Tool for Battling Coming Inflation February 19, 2009
Posted by Jeff Nabers in Money, Personal Enjoyment, Personal Productivity, real estate, Self Directed IRA/401k.Tags: alternative asset, alternative investment, bail, bailout, bernanke, building, congress, currency, debasement, economy, fed, federal reserve, fiat, fiscal, government, inflaiton, ira, ira llc, monetary, obama, out, paulson, policy, responsibility, rubino, schiff, self directed, solo, Solo 401k, stimulus, strategies, strategy, tax, tool, treasury, wealth
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If you’ve been following my blog, you know that I take great interest in understanding money. Why every single human who uses money on a regular basis doesn’t also share this interest is beyond me.
With trillions of dollars created by actions of Congress, the Federal Reserve, and the Treasury Department, the concern for coming inflation can only spread. This video explains why tax deferred investment vehicles are the best tool for battling inflation and can possibly even (more…)
Meet The Fed November 23, 2008
Posted by Jeff Nabers in Money.Tags: bank, fed, federal reserve, gold, inflation, monetary, Money, policy, treasury
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I ran across this video recently. There are a lot of videos about the Federal Reserve, but this one is rather interesting because it contains a interview footage with their Corporate Communicaitons Officer. This isn’t some conspiracy theorist’s take on the Fed, it’s the Fed’s take on itself. You’ll probably be surprised from some of the information.
FYI – The interview itself starts at 3:39 in the video.
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CPI Explained – Part 1 – Hedonics November 3, 2008
Posted by Jeff Nabers in Money, Personal Enjoyment.Tags: bank, bls, cost of living, cpi, debasement, economics, economy, fed, federal reserve, government, inflation, monetary, Money, policy, social security, statistics
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While the measurement of inflation varies wildly depending on which economist you talk to, here we will examine the official figures published by the Bureau of Labor Statistics (BLS): CPI or Consumer Price Index. The purpose of publishing CPI is to measure inflation and/or deflation, the decreased or increased buying power of the U.S. dollar. Awareness of inflation is essentially an awareness of how much our central banking system, the Federal Reserve, is printing or destroying money through “monetary policy”. This side of economics can get confusing, but it doesn’t have to be. This account will be an understandable explanation intended for accountants and laymen alike.
CPI is not calculated the same today as in the 70s & 80s
While remarkably high inflation is a key part of our memory of the 70s and 80s, if today’s CPI calculation methods were applied to the 70s & 80s, the CPI figures would be revised to show very low inflation – probably under 6%. Why? Two important concepts have (more…)
What Causes Inflation? (You may be surprised) – Part 1 July 7, 2008
Posted by Jeff Nabers in Money.Tags: bank, banking, cost, debasement, fed, federal reserve, goods, inflation, m3, monetary, Money, policy
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Some of the most prominent explanations of the cause of inflation can be extremely confusing and often end up leading the reader/inquirer to conclude “Ahh, it’s just too complicated. We can’t really put our finger on it, and there are many different factors.” In this post, I aim to undo that surrender of understanding and replace it with a simple, accurate explanation.
What is inflation?
Inflation is the steady, continual rise in the price of goods. It is typically measured using a “basket of goods”. In this approach, the prices of many different goods are tracked and then integrated using some sort of logical weighting calculation.
The Cause… Theory #1 – Demand-Pull Inflation
“Too much money chasing too few goods”. This is the theory that says inflation is caused by demand out pacing supply. Believers of this theory pat themselves on the back about inflation as if it is evidence of a growing economy. This kind of fantastical belief is possible only through naivety. A global review of inflation teaches us that some of the most rapid inflation occurs in economies that aren’t growing at all. Conclusion: False.
The Cause… Theory #2 – Cost-Push Inflation
“When companies’ costs go up, they have to raise their prices to maintain a profit margin.” This may explain fragmented price fluctuations, but remember that inflation is the steady rise in price of goods (in general). If prices are stable across the board, but wheat spikes in price, it won’t single handedly result in substantial inflation. Even if wheat is in the “basket of goods” that we use to calculate inflation, its rise in price will minimally affect the overall computation for inflation. Another thing to note is this: What is causing the companies costs to go up? The Cost-Push Inflation theory is almost like saying “Rising prices are caused by rising prices”. Huh? Conclusion: False.
Supply & demand of goods have nothing to do with inflation. Let’s look at the rising price of oil, and examine (more…)
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