The "dollars value has dropped 95% since the inception of the FED" statement.

[Jakem]

@JeffB

I’ve never been to LRC as far as I know, and I’ve only been on here for a very short time so I can’t speak to whether anyone is being dishonest with their readers, but I haven’t seen it so far. In any event, I think you are undervaluing the problems with inflation and a central bank that has complete control over the money supply and can in fact create it out of thin air at will.

Since they’ve come into existence we’ve had many boom and bust cycles, including the Great Depression, not to mention our current “Great Recession” which may well turn into another Great Depression or worse yet, a Great Collapse of our financial system.

You are wrong that most economists would say inflation discourages saving. There is a differnce between expected and unexpected inflation. Expected inflation, in the opinion of most economists, has no effect other than the inflation tax. Inflation was low and expected during the past 20-25 years which was also the most stable period in US economic history.

It is an assertion that the current problems were caused by the collapse of a bubble. The initial onset may have been a bubble but most of the devastating effects were produced by an unmanaged nominal shock. BTW, I’m not making a case for central planning. The shock could have been “managed” by a free banking system. That’s another discussion that I won’t get into.

As to the dishonesty of various LRC and Mises Institute writers, just ask yourself why Hoppe has suddenly become the second coming of Rothbard over the past few years. He’s the most “hardcore” and “uncompromising” supporter of 100% reserves and libertarian natural rights they have. They have a movement to create and they don’t care about the truth.

[bloomj31]

This thread reminds me of one of my favorite quotes:

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” - John Maynard Keynes

[nirgrahamUK]

nonsense, its the exact opposite; they have truth to get out, and that demands a movement

[scrosley]

Well after all the communication on here regarding my OP. I emailed Dr. Murphy (http://consultingbyrpm.com/blog/) to see if he would respond. He sent back an email and said I could post it coming from him.

You can put this in there as coming from me if you want:

“I use that stat a lot in my writings for the lay public, because it demonstrates how utterly the Fed has failed at one of its official mandates: price stability. Look at the Fed’s website under the ‘goals of monetary policy’ to see how badly it has failed to live up to its own description of its mission: http://www.federalreserveeducation.org/fed101/policy/basics.htm.”

Which is something that I also mention about the FED when talking to people. I think they really have no chance of out-guessing the market, and with its up and downs, I think that has been proven. Or as Dr. Paul says in the documentary I.O.U.S.A. while talking to Greenspan, “if I missed as many benchmarks as you do, in my medical practice. I would have dead patients.”

They have three real objectives or missions.

Price Stability = Fail - 95% loss of dollar value - Housing - Oil for example

Unemployment = Fail - 10.2% or much higher on shadowstats.

Stable Growth = Fail - Booms and Busts are not stable growth

It also sounds like Dr. Murphy only uses this statement when talking to LAY people, or people that dont understand basic economics.

[sthomper]

when they say price stability do the mean some sort of ratio of wage price increase to goods price increase?

“in 1935, when gas prices were 17 cents per gallon and annual disposable income was $466, the cost of 1,000 gallons of gas was 36% of average disposable income. Today, it takes less than 7% of our disposable income to buy 1,000 gallons of gas at the current $2.10 a gallon. The “cheap” gas of the '60s and '70s cost about 12% as a share of income.”

“Measured in real dollars, gas prices peaked in March 1981 at more than $3 per gallon.”

http://www.usatoday.com/news/opinion/editorials/2005-05-31-gas-prices-edit_x.htm

rising from, say, $28 a barrel to $56–the price of the average mile rises only 10% to 15%.

http://www.forbes.com/forbes/2005/0509/100.html

“when prices are adjusted for inflation, Americans today spend '40% less on clothes, 20% less on food, more than 50% less on appliances, about 25% less on owning and maintaining a car’than they did during the early 1970s. Over that same period, Census Bureau tables show, US median household income rose by at least 18% in constant dollars . . .”

http://blog.mises.org/archives/010741.asp

i found info that said the average hourly wage was 13.50 in 1999 and is now around 18.00+

i guess thats a thirty some percent increase.

a cpi calculator showed a good purchased in 1999 for 13.50 would cost ~17.45 in late 2009."

