No Inflation Friday

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man blog,

One of the greatest lies of the modern financial system (and that’s really saying something) is about inflation.

The puppet masters who control the system have managed to convince people that deflation = bad, and inflation = necessary evil.

Perhaps the even bigger lie is that of the actual inflation statistics. They tell us that there’s no inflation… or minimal inflation.

And they tell us that the ‘target’ rate is 2%. Bear in mind that 2% annual inflation means your currency will lose over 75% of its value during the course of your lifetime.

But these figures are massively understated. And you don’t have to look hard for proof.

US postage stamp rates, for example, are set to increase this weekend. They’ve been going up almost every year since 2006.

This weekend, the rate for a one-ounce first class letter will rise to 49c from 46c, a 6.5% increase. And the price to send a postcard will rise from 33c to 34c, a 3.0% increase.

If you take a longer-term view, the price of a postcard back in 1951 was just one cent. This means that the dollar has lost over 97% of its value against postcard shipping rates in the last six decades.

Let’s look at this another way.

According to the US Department of Labor, the average household income in 1950 was $4,237. This means that the average US household could afford to send 423,700 postcards back then.

Today’s median household income is $51,017 (and that’s from a majority of dual-income households). This means the average family in the Land of the Free can now afford to send about 150,050 postcards.

It’s a huge difference. The standard of living denominated in postcards has declined by nearly two-thirds since the 1950s.

Short-term, long-term, the conclusion is the same: Inflation exists.

And any suggestion to the contrary that inflation is ‘good’ or at least a ‘necessary evil’ is simply a lie. It destroys both purchasing power and standard of living.

Rational, thinking people need to be aware of this. If you hold a lot of your savings in a bank denominated in paper currencies like the dollar or euro, you will lose.

And I’d strongly urge you to consider holding at least a portion of your savings in stronger, more stable currencies, or better yet, alternative asset classes that cannot be inflated away by central bankers.

This includes productive real estate, precious metals, or even collectibles.

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Say What Again's picture

And to think, I was going to skip out early to go to scores.  I would have missed the fun

Landotfree's picture

"The puppet masters who control the system have managed to convince people that deflation = bad, and inflation = necessary evil."

It's not about bad or evil, the system must expand exponentially forever or the alternative (which is unavoidable) is collapse and liquidation of the walking unfunded liabilities.   The only way to win the forever war against the equation is to have unlimited power... sorry I don't know who has that sitting on this floating rock.  

The Fed's job is simple.... keep the game going as long as possible... the author of the article is clueless in a Sea of Blame.  There is absolutely nothing a central bank can do other than to convince people like the author that helicopters are coming... the author is a wet dream to them.

"Rational, thinking people need to be aware of this. If you hold a lot of your savings in a bank denominated in paper currencies like the dollar or euro, you will lose."

A good portion of the 7 billion unfunded walking liabilities are going to "lose"... a little late to be complaining.

Say What Again's picture

To the DOWN Vote troll,

Have a great weekend.

JR's picture

America’s most precious legacy to the world was liberty.

The West's hero of civilization, Thomas Jefferson, “insisted that liberty is impossible without secure private property.” The Federal Reserve has destroyed that security.

Americans' private property is no longer secure; they are losing their property - the value of their private assets - because of inflation and Fed usury and transfer of wealth – by design.

Jefferson explained that “a right to property is founded in our natural wants, in the means with which we are endowed to satisfy these wants, and the right to what we acquire by those means without violating the similar rights of other sensible beings…”

Fed International bankers and the Congress are seizing Everyman’s wealth, violating arbitrarily the “guarantee to everyone a free exercise of his industry and the fruits acquired by it.”

That is the ugly fact; this is the evil.

“While boasting of our noble deeds, we are careful to conceal the ugly fact that by an iniquitous money system we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery.” – Horace Greeley

There is an alternative. End the Fed.

Landotfree's picture

Depends on what you consider an alternative... instant collapse and liquidation of the walking unfunded liabilities.  

My guess is a few billion will have to go... if nukes are used completed or near complete wipeout is not out of the question.

Sorry buddy, you don't need a central bank to use the equation.   System has been going through the same cycle before there were things called central banks or even banks.   Attach interest ot your medium of exchange and the clock starts ticking.

