Last December, we explained why central bankers are terrified of economies that slip into a very difficult to stop deflationary spiral. European policymakers are not yet terrified, but it is fair to say they are concerned about what has been persistent low inflation. From Reuters: Euro zone price inflation fell unexpectedly in May, increasing the risks of deflation in the currency area and all-but sealing the case for the European Central Bank to act this week. Annual consumer inflation in the 18 countries sharing the euro fell to 0.5 percent in May from 0.7 percent in April, the EU’s statistics office Eurostat said on Tuesday. Fed Casts A Wider Economic Net Unlike the … [Read more...]
Oil, Petrodollars and Gold
For thousands of years gold has been synonymous with money, albeit with periods where governments mandated other mediums of exchange. Therefore, throughout history prices were measured in gold rather than in dollars, Rubles or Yen. By looking at the chart to the right you can see the current price of gold over the last 24 hours in terms of dollars. As of this writing it is $1256.70 per troy ounce but gold has fallen from its monetary pedestal and now fluctuates just as other commodities. The Fall of Gold and Rise of the Dollar Shortly after assuming office in 1933, President Franklin Roosevelt perpetrated one of the greatest frauds ever on the American public. He knew that the … [Read more...]
What are Excess Reserves and How Could they Spark Inflation?
How can you possibly have too many reserves? You would think that the more reserves the healthier the institution and so there would be no such thing as "excess reserves". We've mentioned this in previous articles such as FED Looks for New Ways to Crank Up Money Supply and How “Excess Reserves” and the Money Multiplier Could Trigger Inflation but excess reserves are in the news once again as Philadelphia Federal Reserve Bank President Charles Plosser says that that "excess reserves" could push inflation dramatically higher. Well, we have been telling you that for quite some time so it shouldn't be news to long time readers. But if you are new to InflationData... What are Excess … [Read more...]
Unique Inflation Characteristics of the Decades in the Early 1900’s
The Beginning of Inflation Tracking in the U.S. Contrary to popular belief the U.S. didn't begin tracking inflation in 1913. Inflation tracking actually began in 1917 but once the index was constructed inflation rates and the Consumer Price Index for the prior years were reconstructed back to 1913 from price data available at the time. In 1917 the U.S. joined World War I and one of the prime motivators for developing the CPI was rapidly rising prices due to the war effort. The government was pumping money into the shipping centers and the workers were demanding cost-of-living adjustments for wages. Total cumulative inflation for the period of 1913 through 1919 was an astronomical … [Read more...]
How to Grow a Small Account into a Big Account
Today we've got a video for you from millionaire trader John Carter that shows: The difference between trading for income vs. trading for growth The # 1 job that every trader has to accomplish Why you don’t want to focus on being right Why position sizing may be the most important factor for small accounts Check out the video here … [Read more...]
Various Methods of Calculating Inflation
Why are There So Many Different Ways to Calculate Inflation? We've all heard the old saying, "Figures don't lie but liars figure" or perhaps "You can make numbers say anything you want". Both of these sayings contain the underlying assumption (or at least possibility) of malicious intent. But even if you have the raw data and just want to get at the truth, number calculations can present difficulties because the answer you get can depend on how you analyze it. For instance, you would think that if you want to know the "average" income of a group of 10 people it would be easy to calculate. And if all the incomes are relatively closely grouped it is easy... simply add them all up and … [Read more...]
April Inflation Up Sharply as Projected
The current CPI for the month of April was 237.072 which resulted in monthly inflation being up 0.33% in the month of April causing the annual inflation rate to jump from 1.51% up to 1.95%. Last month we told you to be aware that this month's jump would be seen as a possible return to inflation and of course the main stream media and even some of our competitors fell right into that trap. USInflationCalculator for instance quoted the Wall Street Journal as saying, "Inflation may be normalizing a bit faster than we thought," the Wall Street Journal quoted Laura Rosner, U.S. economist at BNP Paribas. "It’s still too early to assume this will persist, but it certainly raises the risks of … [Read more...]
Is It Time to Admit That Gold Peaked in 2011?
By Jeff Clark, Senior Precious Metals Analyst Have you seen this “real price of gold” chart that’s been making waves? Among other things, it purports to show the gold price adjusted for inflation over the past 223 years. Notice the 1980 vs. 2011 levels. The chart makes it seem that on an inflation-adjusted basis, gold has matched its 1980 peak in 2011, or nearly so. A mainstream analyst who still thinks of gold as a “barbarous relic,” a government official who doesn’t want people to think of gold as money, or an Internet blogger looking for some attention might try to convince you that this proves that the gold bull market is over, arguing that the 2011 peak of $1,921 is the equivalent … [Read more...]
Cost of Living- Infographic
Over the years prices have changed (generally getting higher except possibly for technology devices). But it is difficult to track the changes if the length of the ruler is constantly changing. You need to compare it to a constant measurement. When that comes to calculating the cost of things, in order to get an idea of how prices are doing you need to adjust them for inflation. That is called measuring "constant dollars". Typically the calculation is based on the CPI or Consumer Price Index. In today's infographic created by our friends at Vouchercloud we will look at how things are doing in the ten years since 2003. … [Read more...]
Monthly Inflation Jumps for March 2014
The current CPI for the month of March was 236.293 which resulted in monthly inflation being up 0.64% in the month of March causing the Annual inflation rate to rebound from 1.13% up to 1.51% nearly reaching January's 1.58%. And the Moore Inflation Predictor's inflation forecast is for another huge jump this month taking the inflation rate to over 2%. In other news: We are in the process of upgrading and redesigning the site in an effort to make it easier to use and as my webmaster says "more responsive" which means that if you have a tablet or even a smart phone you should be able to read it easier. If you are on a full sized screen and want to see what happens you can drag the side of … [Read more...]