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...]
Why the Fed Does Not Control Inflation and Deflation
Although we may not always agree with Steve Hochberg's conclusions the following video contains some very thought provoking ideas accompanied by some charts that you probably haven't seen anywhere else. It's interesting to note the quadrupling of the FED's leverage over the years since 2008 and the amazing lack of inflation associated with it. Check out this excellent six-minute video clip by Elliott Wave International's Steve Hochberg... at the Orlando Money Show. Despite the Fed's leverage and its attempt to inflate throughout the economy, the deflationary pressures in the U.S. are overwhelming. Gain an Advantage Over 99% of U.S. Investors - in Just 15 MinutesYou can … [Read more...]
Is the Federal Reserve Right About Inflation?
The Federal Reserve The Federal Reserve serves as the Central Bank of the United States, and whether you realize it or not, it plays an active role in the lives of every American. It makes decisions about monetary policy and interest rates that have a direct impact on the market and an indirect impact on everyone. The FED uses inflation targets to determine how much they can devalue (inflate) the currency. Many people believe that they created a massive money printing scheme cryptically called "Quantitative Easing"since QE1 converted almost worthless mortgage backed securities into currency. The Fed regularly issues statements about how inflation isn't really as bad as everyone says it … [Read more...]
Annual Inflation Down in February
Current Inflation Commentary- The U.S. Bureau of Labor Statistics has released the Annual Inflation rate today. For the year ending in February, inflation was 1.13% down roughly 1/3rd from 1.58% for the year ending in January. Monthly inflation was relatively high at 0.37% in January and the same again in February. This is consistent with the historical trend of low inflation in the 4th quarter and high inflation in the first quarter of the year. Click for larger image The Consumer Price Index came in at 234.781 in February which was … [Read more...]
What is the Misery Index?
The misery index was created by economists in an effort to quantify how bad the economy is based on cold hard numbers. In many ways, it can be argued that suffering is not quantifiable, after all how do you measure the pain associated with starvation, sickness, disease, homelessness, war, lawlessness and all the evils of society? But in economic terms economist Arthur Okun developed a simple but brilliant method of determining how miserable people were economically. The Misery Index and Unemployment The first component is unemployment. Okun reasoned that if a lot of people were unemployed, that would make the country as a whole feel poorer and so they would be less well off. Also a side … [Read more...]
U.K. Historical Price Converter Added
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...]
Effect of Inflation on Bonds Part 2
Effect of Inflation on Bonds While inflation has hardly taken center stage among our economic woes of late, there are some credible voices in economics who are already warning of its dangers down the road. Since the FED has already locked itself into rock-bottom interest rates for the foreseeable future, if the economy does not surprise us with a great rebound in the next few years the Fed will have to resort to its one remaining tool, i.e. an expansionary monetary policy, adopting more aggressive quantitative easing, debt monetizing, and other stimulating (but also inflationary) measures. In short, the FED will have to print more money. At that time, the threat of inflation will be real … [Read more...]