You are actually the central banks wet dream, you obviously don't know it.   You are actually trying to cure the symptom instead of addressing the problem... good luck.  

JR's picture

Like Keynes and Krugman, you believe Bernanke can stabilize this depression, this linear train wreck, (yes, I said linear), by printing and printing and more printing – wiping out the savings and purchasing power of every man, woman and child in America along Main St. while the speculators on Wall Street, aka, oligarchs, rake in the dough by the trillions.

Well, I have news. You keep the Fed and its intervention in the marketplace. We’ll resurrect the old supply and demand market economy that cures depressions and we’ll let it determine the equilibrium in the market, rather than the Fed.

Von Mises showed that this unwarranted expansion of bank money, with all the central banks acting in concert, not only drives up the prices of goods and inflation but, that by pouring excessive new loan funds into the business world, it artificially lowers the rate of interest in the economy below its free-market level. And that’s on top of ZIRP policy.

What do an artificial interest rate and high inflation spell?  They spell trouble.

Booms and busts are short-lived in a market economy. They cure themselves.  Mises would tell you that the government must do nothing.  It’s called laissez-faire policy. But, as you say, Bernanke with his QEternity policy must go on and on and on, sowing trouble,  else the Fed's whole house of cards will collapse. IOW, you, the same as Michael Bloomberg, are prophesying perpetual depression (i.e., permanent stagflation) for America and nearly permanent mass unemployment.

I have news. When this inflation and theft finally cause the public to balk, the piper must be paid. And we'll see how that works out.

My alternative is natural selection, a profit-and-loss economy. What do you call yours? Keynesian socialism?

Mad Muppet's picture

America’s most precious legacy to the world was liberty.

The West's hero of civilization, Thomas Jefferson, “insisted that liberty is impossible without secure private property.” The Federal Reserve has destroyed that security.

Americans' private property is no longer secure; they are losing their property - the value of their private assets - because of inflation and Fed usury and transfer of wealth – by design.

Jefferson explained that “a right to property is founded in our natural wants, in the means with which we are endowed to satisfy these wants, and the right to what we acquire by those means without violating the similar rights of other sensible beings…”

Fed International bankers and the Congress are seizing Everyman’s wealth, violating arbitrarily the “guarantee to everyone a free exercise of his industry and the fruits acquired by it.”

That is the ugly fact; this is the evil.

“While boasting of our noble deeds, we are careful to conceal the ugly fact that by an iniquitous money system we have nationalized a system of oppression which, though more refined, is not less cruel than the old system of chattel slavery.” – Horace Greeley

There is an alternative. End the Fed.

 

 

Simply fucking brilliant, JR.

aVileRat's picture

Didn't 1929 have a similar bad friday before the big kersplat ? Or is my brain overstimulated from all this Cherry Coke ?

eh

 

kridkrid's picture

Are the two mutually exclusive?

MarkD's picture

That's why I use email..... no inflation. hehehehe

Stuck on Zero's picture

Another way to look at it is in terms of productivity.  Mail sorting machines, high-speed package handling, improved feul economy in jets etc. and still the rates go up.

 

Yen Cross's picture

  When I read articles about the USPS this video comes to mind. Just like every other .gov crony controlled entity, the USPS has fully flushed itself down the shitter!

   I remember when I was a kid, I respected my mailman and knew him on first name basis, like he was Santa Claus or something. Now we get videos like this fat bastard destroying personal property because she can't walk to the fucking porch without an oxygen tank!

  It’s Almost Unbelievable What One Homeowner’s Security Camera Caught a U.S. Postal Worker Doing | Video | TheBlaze.com

ghostfaceinvestah's picture

Yeah, the but Fed will argue "hedonics": you don't have to send postcards anymore, email is free, thus the cost of sending a message has decreased, and this deflation is EVIL!!

taketheredpill's picture

 

 

I hedged my Postage Stamp exposure with Antique Coca Cola Drink Trays.

 

WTF?

Papasmurf's picture

If you could buy ethics, then you would have a true antique collectable.  They don't make that anymore.

pods's picture

This is the skim that the govermnent gets for their unholy marriage with the FED.

They get to spend $$ before they are devalued.

