[PRCo] Re: Inflation

Thu Feb 9 13:36:51 EST 2012

Fred

Indeed I did mean to write it the way I did.  I did not say inflation comes from (is caused by) an increase in productivity.  I said it can come with (along with) an increase in productivity, and indeed this is exactly what has happened in the USA in the majority, if not all, years of inflation. 

Returning to the gold standard has many more problems than just the amount currently available.  I donâ€™t advocate it.  I just point out that to many folks to whom inflation is anathema that solution has a simplistic appeal. Ron Paul is obviously one of those.

Inflation vs deflation is, reduced to simplest terms, a class struggle between the creditor class and the debtor class. Those of us who are on fixed incomes are part of the creditor classâ€”we are owed pensions (or interest on debt obligations such as bonds) that we paid for in dollars of the year but are now being paid for in current, reduced value dollars.  The politicians, eternally clever folks that they are, have taken the sting out of this for the masses that rely primarily on Social Security and its ilk by building in COLAs.  Those of us with private pensions are a minority that does not have a big enough bark, let alone bite, to prevent destruction of the benefit we bargained (implicitly or explicitly) for back in the day. Nothing new about thisâ€”just that the numbers become more stark as years go by. The best we can hope for is that the RATE of inflation does not become rampantâ€”or that we may remain healthy enough to engage in gainful employment to offset the loss in values in our fixed incomes.

History shows that the creditor class, excepting professional financiers, has not had enough political clout to stop inflation.  Politicians pander to the debtor class with sophistry which makes it appear to members of that class that they are improving their lotâ€”when in reality that seldom occurs.  In fact for the last twenty or so years there has been a net LOSS in the true economic position of the numerically largest portion of that classâ€”the so-called American Middle Class.  Professional financiers build in sufficient reserves in their interest rate calculations to offset expected inflation.  However, nothing can shield them from radical inflation such as that caused by the meddling policies of the Nixon administration, compounded by the ineptitude of the Ford and Carter ones which followedâ€”or in a truly frightening situation such as the Weimar Republic. We can only pray to whatever higher power in which we believe that this will not happen again;  Germanyâ€™s example should be instructive as to what the wrath of the people, once aroused, can create.

I donâ€™t like your idea about eating politicians because I do not care to commit suicide by poisoning myself.  However, grinding them up and using them for boiler fuel is not a bad idea, and would contribute in a minor way to alleviating the energy crisis that their actions (or should I say inactions) have created in our country.

Dwight

From: Fred Schneider 
Sent: Wednesday, 08 February, 2012 22:52
To: pittsburgh-railways at dementix.org ; Dwight Long 
Subject: Re: [PRCo] Re: infographic from 1941!
Did you mean to write it that way.   Inflation comes from an increase in productivity?   That would cause deflation.

I think you meant to say inflation was caused by a decrease in productivity.  

Problem with restoring the gold standard is that we don't have enough gold to divide among 320,000,000 people.   Of course we can inflate the value of the gold and we have.   It used to be $35 an ounce.   Now it is somewhere around $1700 an ounce.

Do you remember having to read a story called the Modest Proposal?  Johnathan Swift wrote that in order to prevent the poor people of Ireland from being a burdon on their parents or their nation, they could be beneficial.  He suggested that the poor people could sell their children as food to the rich.   

Maybe Ron Paul could suggest eating politicians and their staff in order to reduce the burden on society.   That might at least reduce the population by quite a few thousand and then we would need less money in circulation.   Considering they have about ten times what the average American has, maybe we could reduce the dollars in circulation by a few hundred thousand for every politician we devour.   :<)   

As I look at the 

On Feb 8, 2012, at 10:15 PM, Dwight Long wrote:

