Silver at $40 an ounce.

[maple_leafs182]

It's good to have hope on a day when you lost 25% of your money.

Most of my silver I bought when it was under $20 so I'm still up. As for hope, I wouldn't call it that. If you study austrian economics you would see what I see.

[Pliny]

Most of my silver I bought when it was under $20 so I'm still up. As for hope, I wouldn't call it that. If you study austrian economics you would see what I see.

I see what you see, being a fan of Austrian economic theory. Right now is a precious metals buying opportunity.

Frankly, I think the dollar is becoming detached from the public's ability to assess it's real value and reaching the point where all fiat currencies wind up - zero. The market is going to become more of a determining factor in it's real value above what the monetary and fiscal policy of government is - that is, if the US government continues on it's current course.

One thing we can be sure of is we have no idea of Obama's intent. We know he supports leftist ideology but how far he is willing to stick his neck out to forward the ideology is the question. He could take advantage of a global crisis to bring America in line with socialist Europe rather than attempt to throw off that proclivity for progressivism and promote American exceptionalism in a capitalist free market.

[Pliny]

Terrible shape compared to what? The US economy is in a post recession period like many that have come before. It remains the largest economy in the world, has positive growth (unlike Canada last quarter), and may have to help bail Europe out (IMF).

With Obama we can't be certain - he may wish to hop in the pot with Europe and work it all out with a balanced approach - no American exceptionalism allowed. The result may be a new global currency.

Depends upon how bad things will get for you and how your...that's you bush-cheney...sense of "patriotism" to the American ideal holds firm.

By the way what happened to Dancer?

[maple_leafs182]

I see what you see, being a fan of Austrian economic theory. Right now is a precious metals buying opportunity.

Frankly, I think the dollar is becoming detached from the public's ability to assess it's real value and reaching the point where all fiat currencies wind up - zero.

Yes, people don't seem to realize that the average life expectancy for a fiat currency is only 27 years.

[maple_leafs182]

Terrible shape compared to what? The US economy is in a post recession period like many that have come before. It remains the largest economy in the world, has positive growth (unlike Canada last quarter), and may have to help bail Europe out (IMF).

Your government along with your central bank keep pumping hundreds of billions of dollars into your economy. That isn't a sign of a strong or healthy economy. Just because you see a higher GDP does not necessarily mean your economy is growing.

[Pliny]

Yes, people don't seem to realize that the average life expectancy for a fiat currency is only 27 years.

You have to admit though that the US dollar holds a precedent as the world's first fiat standard. It has been a fiat instrument only since 1971 so it is beating the average but as Voltaire said, All paper money eventually returns to it's intrinsic value - zero." Today's politicians have been goaded into thinking that this economic truth can be over-ridden with wise economic management. Unfortunately, the temptations to print and spend when it is so easy tend to over-ride the power to suppress it. Especially, when the collective good can justify it. (Sarcasm on)We all benefit!(Sarcasm off)

[maple_leafs182]

You have to admit though that the US dollar holds a precedent as the world's first fiat standard. It has been a fiat instrument only since 1971 so it is beating the average but as Voltaire said, All paper money eventually returns to it's intrinsic value - zero." Today's politicians have been goaded into thinking that this economic truth can be over-ridden with wise economic management. Unfortunately, the temptations to print and spend when it is so easy tend to over-ride the power to suppress it. Especially, when the collective good can justify it. (Sarcasm on)We all benefit!(Sarcasm off)

Yeah, this kind of stuff makes me sad. I don't understand why so money people want a fiat currency even though it probably hurts our society the most.

[bush_cheney2004]

Yeah, this kind of stuff makes me sad. I don't understand why so money people want a fiat currency even though it probably hurts our society the most.

It's not complicated.....go to a casino and you will find that the gaming "currency" changes to chips, tokens, and electronic credits. The designated medium of exchange has greater utility than your pot of gold.

[maple_leafs182]

It's not complicated.....go to a casino and you will find that the gaming "currency" changes to chips, tokens, and electronic credits. The designated medium of exchange has greater utility than your pot of gold.

You are wrong.

