for 100 years. Further, the certification of trading promises (i.e. money creation) has been sporadic and unrelated to trading promises over those years. It is purposely manipulated to run the international banker's farming operation ... i.e. to keep the business cycle going.

With a properly managed MOE, trading promises are freely certified; defaults are monitored and an equal amount of interest is collected, thus guaranteeing inflation to be zero everywhere at all times.

We can have proper MOE management, but we won't until people discard predominant myths about what money is and come to know what it has always been.

Money "is" and "has always been", a "promise to complete a trade".

Do NOT follow this link or you will be banned from the site!