“New wage data indicates what you might have suspected. Average wages are not keeping up with the cost of living. This has given rise to claims that we live in the first sustained period of economic growth that has failed to offer a similarly long increase in real wages. Indeed, wages have declined in real terms by 2 percent in the last three years.”

i dont know if the crockwell was using shadowstats or not.

http://www.lewrockwell.com/rockwell/worse-off.html

There was economic growth, but it was not spectacular after 1973, when real wages grew stagnant for two decades. The stock market did not outperform general economic growth.

http://www.lewrockwell.com/north/north555.html

it seems that the market has produced decling prices for many goods with something similar to todays federal reserve fiat-dollar currncy in effect (probobly unconsitutionaly in effect).

if the market was using gold/silver as money with no bailout-banking for fractional reserves + federal reserve would living standards be similar or better without the crockwell articles mentioning of stagnant wages for twenty years or decling real wages from 03 to 06 or other alleged malinvestment periods??

i dont know.

would the periods of stagnant real wages have been smoothed out? instead of bears and bulls would there be catepillars and butterflies?

thats the only advantage i can think of (unless gold/silver provides some level of greater individual economic freedom) with a lack of data from free/honest gold/silver banking.

[JeffB]

@scrosley

Well after all the communication on here regarding my OP. I emailed Dr. Murphy (http://consultingbyrpm.com/blog/) to see if he would respond. He sent back an email and said I could post it coming from him.

You can put this in there as coming from me if you want:

“I use that stat a lot in my writings for the lay public, because it demonstrates how utterly the Fed has failed at one of its official mandates: price stability. Look at the Fed’s website under the ‘goals of monetary policy’ to see how badly it has failed to live up to its own description of its mission: http://www.federalreserveeducation.org/fed101/policy/basics.htm.”

Which is something that I also mention about the FED when talking to people. I think they really have no chance of out-guessing the market, and with its up and downs, I think that has been proven. Or as Dr. Paul says in the documentary I.O.U.S.A. while talking to Greenspan, “if I missed as many benchmarks as you do, in my medical practice. I would have dead patients.”

They have three real objectives or missions.

Price Stability = Fail - 95% loss of dollar value - Housing - Oil for example

Unemployment = Fail - 10.2% or much higher on shadowstats.

Stable Growth = Fail - Booms and Busts are not stable growth

It also sounds like Dr. Murphy only uses this statement when talking to LAY people, or people that dont understand basic economics.

Thanks for sharing that with us, but I’m curious about what you mean by that last line.

Why do you think he would only use that statement with lay people or people that don’t understand basic economics?

[scrosley]

I dont know where you got your information on the increase in wages in the last 10 years? I mean even PAUL KRUGMAN has said recently that the last 10 years real wages went down not up, like your stats. I see your links for other items but I dont see links for your $13 to $18 in 10 years. Im not saying your even wrong, I just havent seen that information.

[sthomper]

when they say price stability do the mean some sort of ratio of wage price increase to goods price increase?

does the federal reserve have any statement on decling prices over time? greenspan on productivity for instance?

in 1935, when gas prices were 17 cents per gallon and annual disposable income was $466, the cost of 1,000 gallons of gas was 36% of average disposable income. Today, it takes less than 7% of our disposable income to buy 1,000 gallons of gas at the current $2.10 a gallon

so at 3 dollars per gallon where i am at…maybe 10 percent of disposable income? a drop of 25 percent of disposable income over 70 years or so?

is that price instability?

[chloe732]

@sthomper

i dont know if the crockwell was using shadowstats or not.

@sthomper

would living standards be similar or better without the crockwell articles…bla bla bla

“crockwell”?

[scrosley]

@JeffB

@scrosley

Well after all the communication on here regarding my OP. I emailed Dr. Murphy (http://consultingbyrpm.com/blog/) to see if he would respond. He sent back an email and said I could post it coming from him.

You can put this in there as coming from me if you want:

“I use that stat a lot in my writings for the lay public, because it demonstrates how utterly the Fed has failed at one of its official mandates: price stability. Look at the Fed’s website under the ‘goals of monetary policy’ to see how badly it has failed to live up to its own description of its mission: http://www.federalreserveeducation.org/fed101/policy/basics.htm.”

Which is something that I also mention about the FED when talking to people. I think they really have no chance of out-guessing the market, and with its up and downs, I think that has been proven. Or as Dr. Paul says in the documentary I.O.U.S.A. while talking to Greenspan, “if I missed as many benchmarks as you do, in my medical practice. I would have dead patients.”