[Bonam]

Most of my silver I bought when it was under $20 so I'm still up. As for hope, I wouldn't call it that. If you study austrian economics you would see what I see.

Whatever the initial price at which you bought your silver, the $10 drop represented a 25% loss of the present value of your investment. The option of keeping the silver must be compared to the opportunity cost of the alternative option, which was selling the silver. There is no guarantee that silver will return to $40 or higher in the near future.

Your main thesis is that silver and gold will continually rise in value due to inflation. Well, inflation rate is around 2%. Meanwhile, in 2010 and the first half of 2011, the price of silver rose at an annualized rate of about 100%. Clearly, even if you want to use other measures of inflation besides the official one, silver has far outpaced that rate. The recent spike was due to emotion and fear, not inflation or fundamentals. If silver was fairly valued in 2008 at ~$15, it would take many decades for its value to reach $40 through inflation alone.

[bush_cheney2004]

You are wrong.

Why am I wrong? Are you a leprechaun?

[Pliny]

Yeah, this kind of stuff makes me sad. I don't understand why so money people want a fiat currency even though it probably hurts our society the most.

In the short run it is advantageous to bankers and governments who can make it appear, by printing more that we are richer. And until the time malinvestment makes society wobbly and we get people digging holes and filling them up again called production it will appear to be good. I think with our boom and bust bubble cycles becoming more frequent and more serious we are ending the current run of fiat currencies.

[Pliny]

Whatever the initial price at which you bought your silver, the $10 drop represented a 25% loss of the present value of your investment. The option of keeping the silver must be compared to the opportunity cost of the alternative option, which was selling the silver. There is no guarantee that silver will return to $40 or higher in the near future.

Generally, I agree with your view of capitalism and your staunch support of the free market. When it comes to the economics part we have disagreements. What has been and will be the opportunity cost to technology when the economy crashes when malinvestment has us building high cost solar panel manufacturing plants and inefficient windmills or paying unnecessary carbon taxes when this need not happen at all? Science becoming political means we are in deep doo-doo - it is being bought. It is bad enough when corporations buy it and try and sway public opinion. The reason is that they have many pieces of paper to spend. The market doesn't reflect real costs and people are numbed by the high numbers governments and corporations throw around. Zimbabwe is an extreme example today but there are many more similar examples in history.

Your main thesis is that silver and gold will continually rise in value due to inflation. Well, inflation rate is around 2%. Meanwhile, in 2010 and the first half of 2011, the price of silver rose at an annualized rate of about 100%. Clearly, even if you want to use other measures of inflation besides the official one, silver has far outpaced that rate. The recent spike was due to emotion and fear, not inflation or fundamentals. If silver was fairly valued in 2008 at ~$15, it would take many decades for its value to reach $40 through inflation alone.

The inflation rate is about 2% a quarter so that is closer to 8% annually and you can watch it get higher. That is what the speculation is about because if the US dollar starts to hyper-inflate, that is, the Fed keeps pumping it, then it will increase the demand enough to pass the speculative point of it's value and become real value based upon demand.

To say the price will be a steady rise up and never go down would be foolish. Right now, it is on the long term going upward and in the short term it is a buying opportunity. Nothing has occured that would indicate otherwise.

[Pliny]

It's not complicated.....go to a casino and you will find that the gaming "currency" changes to chips, tokens, and electronic credits. The designated medium of exchange has greater utility than your pot of gold.

Both the casino and the banks will take your pot of gold and give you their currency. When you cash in they won't give you your gold back. The bank will give you their paper and the casino will also give you the bank's paper. You could arrange with the casino to cash in in gold, perhaps.

You can always buy some at the bank as an investment but they know you aren't going to use it as a currency so they don't feel threatened. When you do start using it as a currency, that is it becomes popular, they might get nervous.

[maple_leafs182]

Whatever the initial price at which you bought your silver, the $10 drop represented a 25% loss of the present value of your investment. The option of keeping the silver must be compared to the opportunity cost of the alternative option, which was selling the silver. There is no guarantee that silver will return to $40 or higher in the near future.

Okay, I get what you are saying. Selling it when it was higher would of been more profitable. I don't play the market short term, I see long term trends and I stick with them. Also, I could not of predicted what the monetary policy the Fed would take and its effects, I wish I was that smart.

