CPI Inflation Calculator, complements of our Government

http://data.bls.gov/cgi-bin/cpicalc.pl? ... year2=2012

Notice a few things:

1) This official Government provided CPI inflation calculator only goes back to 1913. Before then deflation was the rule, and deflation is negative inflation. The Federal Reserve took over money creation and oversight in 1913.

2) To achieve one dollar of equivalent buying power to 1913 it requires the expenditure of $23.21 today. That means our own Government is admitting to todays dollar having lost 96% of its value vs. 1913 dollars.

3) Since 1971 when Nixon took us off the gold standard and left us with a only a standard of "good faith and promises", the dollar has lost a whopping 82.4% of its value (buying power).

Need I mention that one of the mandates of the Federal Reserve is to maintain and sustain the buying power of the US Dollar? I'd say it has failed miserably.

It's impossible for them to maintain the value of the dollar when their stated goal is 2% inflation per year.

At only 2% annual inflation the dollar will lose 50% of its purchasing power every 36 years. I believe the loss has been historically greater than that, so our past rate of inflation on average must be higher than 2% annualized long term.

At 3% average annualized inflation the dollar loses 50% of its buying power every 24 years. Since we came off the gold standard, that's probably closer to the truth, though it is probably somewhat worse than that. I can't imagine it being historically much worse (so far) than about 3.5% annualized over the long haul since we abandoned gold. This is mainly because the availability of the likes of cheep Chinese goods has kept a tight lid on (I.E., a mask over) our "real" rate of inflation. That said, if we lived in a "buy American" economy like we had up until about the end of the gold standard, we would realize that inflation in the good old USA was annually well over 3.5% on average.

If inflation was to average 4%, the dollar would buy 50% less goods and services every 18 years. Just imagine it, in only 18 years, everything would cost twice as much as it does today.

At 50% inflation, prices double (the dollar devalues by 50%) every 17 months. Pray that we never experience runaway inflation. Especially with the likes of TARP, QE1, QE2, Twist, and the coming QE3 (some say its secretly already here).

"The greatest shortcoming of the human race is our inability to understand the exponential function." Albert Bartlet (retired Nuclear Physicist)

OK, I just did the math, and since 1971 the rate of inflation has had to be on average 4.3% annually (even with cheap Chinese and Mexican goods replacing American made goods) in the USA in order for the dollar to have lost 82.4% of its buying power since 1971.

I'm shocked. That's higher than I imagined. If the Federal Reserves target is on average 2% annual inflation, then they have quite miserably failed to hold us to even that clearly disastrous rate of inflation. And yet most would consider Ron Paul to be insane because he says it's time to stop the Federal Reserve madness. If insanity is doing the same thing (in this case forever deflating the value of the dollar) over and over and each time expecting to get a different result (but instead always getting the same wealth eroding result that inflation by its nature must bring upon us), then it would seem by this definition of insanity, the only sane candidate for President is Ron Paul.

Hopefully you all know by now that it's the Fed that runs the country & it doesn't matter what man you have in office, Ron, Paul or his brother small they should know better than to even say they are going to do what they themselves know they cannot. They who own the gold rule.

samhill wrote:Hopefully you all know by now that it's the Fed that runs the country & it doesn't matter what man you have in office, Ron, Paul or his brother small they should know better than to even say they are going to do what they themselves know they cannot. They who own the gold rule.

Who ran the country before 1913?

LBJ paid for the Vietnam war with money printing; Nixon made it easier by getting rid of the gold standard. The chickens came home to roost on poor Jimmy Carter who had to pay for those who came before.

It's not in the interest of politicians to have a stable dollar, so their self interest dictates spending and let the next guy pay the price. When the current mess plays out down the road it will be a historical event.

Despite my misgivings with respect to democracy, perhaps we should vote on it. Who is for moderate inflation to continue annually forever, and who would prefer to have very mild deflation over time?

I vote for mild deflation.