They have three real objectives or missions.

Price Stability = Fail - 95% loss of dollar value - Housing - Oil for example

Unemployment = Fail - 10.2% or much higher on shadowstats.

Stable Growth = Fail - Booms and Busts are not stable growth

It also sounds like Dr. Murphy only uses this statement when talking to LAY people, or people that dont understand basic economics.

Thanks for sharing that with us, but I’m curious about what you mean by that last line.

Why do you think he would only use that statement with lay people or people that don’t understand basic economics?

I think he uses just like he says, It shows people with little to know actual knowledge of the FED how inept they are at their own objectives. And its an easily understandable number. I did email him back with another question, similar to yours. We will see if he responds.

[sthomper]

bla bla bla

you are making progress

you mom must be proud

[scrosley]

@sthomper

when they say price stability do the mean some sort of ratio of wage price increase to goods price increase?

does the federal reserve have any statement on decling prices over time? greenspan on productivity for instance?

in 1935, when gas prices were 17 cents per gallon and annual disposable income was $466, the cost of 1,000 gallons of gas was 36% of average disposable income. Today, it takes less than 7% of our disposable income to buy 1,000 gallons of gas at the current $2.10 a gallon

so at 3 dollars per gallon where i am at…maybe 10 percent of disposable income? a drop of 25 percent of disposable income over 70 years or so?

is that price instability?

Must be nice to live where you do, we havent had $2.10 gas since March of this year and its currently about $2.90 soon to be $3.00.

If you look up stability in the dictionary ups or downs are not stability.

[JeffB]

@Jake McCloskey

You are wrong that most economists would say inflation discourages saving. There is a differnce between expected and unexpected inflation. Expected inflation, in the opinion of most economists, has no effect other than the inflation tax. Inflation was low and expected during the past 20-25 years which was also the most stable period in US economic history.

I think all would agree that inflation discourages saving in the sense that they will be discouraged from saving at interest rates that prevailed at a zero inflation rate. Borrowers need to up the ante at that point to get more savers. They need to pay a premium of at least the expected inflation rate plus a risk premium for any perceived probability of volatility in the inflation rate.

A low, steady and expected inflation rate is obviously far less of a discouragement to savers than a high inflation rate or a volatile or unexpected one.

I do think, however, that a 20-25 year time frame is a very short one in the grand scheme of things and would also note that the relatively low interest rates were artificially induced by the Fed and personally think that it inflated the housing and real estate bubbles that blew up in our face. I think it should also be noted that during that same time frame the nation’s savings rate steadily dropped over that same time frame, bottomed around 2005 and stayed below 3% of disposable income until the 2nd quarter of 2008 when it bopped a little over 3% as recessionary fears really kicked in.

I’m no historian, but “the most stable period in US economic history” was certainly tumultuous at times. There were at least 3 pretty major economic crises that caused the Fed to kick into high gear, and a couple of recessions.

One was the S&L crisis, when 747 of them went bankrupt in the 1980s & 1990s. Another was the bursting of the dot.com bubble, and yet another was a financial panic after the 911 attacks when the stock market shut down for a week.

@Jake McCloskey

It is an assertion that the current problems were caused by the collapse of a bubble. The initial onset may have been a bubble but most of the devastating effects were produced by an unmanaged nominal shock. BTW, I’m not making a case for central planning. The shock could have been “managed” by a free banking system. That’s another discussion that I won’t get into.

That too is an assertion, and one at odds apparently with Austrian economic theory it seems to me, though I’m obviously no expert on the subject. The collapse had been predicted by any number of Austrian economists before it happened, as the artificially low interest rates at the time brought about the exact conditions as predicted would occur in an unsustainable bubble which was itself predicted by the artificially low interest rates.

Here is Peter Schiff’s spot on prediction from May 2004: http://seekingalpha.com/article/181514-bernanke-denying-the-obvious

@Jake McCloskey

As to the dishonesty of various LRC and Mises Institute writers, just ask yourself why Hoppe has suddenly become the second coming of Rothbard over the past few years. He’s the most “hardcore” and “uncompromising” supporter of 100% reserves and libertarian natural rights they have. They have a movement to create and they don’t care about the truth.

That’s over my head.

