Inflation is caused by the government

Reference: http://scholar.harvard.edu/files/rogoff/files/shifting_mandates_aer.pdf
Shifting Mandates: The Federal Reserve’s First Centennial.
By Carmen Reinhart and Ken Rogoff
Presented at the American Economic Association's 2013 Annual Meeting

It is probable that in 1913, while financial panics were not uncommon, high inflation was
still largely seen by the founders of the Fed as a relatively rare phenomenon associated with wars
and their immediate aftermath. Figure 1 plots the US price level from 1775 (set equal to one)
until 2012. In 1913 prices were only about 20 percent higher than in 1775 and around 40 percent
lower than in 1813, during the War of 1812. Whatever the mandates of the Federal Reserve, it is
clear that the evolution of the price level in the United States is dominated by the abandonment
of the gold standard in 1933 and the adoption of fiat money subsequently. One hundred years
after its creation, consumer prices are about 30 times higher than what they were in 1913. This
pattern, in varying orders of magnitudes, repeats itself across nearly all countries.



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What does this tell us? That inflation is not random but the result of deliberate government activity intended to increase prices.

1779 - hyperinflation due to the 13 colonies and the federal government printing money in order to fund the Revolution
1794 - inflation due to the US prospering from the Wars of the French Revolution
1864 - Civil War, inflation aided by the issuance of money not redeemable in silver or gold (fiat money, called "greenbacks")
1918 - inflation resulting from World War 1

Up to this point, inflation is due to war. Governments funded war through inflation.

In the 1930's it all changes. In 1913 the Federal Reserve is created and its goal for 20 years is price stability. Then in 1933 the US went off the gold standard and to fiat money, which gave the federal govt the power to print as much as it desired. And the Federal Reserve mandate went from simple stability to financing the government.

And from 1933 onward, prices increase steadily.

Inflation is a government creation, its purpose is to fund the government at the expense of the people.

To sell this meme to people, the government propaganda promotes the "deflation is bad" lie.

 

Yes, but is government dedicated to improving the lot for workers, or for business?

Government serves business by taking action to benefit business and to make it possible or easier to benefit business for the benefit of the top 1%. Consider legislation that benefits business like trade agreements, A.L.E.C., and favorable taxation vs. legislation that benefits workers (or harms them) like taxation and laws that led to a major decline in union membership from 25% of the workforce to the current 7%. Compare the increase in incomes of the top 1% to that of the median worker.

Top 1% wins; average worker loses.

"The CEO-to-worker compensation ratio was 20-to-1 in 1965 and 29.9-to-1 in 1978, grew to 122.6-to-1 in 1995, peaked at 383.4-to-1 in 2000, and was 295.9-to-1 in 2013, far higher than it was in the 1960s, 1970s, 1980s, or 1990s."
http://www.epi.org/publication/ceo-pay-continues-to-rise/

 

Your options highlight your misplaced trust in government, in thinking the govt is not corrupt and the root of the problem.

Government serves the government, the government is interested in improving the power and wealth of government.

 

The flip side of the rise of the stock market...

Food prices surge in July; UN agriculture agency cites cereals, sugar and dairy as main drivers
Friday 4th August, 2017 -- Driven mainly by higher cereal, sugar and dairy quotations, global food prices rose for the third consecutive month in July, according to the United Nations agriculture agency.

 

The real problem is every time they try to change interest rates, it causes inflation.
You can't just magically change interest rates in the entire economy without there being a cost somewhere.

Of course, there's a debt money printing feedback loop. The government wants money so they have the Federal Reserve authorize it for them. Then the government hands government bonds to the Federal Reserve Bank in exchange. This couldn't go on if the government didn't continue to run budget deficits every year. The Fed basically has to buy this government debt at discounted rates if they want to keep interest rates down in the rest of the economy.

 

Actually deflation is very bad. Nobody has a reason to buy and you have a depression. Do you understand?

 

Deflation is good for the saver and bad for the borrower. Inflation is the opposite. Just as in almost every issue, extremes are bad - high inflation is bad, high deflation is bad. To claim that any degree of deflation will cause recession is foolish.

