This month as a service for our friends in the U.K. we have added a U.K. Historical Price Converter. This handy little calculator will tell you the equivalent value of any prices from 1751 to the present. It is based on the "Retail Prices Index" which was instituted in Great Britain in 1947 in an effort to determine how much the war was affecting prices. The data was later "backdated" to include prices back to 1751 by Jim O’Donoghue, Louise Goulding, and Grahame Allen in a paper entitled ‘Consumer Price Inflation Since 1750’. In it they state that, their article presents: "a composite price index covering the period since 1750 which can be used for analysis of consumer price … [Read more...]
Inflation was Up Slightly in January 2014
Current Inflation Commentary- The U.S. Bureau of Labor Statistics has released the Annual Inflation rate today. For the year ending in January, inflation was 1.58% up very slightly from 1.50% for the year ending in December 2013. Annual inflation is made up of 12 monthly inflation components and although monthly inflation was virtually Zero for December 2013 and rose to 0.37% in January. This fits well with the historical trend of low inflation in the 4th quarter and high inflation in the first quarter of the year. The Consumer Price Index came in at 233.916 in January which was actually … [Read more...]
Current Inflation Commentary for December 2013
Current Annual Inflation Commentary Annual Inflation: Annual inflation rose was 1.24% in November and rose to 1.50% in December. Monthly inflation for December 2013 was -0.01 or virtually Zero. Going by the Consumer Price Index which was 233.049 in December, 233.546 in October and 234.149 in September prices were "rolled back" to below June levels when they were 233.504 but greater than May when they were 232.945. Annual Inflation was 1.50% in spite of the FED buying $85 Billion a month in Bonds lending more credence to Robert Prechter's Deflationary scenario. You can get Robert Prechter's 90 page deflation survival guide free here. Historically monthly inflation rates tend to be … [Read more...]
What Causes Unemployment?
I recently received the following question about unemployment from a gentleman in Tanzania and I thought it was a good question and I would share the answer with you. What Causes Unemployment? I have been thinking on that situation of unemployment. Why does the rate of unemployment increase day after day? Does it mean that people have decreased the rate of thinking on creating jobs or there is any other reason? ~ Lioba from Dar-es-Salaam Tanzania. Here is my Response: Lioba, That is a very good question. Unemployment is a function of how efficient the marketplace is. In a purely agricultural economy, there is no unemployment, everyone has to work, if they don't work they don't eat. … [Read more...]
BLS Recovering From Shutdown
The government shutdown is over and the U.S. Bureau of Labor Statistics is recovering from their unscheduled vacation. The United States federal government shutdown of 2013, lasted from October 1 to 17, 2013. Unemployment data for the month of September was due to be released on October 4th i.e. four working days into the shutdown. So the employment data is now scheduled for release on October 22nd. And the Consumer Price Index which is used to calculate the September inflation rate, which was scheduled for release on October 16th is now scheduled for release on October 30th. Although the shutdown inconvenienced vacationers wanting to see National Monuments and the National Zoo, did it … [Read more...]
A Reader Question About IRAs and Gold Stocks
I recently got an excellent question from a longtime reader named Bob and I thought I would pass along some of what I told him. Bob has invested a good portion of his IRA in shares of Randgold Resources. The NASDAQ symbol is GOLD. Randgold Resources is a gold mining business based primarily in Mali. Its headquarters are in Jersey, the Channel Islands, it is listed on the London and the NASDAQ stock exchanges. Bob has been accumulating shares of Randgold because he feels that as a mining company it is a productive asset rather than physical gold (or paper derivatives of gold) which earns no interest (or dividends). Randgold peaked at around $127 back in October 2012 and has been trending … [Read more...]
Syria in the Throes of Hyperinflation
Living in the United States or other "stable" countries, we tend to think that Hyperinflation is a relatively uncommon event but that is far from the truth. In our post What is Hyperinflation? We list 26 instances of hyperinflation 11 of which have occurred since 1990. It seems that every couple of years there is another one. Even in the midst of deflationary pressures we have seen Zimbabwe (which ended in 2008), North Korea (2010-13) and now Syria. In Surviving a Hyperinflation we noted that "Hyperinflation only occurs in countries where the government has already broken down. Weimar Germany was mired in a social Civil War… Zimbabwe never had a working democratic government and the … [Read more...]
The Case of the Disappearing Gold
When I was in the 6th grade (many, many years ago) my class took a field trip to New York City and visited the NY FED. The highlight of the trip for me was a ride down the elevator (or more precisely what was at the bottom. The ride took forever with dozens of kids and one security guard in that tight stuffy space. Anticipation built as we went down what seemed like miles into the earth where the vaults rested on Manhattan bedrock. And what was in those vaults? Gold! Lots of gold! Each vault had a name on it but not people's names, countries names. After all in those days people weren't allowed to own gold. For years now there has been a controversy as to whether our (the U.S.) Gold … [Read more...]
Marginal Utility
In economics, the marginal utility of a good or service is "the perceived value from an increase in the consumption of that good or service". In other words, how much benefit do you get from using or consuming one more. The concept of marginal utility grew out of attempts by economists to explain how individuals determine price. The term “marginal utility” is credited to the Austrian economist Friedrich von Wieser which was a translation of Wieser's term “Grenznutzen” (border-use). For years economists knew that there was some sort of interrelationship between utility and rarity that affects economic decisions, but were at odds to quantify it. In opposition to what Karl Marx might have … [Read more...]
Highest Grossing Movies Adjusted for Inflation
Traditionally, war films, musicals and historical dramas have been the most popular genres and Gone With the Wind held the record of highest-grossing film for 25 years but doesn't even make it into the top fifty in the modern market. But purchasing power varies widely over the time period since Gone With the Wind was first released in 1939. But the true key to determining how revenues really compare is when you adjust them for inflation. Highest-grossing films (Nominal) First we will look at nominal gross box office revenues. That is the actual number of dollars (not adjusted for inflation) earned strictly in the box office. Modern films have an advantage because in addition to box office … [Read more...]