[sthomper]

so at 3 dollars per gallon where i am at.

[scrosley]

@JeffB

@scrosley

Well after all the communication on here regarding my OP. I emailed Dr. Murphy (http://consultingbyrpm.com/blog/) to see if he would respond. He sent back an email and said I could post it coming from him.

You can put this in there as coming from me if you want:

“I use that stat a lot in my writings for the lay public, because it demonstrates how utterly the Fed has failed at one of its official mandates: price stability. Look at the Fed’s website under the ‘goals of monetary policy’ to see how badly it has failed to live up to its own description of its mission: http://www.federalreserveeducation.org/fed101/policy/basics.htm.”

Which is something that I also mention about the FED when talking to people. I think they really have no chance of out-guessing the market, and with its up and downs, I think that has been proven. Or as Dr. Paul says in the documentary I.O.U.S.A. while talking to Greenspan, “if I missed as many benchmarks as you do, in my medical practice. I would have dead patients.”

They have three real objectives or missions.

Price Stability = Fail - 95% loss of dollar value - Housing - Oil for example

Unemployment = Fail - 10.2% or much higher on shadowstats.

Stable Growth = Fail - Booms and Busts are not stable growth

It also sounds like Dr. Murphy only uses this statement when talking to LAY people, or people that dont understand basic economics.

Thanks for sharing that with us, but I’m curious about what you mean by that last line.

Why do you think he would only use that statement with lay people or people that don’t understand basic economics?

He did reply and gave me permission to show it again.

Dr. Murphy:

The lay public because the “experts” are so deeply ingrained in the way the Fed thinks about monetary policy, that they wouldn’t be able to step back and realize the absurdity of it. They have convinced themselves that price stability is the same thing as prices rising from 1-2% every year forever.

So it’s sort of like an emperor has no clothes thing, you need the innocent child to say it, rather than the tailors and courtiers.

You’re right, we have more dollars now, to compensate for the loss in purchasing power. I don’t use the 95% drop statistic as a standalone case against the Fed, I just use it to illustrate how bad a job it does on its own goals. If the Fed simply said, “Our goal is to ensure full employment” or something then I might not use it at all.

[sthomper]

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief

the above link shows that since 1999 cpi has been between 1.5 to 5 percent for the most part…i dont know that a market money would provide a flatter cpi or a longer term decling cpi (for the same group of goods).

but is cpi staying between 1.5 and 5 percent what the fed means by price stability?

[Ansury]

@sthomper

but if the dollar value has fallen 95% and you have 95% more dollars per unit of labor or what have you…why go on saying the 95% drop in value is a problem (as i have seen on mises sites and lrc) if you have 95% more dollars?

as i posted earlier, is this just an economic freedom issue or can someone really show where a commodity money and banking more geared to fully backed reserves would be more beneficial than the current ‘when prices are adjusted for inflation’ scheme.

It’s not the inflation (the 95% loss) itself that’s the problem (even a commodity money like gold has it’s inflation, to a lesser degree), it’s the hidden effects.

Page 130, “Inflation vs. Morality”:

What You Should Know About Inflation

(Thanks to chloe732 for the link.)

Of course this is just one small problem I happened to recall that I pointed out, among many (worse) others being created by the Federal Reserve, but isn’t just this bad enough? This effect of the inflation the Fed forces on us is one of my more favorite ones to bring up, because it’s an issue that’s clearly close to “the little guy” and the poor–people who are supposedly being protected by government policies and crushed by the free market.

Focusing too much on “the 95% loss” does sorta miss the point (unless you were a big saver during that period :p) but I think it’s mainly used to get people’s attention, and to help give them some sense of the magnitude to which dishonest currency has affected us.

If you really want to get angry about the issue with a short book, read “The Case Against the Fed” by Rothbard, he talks about the origins of the Federal Reserve, the opinion of central banking in general 110+ years ago (hint: it wasn’t popular), who benefits (and suffers), etc. There was a lot of people (criminals) involved, lots of dirty bankers, politicians, secret meetings, propaganda campaigns, and so on that happened leading up to the establishment of the Federal Reserve.

[sthomper]

you really didnt tell me much at all…and chloe seems to have just gotten past blah blah blahs and moved on to lying.