I am in it for the long run, I really do believe we will see another injection of cash in the economy soon and I don't see the global economy getting better any time soon.

Your main thesis is that silver and gold will continually rise in value due to inflation. Well, inflation rate is around 2%. Meanwhile, in 2010 and the first half of 2011, the price of silver rose at an annualized rate of about 100%. Clearly, even if you want to use other measures of inflation besides the official one, silver has far outpaced that rate. The recent spike was due to emotion and fear, not inflation or fundamentals. If silver was fairly valued in 2008 at ~$15, it would take many decades for its value to reach $40 through inflation alone.

The CPI takes the average rate of year to year price increases of certain items. From what I have come to understand is gold and silver react faster to monetary policy then other items. Their inflation and deflation rates are higher then the average.

Also, the CPI is manipulated or I don't agree with how the CPI is calculated. I believe these charts are more accurate.

http://www.shadowstats.com/alternate_data/inflation-charts

Do you guys really think that certain monetary polices and some monetary policies details should be kept secret from the public?

IMO I think this is by far the stupidest thing we do as a society...K, maybe not, it is a close first and second between keeping monetary policy secret and killing other people for their resources.

Edited September 27, 2011 by maple_leafs182

[maple_leafs182]

Why am I wrong? Are you a leprechaun?

Because inflation is killing the middle class. Why do you think it is okay to steal peoples savings by inflating the currency and who does that benefit?

Edited September 27, 2011 by maple_leafs182

[Bonam]

Because inflation is killing the middle class. Why do you think it is okay to steal peoples savings by inflating the currency and who does that benefit?

Inflation only steals your savings if you keep them in the form of paper stuffed in a mattress.

[bush_cheney2004]

Because inflation is killing the middle class. Why do you think it is okay to steal peoples savings by inflating the currency and who does that benefit?

Inflation is not killing the middle class. The "middle class" went on a credit binge and now they have to pay the piper. You're too young to remember what real inflation feels like (1970's).

[maple_leafs182]

Inflation only steals your savings if you keep them in the form of paper stuffed in a mattress.

Inflation always hurts the savers. Even if people are making some interest in banks or bonds, the purchasing power of those dollars are still being taken away. Why is that okay?

Inflation is not killing the middle class. The "middle class" went on a credit binge and now they have to pay the piper. You're too young to remember what real inflation feels like (1970's)

I am in the middle class, I never went on a credit binge, why should I have to pay for other peoples debt problems, why should my wealth be stolen?

Edited September 27, 2011 by maple_leafs182

[Pliny]

Inflation only steals your savings if you keep them in the form of paper stuffed in a mattress.

So if you don't do anything with your money then that's the only time you lose to inflation? Who does that Bonam?

The poor and those on a fixed income lose purchasing power, don't they? They are hurt the most. Not everyone can make investments in the market, or real estate to overcome the effects of inflation. There are an increasing amount of people living paycheck to paycheck. It makes little sense to them to save, especially, as you point out, in the form of paper stuffed in a mattress. They can't afford to take risks in investing. So the are losing ground. Meanwhile, money takes on an increasingly meaningless value. CEO's make 100 million a year, Sports figures make 10 million a year. It becomes increasingly difficult to judge value and quality by a "dollar" value.

As for the middle class, bush_cheney, it is increasingly marginalized by inflation. Those that don't get regular pay raises, the retired living on annuities, unskilled labour that works for minimum wage, they are all affected, among others. Bonam and you both think that inflation is a negligible factor but it has a very negative effect upon society. The government running up debt gets the advantage of spending new money first and servicing it's debt interest, because it rarely pays back the debt, with a devalued currency.

Over the short term, an inflationary fiat currency, offers a benefit to society and government. We all get more money and prosperity reigns. Over the long term; a generational period, it destroys the cohesiveness of the society because some will continue to benefit from inflation, those that are spending new money first, which includes banks, corporations, government, not the general populace. The regular citizen learns his money isn't worth saving and is encouraged to consume because that is what drives the economy. He is left to his own devices and it is best he doesn't discover much about finance and money and economics. That's the governments responsibility, they are supposed to supply jobs, ensure food gets to the table, make sure everything is affordable to the consumer and if it doesn't well, we can always blame the greedy rich for hogging all the wealth.

