The United States has a problem: not enough inflation?

[rockyfatcat]

http://www.msn.com/en-us/money/mark...low-and-thats-a-problem/ar-AAoJHjU?li=BBnbfcN

So gold used to be $30 an ounce and our government took us off the gold standard and started printing money. Gold is now $1,222 an ounce resulting in the false illusion of wages and corporate profits to rise more quickly.

If everyone is making more money, then no one can buy more stuff. Prices just go up. But the evidence suggests people enjoy the illusion and, importantly, they respond to the illusion by behaving in ways that increase actual economic growth, for example by working harder.

so if the minimum wage was $100 an hour. How much would it cost for a Big Mac?

All else being equal I'd guess $62.50

In 1960 the price of a new corvette was $2,000 and minimum wage was a dollar an hour. $40 a week used to be enough to cover food, rent, and utilities. A quarter used to cover a saturday at the movies including soda and popcorn.

.25 cents from the 60's in today's money would be $30.00.

So we don't have enough of that?

 

[Jeddak]

One thing to remember is that Gov used to set Gold price, it was not allowed to fluctuate on it own.
I toured a closed goldmine (Independence) in AK. One of the reason it was closed was the artificially low price of gold. Mining costs rose too high.
I am all for returning to the PM standard, but if Feds set the Gold price, we will gain nothing.

PS, I would really want to look at the Fed's measure of inflation. Basket of goods goes by item quantity, not always weight, IIRC. Cereals, coffee, tea, pasta have all decreased in the weight per package, but price stayed the same, or rose slightly.

 

[rockyfatcat]

One thing to remember is that Gov used to set Gold price, it was not allowed to fluctuate on it own.
I toured a closed goldmine (Independence) in AK. One of the reason it was closed was the artificially low price of gold. Mining costs rose too high.
I am all for returning to the PM standard, but if Feds set the Gold price, we will gain nothing.

PS, I would really want to look at the Fed's measure of inflation. Basket of goods goes by item quantity, not always weight, IIRC. Cereals, coffee, tea, pasta have all decreased in the weight per package, but price stayed the same, or rose slightly.

So every dollar printed without the gold to back it up devalues every dollar in circulation.

When the dollar was backed by gold There was some pressure to raise the dollar value of gold. The Chinese are accused of currency manipulation because they will not allow their currency to "float". The dollar has gone from 30 an ounce to today's 1222 an ounce.

There are countries actively to manipule the value of their currency against other currencies. If the dollar had remained at $30 an ounce, we would still have $1.00 per hour minimum wages. You would be able to feed your family for a few dollars a month and every penny would be over 40 times more precious than it is today. Similarly all things being equal the price of goods would be 1/40th their current prices.

Its only inflation and it's only going to go up until we can get our government to stop overspending our money

 

[StuP]

One thing to remember is that Gov used to set Gold price, it was not allowed to fluctuate on it own.

I'm not sure I understand that correctly, the UK pound used to be gold based as well. Was it that the gov set the redeemable gold value v unit of currency ?

Gold itself has always been traded internationally with the market setting the value.

 

[Jeddak]

StuP, my understanding is that US government set the price it paid miners for an ounce of gold as well set the redeamable value of paper currencies. Private possesion of gold in US was outlawed during the Great depression, and not permitted again till the 70s, so 20tj Century US is a poor example of gold-backed currency, in my opinion.

 

[Cohutta68]

Interesting

http://m.huffpost.com/us/entry/10708196

 

[105thSoftail]

Interesting

http://m.huffpost.com/us/entry/10708196

FDR was a Liberal piece of trash like that rag Huffing Post

 

[rockyfatcat]

FDR quickly realized, however, that he could not print enough money to pay for his spending program, even by increasing taxes. The Federal Reserve Act of 1914 limited the amount of money that could be printed by the government. All Federal Reserve notes (paper money) had to be backed by 40 percent gold owned by the Federal government. In other words, for every dollar printed, the government needed 40 cents of gold in the bank.
The government outlawed the possession of gold.
With gold and paper money now separated, FDR was able to increase the federal deficit by issuing bonds (debt) in exchange for paper money. He used the paper money raised through government bond issues to pay for the many government programs he initiated as part of his New Deal program.

 

[rockyfatcat]

FDR was a Liberal piece of trash like that rag Huffing Post

Even a broken clock is occasionally right