Oh, and you are taxed on nominal income, so they have that going for them too.

pods

HaroldWang's picture

Damn! A -300 day would have warranted the deer. Too bad. Would love to see her.

Johnny Cocknballs's picture

inflation i.e. loss of value of a discrete unit, i.e. purchasing power is inevitable in any system in which the money supply grows at a regular, let alone exponential rate.  That's not evil men sipping cognac on the top floor of the Fed  - that's just fuckin' math.

 

Still, point taken, but you're preaching to the choir, Simon.  We can end the Fed, but if we still have fractional reserve lending/checkbook $ creation, we're in the same bloody boat...  a boat, I presume, you would advise us to fill with krugerands and sail to Nicaragua, eh?

Dre4dwolf's picture

USPS never delivers on - time, and they lie about delivery attempts ALL THE TIME.

I managed to get one of my packages the other day (not in the normal way) the package said that there was a delivery attempt, the truck passed by my house, without making the supposed attempt o/c so I followed the sumabitch up the block and asked him why he didn't deliver the package.

He answered that the last driver of the truck was supposed to deliver it but "he left it" (2nd non-attempt attempt), so I asked him why he didn't deliver it after clearly knowing.... so he just handed the package over and looked like an ass.

 

USPS is either trying to steal packages, or the delivery personel are delivering every other package and being lazy.

 

Government is so-ineficient.... why don't we just get rid of usps and just use actual delivery companies that actually deliver the f'n packages on time????

 

Just GIFT USPS and all its assets to UPS , they would manage the resources a lot better than USPS.

Papasmurf's picture

They don't like to get out of the truck to deliver your package, so they drop off an attempted delivery ticket.  I had cross words with the post office manager in town (a ten mile round trip to collect packages)  after I found the trend and had watched him drive right by that day without making an attempt to deliver.  Now they are very good about delivering stuff.  First class gets to the suberbs overnight and across country in 2-3 days.  I think that's more than acceptable.

FedEx is the one to avoid.  They send subcontractors out in Penske rental trucks and drop packages off in the wrong yards at 9:30PM.   The CEO may have tweaked profits a bit on rural routes, but they have lost my business every time I have a choice.

disabledvet's picture

I need to move to South America to prevent wealth confiscation through inflation?
I'm confused.

Did you mean "keep your dolares and move to South America"?

Cornholiovanderbilt's picture

You will have to move to mars to escape the global tyranny that is in it's infantcy  :-(

akak's picture

No no no!  There is NO inflation!

Because, as we all know, courtesy of (former) ZH pigman poster JimmyJames, "Constant inflation-adjusted prices prove that there is no inflation". 

And according to poster Orly, as long as she can (supposedly) keep buying chicken breasts at $0.99/lb (a price that I have not seen myself in well over 20 years), there is no inflation either.

Now who are you going to believe: them, or your own lying eyes?

Miffed Microbiologist's picture

Akak, I think in reality, Orly's chicken breasts are actually Sino-textured "meat" sprayed with essence of chicken containing 33% "flavor enhancing" fluids by weight. Comparing that to a chicken breast from a real chicken is absurd. Fake chicken for a fake world full of ignorant, apathetic, pliant people.

Miffed;-)

Flakmeister's picture

I wonder if I will have to explain the concept of cost-push inflation yet again to the Austrians...

Edit: As an aside, this is a classic, http://xkcd.com/1321/

GeoffreyT's picture

Pfft. Cost Push is absolute fucking nonsense - the sort of shit that undergraduates get taught by innumerate Keynesian journeyman hackademics because it's pedagogically rtractable and easy to put into an essay question for the quantitatively-incompetent hand-wavers.

Try generating cost-push inflation if the money supply is fixed: can't be done unkless you descend to Krugman-level embroidery - create a system in which some goods have magic powers (e.g., increasing returns over the entire quantity axis).

Absent Krugman-level chicanery, you will get a change in relative prices among goods, but no change in the aggregate price level except that induced by population growth and productivity growth (both of which will put deflationary pressure on prices).

