Institutionalized rate of inflation 5%??

Economics Economics Questions
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1

Hello, I was hoping some Austrian advocates could help explain this to me.

I recently came across this quote by G. Edward Griffin who wrote the book The Creature from Jekyll Island the infamous book on the Federal Reserve (http://en.wikipedia.org/wiki/G._Edward_Griffin) though I do not have this book. This quote is apparently relatively recent (from within the last 10 years) but it does not seem to coincide with the actual inflation numbers I find so I am a bit confused about what he means by institutionalized rate and how I can prove that this rate is actually true and accurate:

“Inflation has now been institutionalized at a fairly constant 5% per year. This has been determined to be the optimum level for generating the most revenue without causing public alarm. A 5% devaluation applies, not only to the money earned this year, but to all that is left over from previous years. At the end of the first year, a dollar is worth 95 cents. At the end of the second year, the 95 cents is reduced again by 5%, leaving its worth at 90 cents, and so on. By the time a person has worked 20 years, the government will have confiscated 64% of every dollar he saved over those years. By the time he has worked 45 years, the hidden tax will be 90%. The government will take virtually everything a person saves over a lifetime.” -G. Edward Griffin

I have a feeling I am misunderstanding something here but I am not sure what.

2

The Federal Reserve is the institution being referred to. The allegation is that over its history it has maintained or tried to maintain an inflation level of 5% - its true “mandate” - even though it’s supposed to be focused on minimizing unemployment and maintaining stable prices. This 5% rate is high enough to significantly benefit the banking cartel and government while low enough not to alarm the citizenry.

Oh, and I think this 5% is just what Griffin himself estimates it to be. I don’t think you’ll find this in any official Fed documentation as it is not official Fed policy.

The 5% would just be a target, the actual rate will fluctuate.

3

Where do you find your actual inflation numbers?

4

I am not sure if this was directed towards me or Mr. Hankster.

At any rate, I thank Mr. Hankster for illuminating me on this matter. I hope to learn more from any potential discussion that may arise here.

5

http://www.shadowstats.com/