"in 1935, when gas prices were 17 cents per gallon and annual disposable income was $466, the cost of 1,000 gallons of gas was 36% of average disposable income. Today, it takes less than 7% (maybe around 10 percent right now) of our disposable income to buy 1,000 gallons of gas at the current $2.10 a gallon. The “cheap” gas of the '60s and '70s cost about 12% as a share of income."

“Measured in real dollars, gas prices peaked in March 1981 at more than $3 per gallon.” i guess were are close to that now - war maybe?

http://www.usatoday.com/news/opinion/editorials/2005-05-31-gas-prices-edit_x.htm

rising from, say, $28 a barrel to $56–the price of the average mile rises only 10% to 15%.

http://www.forbes.com/forbes/2005/0509/100.html

“when prices are adjusted for inflation, Americans today spend '40% less on clothes, 20% less on food, more than 50% less on appliances, about 25% less on owning and maintaining a car’than they did during the early 1970s. Over that same period, Census Bureau tables show, US median household income rose by at least 18% in constant dollars . . .”

http://blog.mises.org/archives/010741.asp

i found info that said the average hourly wage was 13.50 in 1999 and is now around 18.00+

i guess thats a thirty some percent increase.

a cpi calculator showed a good purchased in 1999 for 13.50 would cost ~17.45 in late 2009."

the above price info, if true seems to benefit the little guy, the poor…and probobly even chloe as well.

it seems the the fed/frb/inflationary scheme has brought down many prices for vital goods since 1935 - adjusted for inflation? as far as saving, if the cpi data above is true, the more dollars one has has overcome the loss of PP for each new dollar since 1999.

now if the historical data about bank runs (with specie) was true, then certainly that was a problem…but has the current paper money policy/scheme in the us overcome that to a great extent?

do you have information that can be compared to existing cpi/wage stats that would show a fully backed free market commodity money offers greater savings , living standars and wealth??

if you dont, then much of what i have read at the mises and lrc sites seems wrong (aside from basic historical data) and when there are names with pictures and degree honors listed after them i begin to think that many of the posts here are lies and falsehoods - if the price info that i listed above is pretty easily availabe.

now i dont trust the government so if i can find info (way back i guess and likely not very accurate) where fully backed money was doing something empirically better than what we have currently then i would be glad to read it.

it may just be the market doing what it does (providing more for less and profiting) in spite of govt money and if that can better be illustrated i would curse the current govt system as best i could.

[sthomper]

like i said earlier, is a desire for specie/commodity money now more of an economic freedom issue rather than one where it would lower prices for many and generate more wealth and profits?

the govt ( and probobly some psoters on mises and lrc) has done more immoral things than i could imagine - but many prices have dropped and i like paying less for goods.

[chloe732]

@sthomper

you really didnt tell me much at all…and chloe seems to have just gotten past blah blah blahs and moved on to lying.

Re: “bla, bla, bla”. You’re right. I could have expressed myself without that. I do appologize.

Now, in that post, I questioned your use of the term “crockwell”. I quoted it twice in different sentences, so it wasn’t a typo. Please tell the forum what you mean by “crockwell”.

@sthomper

and moved on to lying.

Serious accusation. Please be good enough to tell me and this forum where I have lied.

Since I provided sincere replies to your questions on the first few pages of this thread, and you chose to ignore all of those replies, and replies from everyone else, I expect you will come back with yet another post with the same statics regarding increases in consumer prices vs. increases in the price of wages. Your analysis leads you to conclude that inflation has not had a major impact on the economy, and may even be beneficial.

@sthomper

a cpi calculator showed a good purchased in 1999 for 13.50 would cost ~17.45 in late 2009." the above price info, if true seems to benefit the little guy, the poor…and probobly even chloe as well.

How so, care to tell us?

@sthomper

do you have information that can be compared to existing cpi/wage stats that would show a fully backed free market commodity money offers greater savings , living standars and wealth??

if you dont, then much of what i have read at the mises and lrc sites seems wrong (aside from basic historical data) and when there are names with pictures and degree honors listed after them i begin to think that many of the posts here are lies and falsehoods - if the price info that i listed above is pretty easily availabe.

The OP has already selected an answer to this thread. There are three sources sited there. Did you read any of these? You do not engage anyone in an attempt to obtain answers to your questions. You simply want to quote statistics, make conclusions, then call me and others “liars”. Good luck to you and your approach to finding the truth. Good bye.