 

I'm not 'technically' an Austrian - one of my mentors was a foundation member of Mont Pelerin, but the others are straight-up Varian-style micro/macro (my PhD supervisor was himself supervised by Leontief... that's not getting you an "Austrian").

alangreedspank's picture

Would not consider myself an expert, but isn't the short definition of it kind of a moving goal post type of thing anyways ? "A type of inflation brought about by important goods' price going substantially higher" What absolve money supply from this initial price ramp and what is "important" ?

kridkrid's picture

This article is kind of dumb. There are all sorts of reasons why the cost of sending a postcard is increasing. Government inefficiency being one and there being so many other options to communicate being another. We certainly are facing inflation and inflation is much higher than what's being told to us, but this whole stamp example is kind of dumb. If I wanted to choose a single means of communication to prove deflation, I would use the cost of making a long distance phone call. That would be equally dumb.

Au_Hunter's picture

Respectfully, after attempting to break through the partisan ignorance I've found such rudamentary examples still above the intellect of most lovers of big, unconstitutional government.

WhyWait's picture

The cost of delivering a card today in hours of clerk time is way down from 50 years ago, and the costs have been further reduced by lower standards for delivery time.  There is no way that - absent underlying inflation - this service should cost more.

Long distance phone calls are another matter, certainly you get a lot more for your money now if you're calling California.  

But consider, 40 years ago I needed a phone line to function, today I need a phone line to function. One way to look at the bottom line is I have to shell out $100 for my cell phone service plus more for an iPhone - I'll be lucky if it lasts the two years of the contract - and it doesn't make me any more efficient or effective than my $18 landline did then. Less so, because 40 years ago people used to pick up when you called them. It's actually harder work to reach people now.  

I can see either argument, but if you ask what does it cost to maintain a certain standard of living, the way the BLS folds in quaity improvements helps cover up the fact that we've been slowly sinking.

Au_Hunter's picture

The CPI as a measure of inflation is the best example of the evil of unrestrained government. After relegating Congress's Enumerated Power, " to coin money, regulate the value thereof, and of foreign coin, and fix the standards of weights and measures" to the unconstitutional Progressive reconstructed central bank previously destroyed by President Andrew Jackson, Congress then needed a manner to reduce "Entitlement Spending" which is a euphemistic lie for "We tax you today upon a promise to give you someone elses taxes later" Income Tax, but I digress...

Congress ceeded it's appropriations authority over to the Department of Social Security, instructing DSS to fund the Cost of Living Alowance necessary to maintain benefits as Government induced inflation reduced the value and purchasing power of the individuals Social Security Benefits.

Congress tied all Social Security COLA increases to CPI which intentionally under reports inflation, thus instituting the first cut to Social Security Benefits in the mid 1970's...

True inflation for 2012 was 8% yet CPI reported an annual inflation rate of 3.1% which is a benefit cut of 4.9% across the board which "Reduces the Growth of Entitlement Spending"...

Now, please imagine you find yourself in my shoes, disabled at the age of 30 as a "skilled laboror".

Your disability is a result of an unexpected emergency surgery and you have a window of "temporary disability" provided by your employer of 6 months, half your physical rehabilitation and you are terminated.

You apply for SSDI, are denied, appeal and are granted benefits which required two years while having no income while you are in physical therapy. You qualify for the maximum SSDI benefit, yet every year your benefits are cut as you attempt to retrain for another career by an average 5% annually...

5% X 20 years = 100%...

You are well informed and learn the Speaker of the House and the President are in bipartisan agreement CPI requires "modification to reduce the growth of entitlment spending" and BOTH propose increasing the disparity between the true rate of inflation and as reported by CPI...

You increase the disparty to cut SS and SSDI benefits by changing to "Chained CPI" to cause further poverty within the elderly and disabled population in secret while SCREAMING about "Income Inequality" being caused by government induced inflation and increasing minumum wages while cutting Social Security spending, not by reducing overhead, but cutting the funds required to live...

Yes, as a matter of fact, I can document all this easily as I have spent over 20 years in study.

 If one fails to recognize the fact all spending cuts have been directed at the people and not government, yet still believe government is "compassionate" and/or "fair" I'd like to suggest visiting your nearest county mental health facility and speaking with a licensed expert... 

kenezen's picture

Well designed and delivered!

hedgemastermb.blogspot.com

Thanks

WhyWait's picture

Check out John Williams' www.shadowstats.com for a serious attempt to reconstruct what the change in the CPI would be if the BLS hadn't made multiple changes to the formula over the years.  Using the 1990 formula, from their chart, the current rate would be about 5% not 1%, which seems about right. Using the 1980 formula, Williams puts it at about 9%, which seems high.

