September 6, 2014 by JImbo
So, after tackling the myth of Low Unemployment, let’s move onto something just as exciting… INFLATION!
This is where Washington REALLY thinks you’re an idiot. With the Unemployment lies they think you don’t know if you’re employed or not.
However, you could have a job. You might miss how many around you are working or not.
With inflation, you CAN’T miss it. You innately KNOW how expensive things are getting when you go to the store. And no, it’s not just “natural” or “inevitable.”
Without going into the whole system behind it, inflation is NOT “inevitable.” It happens because there’s too much money floating around. It happens usually because the government prints too much money, and spends itself into debt. (Sometimes it’s because of something like a gold rush or other windfall of money but you get the idea.)
In THIS case, we can assume it’s the extra TRILLION dollars the government is printing every year. Think about that. A TRILLION dollars when our whole economy is only about $17 Trillion is quite a bit. That’s about 6% more money crammed into the economy, meaning that YOUR SAVINGS are worth 6% less than it was last year.
That’s because everything you buy costs 6% more. Not EVERYTHING mind you, but the AVERAGE of everything. So, our inflation rate should be about 6%.
You instinctively know this from just going to the store and filling your car with gas. Everything is more expensive than last year. Last year was more expensive than the year prior.
That’s not coincidence, that’s DEBT SPENDING. It’s directly because of our government printing more money.
I know this is an oversimplification, but in a nutshell that’s what is driving things. I’m not an economist. I’m a cook. A cook who reads lots of books on economics.
If you’ve kept up on the news, you may be wondering… “But the inflation rate is only 2% according to the President.”
You’re right. Again, politicians don’t like the truth. They like votes. You don’t get votes when the economy is in the toilet.
So, they trick people! And themselves. I’m not entirely convinced that politicians don’t BELIEVE the lies they tell after awhile.
“True” Inflation would be the actual change in value of a dollar. They generally do this by taking a huge “shopping basket” of stuff you spend money on. Essentially, the government used to take a cross section of what MOST people spend their money on (rent, groceries, gas, heat, water, medical, clothes, TVs, etc) and then compare it to last year’s amount for the same things. I believe this was reliable up until about 1980ish.
“New” Inflation is what they use now. They use the same basket approach. However, everything “volatile” is omitted. Now, they TELL you it’s to “make sure prices are stable.” However, in practice the meaning of “volatile items” is “anything that goes up in price fast.”
Can you see where this might rather defeat the purpose of the whole thing? Yes, you guessed it. Gasoline.. OUT. Medical.. OUT. Heating Oil… OUT. Food… OUT.
Essentially all the “basket” has now is flat screen TVs and clothing in it. Those tend to not go up very fast.
Much like the Unemployment Rate, now the Inflation Rate essentially means nothing.
If YOU can live without buying food, medicine, gasoline or electricity then sure your inflation rate is pretty low.
For the REST of us, it’s about triple what Uncle Sam tells us. (see graph.)
Incidentally, while wrappning this up… this also helps to explain ANOTHER big myth the media likes to sell you about the “Evil Rich People.”
They didn’t REALLY do that much better than you in the last few years because they’re greedy. They simply don’t buy the same things and don’t make money the same way.
YOU are paid in dollars.
THEY are paid in stock.
YOUR money goes under the mattress.
THEIRS goes into more stock.
Stay with me now.
When YOU put a dollar under the mattress what happens to it in a year? Five years? Ten years?
Ten years ago you had a choice to buy a Twinkie or put a dollar under your mattress. Today you get it out.
It’s still a dollar.
Twinkies (now that they make them again) are now $1.80. You LOST MONEY!
At 6% inflation f everything else BUT that dollar, that dollar from ten years ago is now worth 54 cents of STUFF.
When a RICH person puts money in STOCK or Commodities (like Gold… or Soy Beans), unless the company tanks those stocks keep going up with inflation! So, that dollar they invested in stocks is worth $1.80.
The RICH guy can still buy a twinkie after ten years, but that’s it.
The newspaper will tell you “The Rich made 80% more in the last ten years!”
Did they? Or did they just keep the SAME amount of money as they had before… after inflation?
They can still just buy the SAME damn twinkie they could ten years ago. The price on the package is higher, but it’s the same Twinkie. (Probably quite literally to be honest. Those things last forever.)
Don’t blame the rich people.
Well, the rich ones in government you can.
They’re the ones spending us further into debt and more inflation.