Looks like Glenn Beck is right on Inflation

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News Update

Well folks, looks like Glenn Beck is right:

Inflation is back, with higher prices for food and fuel hammering American consumers, and this time it really hurts.

It’s not just that prices are rising — it’s that wages aren’t.

Previous bouts of inflation have usually meant a wage-price spiral, as pay and prices chase each other ever upward. But now paychecks are falling further and further behind. In the past three months, consumer prices have been rising at a 5.7 percent annual rate while average weekly wages have barely budged, increasing at an annual rate of only 1.3 percent.

And the particular prices that are rising are for products that people encounter most frequently in their daily lives and have the least flexibility to avoid. For the most part, it’s not computers and cars that are getting more expensive, it’s gasoline, which is up 19 percent in the past year, ground beef, up 10 percent, and butter, up 23 percent.

Inflation is typically the symptom of an economy overheating. Workers can’t keep up with the demand for the vast array of things they make. Abundant dollars pursue scarce goods and services, forcing prices and wages up. The solution is simple enough: Central banks, such as the Federal Reserve, increase interest rates, applying brakes to the economy.

But the current price spike is in some ways more pernicious than the last great U.S. inflation — the steep increases of the 1970s — and harder for policymakers to address. Today, raising interest rates might make a weak economy even weaker, stifling what meager growth there has been in wages. Moreover, higher interest would make the nation’s massive budget deficits even more expensive to finance, taking an additional toll on the economy.

http://www.washingtonpost.com/business/ ... ml?hpid=z3

Now, it may or may not reach levels Glenn Beck has stated, but this is actually happening right now.

IMHO, the very definition of 'inflation' is increasing the money supply though the 'virtual' printing of money, like the Fed is doing now ('Quantitative Easing') to finance the insane deficits that the BHO administration is now running. Inflation is not at all just a normal, cyclical change in the price of one or two commodities.

(Note that the physical coin and banknote production of the USTreasury, Bureau of Engraving and Printing and the USMint is mainly to replace coins and banknotes that wear out in normal circulation - in fact their production, especially at the USMint, is way, waaaaaay down from a couple of years ago.)

Right now, spring 2011, the BHO administration is running up the same amount of public debt in THREE WEEKS that took GWB a full year to do during his worst year. What will logically happen if that is not brought under control?

Also, gasoline/petrol prices have more than doubled in the 2.25 long years since BHO took office.

Mike

Regarding gold, one point that I discovered not long ago and that I simply cannot ignore is that prior to 1933, the USA had 90% Au/10% Cu coins in everyday circulation - and that the USADollar was legally defined as a certain set amount of physical gold (the 'Gold Standard'). These coins had face values of $2.50, $5, $10 and $20 ('Quarter Eagles', 'Half Eagles', 'Eagles' and 'Double Eagles', respectively). This was in early-20th century money. Prices, wages and so forth then were only about 3-4% of what they are now. 100 years ago, in 1911, a $20 gold Double Eagle had a buying power of between $1K and $1.5K in today's inflation-adjusted money.

What is amazing and cannot be ignored in the debate in this thread is that the amount of gold in these gold coins has almost EXACTLY the same buying power in today's commodities markets as it did 100 years ago, when they were everyday circulation coins.



The difference over that time was inflation ('printing money'), this to finance the expanded government and social welfare programs of the 20th century at a cost to any and everyone who holds cash in any form. Thus, inflation is nothing more than a direct tax on holding cash - and a tax that was not voted on nor approved by any elected governing body.

Mike