 

recession is 2 quarters of GDP decline, even .5% decline. Any deflation would encourage at least some people to put off some purchases and that alone would certainly cause a recession. This is why we never have deflation and why Fed shoots for 2% inflation! We cant miss on the deflation side.

 

actually if they raise interest rates it causes deflation and if they lower rates it causes inflation. The idea is to avoid deflation and inflation. Got it now?

 

lets be honest it is liberals that run deficits while it is Republicans who have tried 30 times to make them illegal.

 

Basically, but that's not entirely true exactly.
If they let interest rates rise, then that will be one less thing—one big thing—they are doing to cause inflation. (i.e. letting interest rates rise will mean lower inflation)
But if, hypothetically, they were trying to make interest rates go higher than where they naturally would be in the market (say they were trying to make interest rates to go to 6% and the market wanted 5%) then that would cause inflation too. There doesn't seem to be a big chance of that happening anytime soon though, since the Fed these days always seems focused on trying to push interest rates down lower than they otherwise would be in the marketplace.

 

Total BS. The USA had many cycles of deflation which were not followed by recession, but has certainly had some big recessions since 1930 when deflation has officially never occurred https://en.wikipedia.org/wiki/Deflation#/media/File:US_Historical_Inflation_Ancient.svg

Inflation has caused recessions in the past - do your research, start with something simple as in http://www.economicshelp.org/blog/1128/economics/is-inflation-causing-recession/

High inflation is bad, high deflation is bad. Furthermore, extended periods of inflation are bad - such as the USA has experienced over the past 80-odd years.

You have bought into the government propaganda that:
1 - inflation is good
2 - inflation can be controlled
3 - inflation is and has been for 8 years near 2%

That's the claim by the biggest borrower in the world - the one organization that has everything to gain by making those claims, and whose survival depends upon people believing those claims.

 

so cut BS and give us best 2 examples!!!!!!!!!

 

You obviously did not look at the link I provided. Typical of a "progressives", don't read, don't do your own research, don't check the facts, just gurgle the propaganda talking points you have been spoonfed by your master.

 

if you have evidence of this I will pay you $10,000. Bet??

 

propaganda???? if inflation could not be controlled it might be 500, 1000, 10,000% not 2% as you admit. Sorry

 

for 3rd time: so cut BS and give us best 2 examples of deflation not leading to recession!!!!!!!!!

 

absurd gibberish since the Fed is a huge part of the market and fully integrated into the market while your argument assumes the opposite.

 

LOL, you mean because inflation is not some arbitrary number that you pick that somehow proves inflation is controlled? You mean the inflation rate is not directly related to market forces and only the omnipotent Fed controls the economy? LOL, you are completely ignorant of economics.

 

Bitcoin is over $3,500 right now..

fyi..

 

the stated goal is 2% and it is about 2% not 50, 10,000 20,000 % so that is proof it is largely controlled.

 

the Fed controls monetary policy, not the economy. Do you understand?

 

Ignorant argument.

If you use the pre-1990 CPI govt calculation, the CPI today is about 5.4%. If you use the 1980 govt method the CPI is even higher. The current govt calculation puts the CPI at about 1.7%.

The current CPI is fake, as I've explained to you before. The govt has modified the CPI calculation several times (Reagan was the first), each time the resulting CPI is lower then the previous calculation method. This benefits the govt because many budget items are tied to the CPI - military retirement, civil service retirement and pay, social security cola, etc. A tiny change in the CPI makes a huge change in the budget over time.

Simpson Boles in their balanced budget plan explained it directly, fudge the CPI to help balance the budget.

A CPI of 1.7% means an item that costs $100 today costs $118.36 in 10 years.
A CPI of 5.4% means an item that costs $100 today costs $169.20 in 10 years.
By fudging the CPI, the govt claims that item costs $50.84 less than it actually costs. Its stealing.

 

And yet you claim the Fed controls inflation, which requires control of the entire global economy. You are so lost. Take a class on economics.

 

their job or mandate is to control inflation, if it required control of entire economy we would give them control of fiscal policy, regulations, economic legislation of all kinds, etc etc. Do you see even one economist who says that is necessary to control inflation? Sorry.