Inflation, Deflation and Looking for the Truth

Holding the Fed's and U.S. Government's Feet to the Fire

Barry Dennis
Barry Dennis, Yahoo! Contributor Network
Sep 10, 2011 "Share your voice on Yahoo! websites. Start Here."

U.S. consumers, like many others, have been sold the proverbial ""lies wrapped in truths."
By that I mean that the premise that inflation is "good for us" as a society, leading to higher profits, (inflated by accident and circumstance), but also "automatic" tax increases as inflation gives the government more of your money, and just as hurtfully, higher prices for food, energy and everything else. Inflation reflected in the "price" of the U.S. dollar on world markets means that the dollar actually buys less compared to other currencies; ergo higher import costs FOR EVERYTHING!
Dollar stability at worst, appreciation at best, is the right outcome for the U.S. and consumers in the long term. The illusory "lower prices" for imported goods, compared to the relatively more expensively produced domestic goods, only creates more profits for importers and distributors. A T-shirt of a generation ago cost, say $2.00.
Today, that imported T-shirt, while costing much less in the country of origin; China, Haiti, Vietnam, India, Philippines, actually costs you a lot more! Have you priced a T-shirt lately? Or, a dress shirt, or a suit? Or, shoes? Any Clothing?
How about foods? Even though we are importing lots of meat and other food products from many countries, the actual cost increases at retail far, far exceed what we paid just a few years ago. Producers lay some of the blame on regulations, but most of pricing can be blamed on a U.S. currency rapidly and contiinually depreciating in value, and on lack of competition to deal with excessive markups over cost (translate: higher profits!) by producers and importers. Bananas? Twice the cost of just a few years ago. And, I'm not saying that food and energy manufacturers, importers and producers aren't entitled to profits, they are! Without profits there would be no reason to be in business! However, I am saying that without more competition at every level, and given the government's interference in the marketplace through selecting "winners" in "food conversion to energy" programs (Ethanol from Corn and other food products, benefitting guess who? oNE OF the LARGEST food producerS in the U.S., Archer, Daniels, Midland!)
Coffee? Twice the price that prevailed before the crop-reducing one year event of a frost in Columbia many years ago, and the price-gouging increases that occurred then. ($5.99/6.99 to $11.99/12.99!)
And then the "snake oil" presentation of only calculating "core" inflation, not including so-called "volatile" food and energy prices. Who are they kidding? Not me, and I hope not you! (Food and Energy combined represent 20-25% (or more) of the average household's budget).
If you really want to see the financial establishment and the Fed "pucker up" ask for legislation forcing the government to turn it's gold stocks-approx $522 Billion worth (As of 9/5/2011; that's Billions with a big "B" folks!) into ownership by U.S. Citizens through a minting of various gold coin denominations from $20.00 to $500.00, and auctioning those coins to Citizens, with a limit in each auction of $5,000 per person, and allowing gold coins as Legal Tender.
And, what do you think would happen if the government acted in ways to increase inflation substantially, and REDUCE the value of those gold coins those foresighted Citizens purchased in good faith?
Man the pitchforks and torches, folks, that's what would happen.
We almost lost the country to inflation a generation a half ago, with an annualized rate of inflation of over 12%! (1974-12.3%, 1979-13.5%, 1980-12.5%). Such runaway inflation could be facing us in the near future, and past experience shows that wages, yours and my incomes, DO NOT KEEP UP WITH INFLATION! Prices go up at every point in the manufacturing anf distribution channel, winding up as a VERY large hand in your wallet. I don't remember anyone saying inflation was a good thing then!. In fact, the Federal Reserve had to raise interest rates so high, that economic growth stopped, and we had a major recession.
The cumulative effect of a 2% inflation rate over a twenty year period is that you have lost over half of your purchasing power, if your income doesn't increase FASTER than the so-called core rate!
Don't let politicians sell you that Inflation is good for the country, it isn't!

Published by Barry Dennis

President/founder of retail, direct marketing, mail order, wholesale, publishing, investment banking, management and marketing consulting, distribution, manufacturing, public relations, marketing, advertisin...  View profile

To comment, please sign in to your Yahoo! account, or sign up for a new account.