 

 

adr's picture

Ten years ago I could get through the day on $20. Gas, food, etc. Now I need to spend about $40. Just gas is $15 a day. Everything is just about double. I could buy a week's worth of groceries for about $40, now just a few boxes of cereal, milk, and a little hamburger is $30. It's about $100 for a week of groceries.

10% a year for ten years is about right.

GeoffreyT's picture

10% a year for 10 years does not double the year 1 value: it increases it by a factor of 1.1^10, i.e., 2.59 times.

To double something in ten years, you need to calculate 2^(0.1)-1, which turns out to be a number like 7.18%.

It's easier to use the 'Rule of 72' to calculate doubling time if you know the rate of return "r": doubling time T = 72/r

To find an r that causes doubling in T periods you just invert it: so to find the rate of inflation that will double prices in ten years (T=10), you do r = 72/T (i.e., r = 72/10, or 7.2%).

Papasmurf's picture

+1 for posting the rule of 72.

thewayitis's picture

 

  The USPS is looking to go out of business .....People will just pay their bills online. Costing (.0 cents). Hows that u bastards .....

 

 

Eurodollar's picture

Can someone do the math on how much interest has been paid to the Federal Reserve (and how much wealth has been transferred) (through tax and inflation), and other privately held central banks? It would be interesting to compare this to where we have been at for the last 6 1/2 years. Surely putting a big sum on the evil can help people realize the crime going on right in front of our very eyes.

adr's picture

Beanie Babies were collectable for a time. If you timed it right you could have retired off them.

I am happy that i know how to build things with my bare hands. Even a skill like knowing how to build a fire is valuable today. Go find a 13 year old on the street and ask him to build a campfire. He will probably ask, "Is there an app for that?"

alangreedspank's picture

I don't think that can be used as proof of inflation if there are. Government is known to undercharge to look all nice in the beginning and then cranks the fees up later. They did this with retirement insurance here as well.

AgentScruffy's picture

Along with understanding how the govt fakes stats, I've noticed the price of certain specific items going up. In the camping section at Walmart, they sell these small oval battery-powered lanterns. They were always $4.44 for as long as I can remember. During the recession they suddenly spiked to $8.88. In the same section, they sold a packaged basic pocketknife for $1.00. I'd pick a few up now + then for my "barter box" (read Peter Schiff). Last week they went to $1.97. (Meanwhile, my salary hasn't changed since 08--like a lot of folks).

Joeman34's picture

This article is worthless.  The increase in postage rates is more a reflection of the inefficient, wasteful government that is in charge of running the system.  Arguing that it is isolated to currency effects is ridulous.  I don't know why I even waste my time with Simon Black.  No more...

CuriousPasserby's picture

So it sounds like a good investment would be Forever stamps. If you bought them for 41 cents on May 1, 2008, they'd be worth 49 cents Monday, nearly a 20% gain.

If you buy some Forever international stamps on Saturday for $1.10 ea they'll be worth $1.15 on Monday, a nearly 5% gain in 2 days!

It was Mr. Ponzi himself who stated investing in postal coupons arbitraging the rates.

NoWayJose's picture

I invested in 8 books today to add to my 'stack'. Anyone who thinks the 3 cent increase is going to be rolled back in a couple of years (it's supposed to be) - is drinking Fed Koolaid.

DaveA's picture

According to Senator Tom Harkin (D-IA),

"We're willing to negotiate, but $10.10 is a bottom line. We cannot go below that. Let's be clear: our federal minimum wage of just $7.25, which has not budged in more than four years, is now a poverty wage."

$7.25 to $10.10 in four years is an 8.6 percent inflation rate. You heard it from the horse's mouth.

headhunt's picture

That's the assholes mouth

RaceToTheBottom's picture

Inflation is the Banksters dream, It forces you to disregard risk and invest in companies that you would normally not, otherwise you lose via inflation.

Fess's picture

Interesting, but just note that on January 1st 1952 the cost of a postcard went up to $.02, so the family that could send 423,700 postcards on December 31st 1951 could only send 211,850 the next day.