Here is an excellent article by Bill Bonner on the announcement that Japan made that they are going to crank up the printing press and eliminate the deflation that has been plaguing their economy over the last twenty years. In it he explains the effects of money printing both short term and longer term. He also debunks the idea of where demand actually comes from. He says, "People always want stuff. Demand is infinite. Government doesn't have to stimulate it. What really matters is buying power."~Tim McMahon, editor Why Money Printing Makes You Poorer Last week, Japan announced that it would undertake a bold and radical experiment. After 23 years of on-again, off-again deflation, the new … [Read more...]
What is Biflation?
Biflation is a relatively new term coined by Dr. F. Osborne Brown, a Senior Financial Analyst for the Phoenix Investment Group in 2003. It is sometimes referred to as "mixed inflation" but it basically refers to a condition where both inflation and deflation occur at the same time. This seemingly contradictory situation is not a real a paradox but simply appears to be one as a result of faulty logic. The problem results from thinking that all prices rise in lock-step in times of inflation but this is clearly not the case. It is quite common for electronics to be declining in price (deflation) while oil and gas are increasing in price. Thus we have "mixed inflation" or "biflation" however … [Read more...]
What is the Phillips Curve?
The Nature of the Phillips Curve The Phillips Curve is an economic concept was developed by Alban William Phillips and shows an integral relationship between unemployment and inflation. Phillips began his quest by examining the economic data of unemployment rates and inflation in the United Kingdom. He tracked the data over business cycles, and found wages increased at a slow rate when unemployment was high, and faster when the unemployment rate dropped. Business cycles are basically economic activity over a lengthy period of time. Originally, business cycles were thought to be predictable, but they have since proven themselves to be irregular in the areas of duration, frequency and … [Read more...]
What Does 8% Inflation Really Mean?
By Dennis Miller Eight percent is not good news. In my latest article I shared some reader feedback from our inflation survey, and in case you missed it, the Money Forever Reader Poll Inflation Rate is 8%. But what does that number really mean for us – seniors and savers trying to protect our buying power? It's time to read the tea leaves and find out. Up to Your Ass in Alligators You may remember the old poster that read, "When you are up to your ass in alligators, it's tough to remember the goal was to drain the swamp." You may have felt overwhelmed during the last few years, as the investment options for your retirement portfolio changed. You might read about the benefits of gold … [Read more...]
Food Price Inflation Since 1913
On March 4, 1913, the last day of his presidency, President William Howard Taft signed a bill promoting the Department of Labor to a Cabinet-level Department. That same year they began tracking consumer prices. This is also the same year that the Federal Reserve was formed to manage the money supply. Perhaps Taft worried that putting a bunch of bankers in charge of the money supply was like putting the fox in charge of the hen house and so the country needed a cabinet level department to keep an eye on them? Whatever the reason, that the Consumer Price Index was formed, a gauge, or measuring stick now exists to compare prices across the ages. Although some people believe that the … [Read more...]
Could a Raise in Minimum Wage Trigger Inflation?
Here at Inflation Data we believe that all other things being equal the primary cause of inflation is an increase in the money supply, i.e. "too much money chasing too few goods." But raising the minimum wage may cause other distortions that will have an effect on the economy so that one simple stroke of a pen can still have a major impact. ~Tim McMahon, editor The Law of Unintended Consequences When the Government increases the minimum wage that employers need to pay to their employees, does it cause more problems later? The Government speaks of a raise as a good thing for the economy in order to boost sales (through more disposable income for the poor) and help low-income families pay … [Read more...]
Sequestration, Currency Wars, Inflation and Ben Bernanke
By Douglas French Laissez Faire Club Only in government speak can more = less We thought for sure the shrill cries of Sequestration hell, fire and brimstone were going to get Congress to hit the panic button and reach a deal. As such, they didn't. And while sequestration takes effect, we'll leave you with this one thought: even though $85 billion is getting "cut" from the federal budget... the government is still going to spend $15 billion more than they did last year. $85 Billion Cut = $15 Billion More Spending In the meantime, Doug French treats us to a look behind the curtain: Ben Bernanke an inflation hawk? Read on... Benny and the Monetary Jets "My inflation record is the … [Read more...]
International Inflation and Deflation Trends over the Past 5 Years
International Inflation Rates Had Ups and Downs Over Past 5 Years. The global economy has suffered some serious setbacks since late 2007, with some economists and experts going so far as to call it the "Great Recession," after the 1920s-era Great Depression. And that certainly is an apt term for it, as the spread of the crisis has not been limited to a few countries. Nearly every country in the world has been affected in some way, which is a telling sign of the modern international economy. Inflation is one of the key indicators as to the health of the economy, but it needs to be looked at in context in order to have any value. Economists often use stretches of five years of … [Read more...]
Deflation Not Over?
The majority of the inflation from 2012 occurred in the first quarter with extremely high monthly rates of inflation. Overall in 2012 there were 6 very inflationary months (on a monthly basis), 5 slightly deflationary months and 1 very deflationary month (November). The first month of 2013 started out pretty inflationary but the first quarter of the year generally shows the most inflation for the entire year. See Table … [Read more...]
The Impact of Inflation on Savings
The obvious impact of inflation on your savings is that the purchasing power is erroded. This means that if you stash $100 under the mattress today and inflation is 3% per year when you come back a year from now your $100 will buy 3% less stuff. Put another way you would need $103 to buy the same amount of goods a year later. When you extend this to 10 years you might think that it would mean that you would need $130 to buy the same amount of goods but because of the effects of compounding you would actually need $134.39. You can use the Retirement Planning Calculator to calculate the impact of inflation on your savings. As time goes on the impact of "only" 3% inflation compounds making … [Read more...]