Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Consumer Price Index: Inflating the Money Supply

Economics / Inflation Jun 13, 2008 - 12:33 PM GMT

By: Adrian_Ash

Economics

"...With the cost of living always rising, not falling, it's a good job there's so much more money around to help pay for things. Right...?"

SURELY the 20th CENTURY'S greatest marketing coup – besides making cigarettes taste of freedom and youth rather than the Sandakan death-march – was kidding the world that "inflation" meant rising prices.


Long mistaking symptom for cause, what hope do we have of defending our money today?

"The word 'inflation' originally applied solely to the quantity of money," as Henry Hazlitt , sometime Newsweek and New York Times editor, put it in 1965. "It meant that the volume of money was inflated , blown up, overextended.

"To use the word 'inflation' to mean 'a rise in prices' is to deflect attention away from the real cause of inflation and the real cure for it."

In short, words matter – and not least when people try to save and plan for the future. Because our drive to label the world dictates our response to it. Use the wrong label, and you're sure to screw up both your understanding and your reactions from there.

"Over the past 100 years the retail market has changed tremendously," notes Alan Kackmeister in a recent paper for the Journal of Money, Credit & Banking . "Transportation is easier. Stores are larger and less personal. Product brands have become more important. Food and other necessities make up a smaller share of consumption expenditures."

To this list of cost-cutting advances, Kackmeister could have added no end of technological and cut-price progress – mechanized and robot production, chemical fertilizers, those two billion people pulling down wage-costs after the Iron Curtain and Great Wall of China both fell to the globalized market...

Yet despite all these advances in making everyday stuff, what's now called "the cost of living" has barely ever failed to stop rising. The official Consumer Price Index in the United States has risen 11 times over in the last 90 years. Here in Britain , one pound now buys less than 3% what it did in terms of "making ends meet".

Good job we've got so many more Dollars and Pounds to help pay for things, right?

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2008

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in