> 
> Fred
> 
> It is not proper to blame unions for inflation.  Absent anything else, all 
> union-achieved wage increases do is to divide the whole pie a different way.
> 
> Inflation can come, and usually has in the USA, WITH an increase in 
> productivity.
> 
> Inflation is primarily caused by the government allowing an increase in 
> money over and above that required to service growth in the economy 
> (assuming there is any REAL growth).  Gresham's Law applies.  No money from 
> the era when money was backed by treasure exists in circulation today--it is 
> all in the hands of collectors or hoarders.
> 
> Why do you think Ron Paul wants to restore the Gold Standard?  (William 
> Jennings Bryan would not approve.  I do not know what William Jennings Bryan 
> Gwinn would think of this mess!).
> 
> Dwight
> 
> 
> ----- Original Message ----- 
> From: "Fred Schneider" <fwschneider at comcast.net>
> To: <pittsburgh-railways at dementix.org>
> Sent: Wednesday, February 08, 2012 9:24 PM
> Subject: [PRCo] Re: infographic from 1941!
> 
> 
>> Who are the bastards?   Remember the line in the Pogo cartoon?   "We have 
>> met the enemy and he is us?"
>> 
>> Inflation is simply nothing more than increased prices without any 
>> increase in productivity.
>> 
>> It would be very difficult to say who was the most guilty of causing 
>> inflation.   Management would blame it on the unions.   Of course in the 
>> most recent years, it's hard not to blame insurance and banking 
>> speculators who think they are worth outlandish salaries.  I remember my 
>> father-in-law talking about a man he very much revered who was the CEO of 
>> a local bank.   That man spent a lifetime getting his salary up to the 
>> point where he could live in a home that today might sell for $500,000. 
>> He was very offended in the 1970s when the young kids wanted immediately 
>> what he spent a lifetime earning.
>> 
>> I know the man's son ... went to school with him.   Jim said his father 
>> always worried about whether his decisions were properly protecting the 
>> assets of his depositors.
>> 
>> Amazing isn't it?   A banker who worried about his depositors!
>> 
>> ______________________________________________________________________________________________________
>> 
>> I used 1958, Dwight because I have seen a picture of a Pittsburgh PCC 
>> passing a gas station with the advertising sign for regular at 29.9 a 
>> gallon.   Well that would have been about $2.999 (or $3.00) in 2008 and go 
>> up about 3% a year since then ...  would put it around $3.37 now.   It's a 
>> little higher but the difference isn't, in this area, is not much more 
>> than the chap who was off by a penny in 1958.
>> 
>> Considering how the American public mortgages their groceries on VISA and 
>> Master Card, and how that stupidity hurt them the last time gas went to 
>> $4.00 a gallon because they had no cushions in their budgets .... Shall we 
>> speculate on what happens if it goes to $10 a gallon in todays greenbacks? 
>> Or $15?
>> 
>> Can you imagine what would happen if we were to float up with the rest of 
>> the world?  The most recent Nationmaster chart of all the world's 
>> countries ... done in 1999 ... shows us with the 101st cheapest gas in the 
>> world out of 141 countries.   We were paying around 77 cents a liter ... 
>> the second worst was Great Britain at 1.92.  German was $1.49.
>> 
>>    http://www.nationmaster.com/graph/ene_gas_pri-energy-gasoline-prices
>> 
>> Multiply the liter prices by 3.96 to get gallon prices ....  .77 x 3.96 is 
>> $3.04 in the USA.   In England ... 1.92 x 3.96 = $7.60.
>> 
>> Since then it went up drastically.   We went into a global recession and 
>> the price of petroleum crashed.  It's a little higher today.
>> 
>> But Europe always had higher taxes.
>> 
>> You want something more current?
>> 
>>    http://www.drive-alive.co.uk/fuel_prices_europe.html
>> 
>> Multiply the numbers times 3.96 to get gallons and then times $1.35 to get 
>> dollars back in December:
>> 
>> England    1.58 x 3.96 x 1.35 = US$ 8.45 a gallon
>> 
>> Germany  1.47 x 3.96 x 1.35 = US$ 7.86 a gallon
>> 
>> Could you imagine our people squealing if they had to actually pay the 
>> kind of road taxes they pay imbedded in the gasoline in Europe to drive? 
>> In Germany, for example, it is about  $2.51 a gallon.   Helps to keep some 
>> of the people on the street cars, trains, busses and eliminate the 
>> suburban sprawl.
>> 
>> 
>> 
>> 
>> On Feb 8, 2012, at 8:22 PM, Dwight Long wrote:
>> 
>>> 
>>> Fred
>>> 
>>> Use 1962.  That way you can apply your 50 year rule and just move the
>>> decimal point without having to do burdensome interpolation.
>>> 
>>> At any rate, the result is the same.  Shows what the bastards have done 
>>> with
>>> the value ???? of our money.
>>> 
>>> Dwight
>>> 
>>> ----- Original Message ----- 
>>> From: "Fred Schneider" <fwschneider at comcast.net>
>>> To: <pittsburgh-railways at dementix.org>
>>> Sent: Wednesday, February 08, 2012 4:56 PM
>>> Subject: [PRCo] Re: infographic from 1941!
>>> 
>>> 
>>>> $4 in constant dollars, not in inflated dollars.   If you mean $4 in 
>>>> 1941
>>>> dollars, I would love to see that.   We are no where near that.  Right
>>>> now, for example, gas is just a tad more expensive than 1958 at normal
>>>> inflation.
>>>> 
>>>> 
>>>> On Feb 8, 2012, at 4:21 PM, BobDietrich wrote:
>>>> 
>>>>> Then again in 2012/2013 when gas prices hit $4.00 or so.
>>>>> 
>>>>> -----Original Message-----
>>>>> From: pittsburgh-railways-bounce at lists.dementix.org
>>>>> [mailto:pittsburgh-railways-bounce at lists.dementix.org] On Behalf Of 
>>>>> Fred
>>>>> Schneider
>>>>> Sent: Wednesday, February 08, 2012 2:06 PM
>>>>> To: pittsburgh-railways at dementix.org
>>>>> Subject: [PRCo] Re: infographic from 1941!
>>>>> 
>>>>> Wouldn't you love to see the same item in 1944 at the height of the war
>>>>> with
>>>>> gas rationing and then again in 2011?
>>>>> 
>>>>> 
>>>>> 
>>>>> 
>>>>> 
>>>>> On Feb 8, 2012, at 12:01 PM, Derrick Brashear wrote:
>>>>> 
>>>>>> Pittsburgh Regional Planning Association noted how people got downtown
>>>>>> in
>>>>> 1941:
>>>>>> http://nullspace2.blogspot.com/2012/02/traffic-then-traffic-now.html
>>>>>> 
>>>>>> -- 
>>>>>> Derrick
>>>>>> 
>>>>> 
>>>>> 
>>>>> 
>>>>> 
>>>> 
>>>> 
>>>> 
>>> 
>>> 
>> 
>> 
>> 
> 
> 