[Bonam]

So if you don't do anything with your money then that's the only time you lose to inflation? Who does that Bonam?

The poor and those on a fixed income lose purchasing power, don't they?

The poor don't have much savings so they aren't losing anything to inflation. Also, most sources of "fixed income" are indexed to inflation.

They are hurt the most. Not everyone can make investments in the market,

Why not?

There are an increasing amount of people living paycheck to paycheck. It makes little sense to them to save, especially, as you point out, in the form of paper stuffed in a mattress. They can't afford to take risks in investing.

There are plenty of ways to invest your money to beat or at least keep up with inflation risk free.

As for the middle class, bush_cheney, it is increasingly marginalized by inflation. Those that don't get regular pay raises, the retired living on annuities, unskilled labour that works for minimum wage, they are all affected, among others.

Minimum wage is routinely raised based on inflation and other factors. Benefits to retireees such as CPP and OAS are routinely increased based on inflation. Most middle class jobs offer pay raises every year or every few years that at least meet inflation.

Bonam and you both think that inflation is a negligible factor but it has a very negative effect upon society. The government running up debt gets the advantage of spending new money first and servicing it's debt interest, because it rarely pays back the debt, with a devalued currency.

It is indeed a negligible factor. For one, it's only 2%. Secondly, wages and benefits inflate at the same rate as prices, if it's truly a matter of pure inflation.

Over the short term, an inflationary fiat currency, offers a benefit to society and government. We all get more money and prosperity reigns.

Another misconception. There is no such benefit. $102 after a year of 2% inflation is worth exactly as much as $100 before that year.

Uniform inflation has no real effect on the economy except that all the numbers get bigger. Purchasing power remains the same. If wages are rising more slowly than inflation, that is an issue of stagnating/declining wages and has a lot more to do with the job market than it does with inflation.

Edited October 13, 2011 by Bonam

[Pliny]

The poor don't have much savings so they aren't losing anything to inflation. Also, most sources of "fixed income" are indexed to inflation.

The poor are losing purchasing power over time. If they do not improve their income they will be able to afford less and less. This is why social justice advocates are always lobbying for more from government for welfare recipients, minimum wage earners and old age pensioners, medicare, youname the program, inflation has a lot to do with it. I thought you were an advocate for small government? It justifies increased taxation, not that the lives of those on welfare ever get any better, and the resultant increased bureuacracy. Increased taxation doesn't mean it gets to the poor. You aren't even trying to see it's disadvantages.

Why not?

Why can't everyone invest in the market? The market is a risk. You just said the poor don't have much savings. They certainly don't and the can't risk those few dollars on a market they usually know nothing of. Besides, you need at least several thousand to make it worth while. When they are having trouble putting food on the table are they going to risk investing in the long term or even the short term?

There are plenty of ways to invest your money to beat or at least keep up with inflation risk free.

Tell me of them. What are they? Most of those marginalized by inflation are already struggling and will, if their situations do not improve, will fall into poverty.

Minimum wage is routinely raised based on inflation and other factors. Benefits to retireees such as CPP and OAS are routinely increased based on inflation. Most middle class jobs offer pay raises every year or every few years that at least meet inflation.

As I said, you aren't even trying. It only gives government justification for it's own self-aggandizement.

What about the guy in business for himself? He gets no guaranteed pay raises. If the economy sucks he loses and infaltion bites him even harder. Middle class jobs aren't all union jobs and there is no guarantee of infaltionary allowances. Inflation isn't always 2% and everyone loses a bit of ground when it is 5, 8 or 10%.

It is indeed a negligible factor. For one, it's only 2%. Secondly, wages and benefits inflate at the same rate as prices, if it's truly a matter of pure inflation.

It isn't negligible. If a persons budget for food is $50/wk he is losing $52 in one year. That's a whole weeks worth of food he won't have money for next year. That's just at the 2% you believe is the rate of inflation. The next year he won't have money for over two weeks of food and in a particularly infaltionary year he might lose 8 or 10%. A whole month's worth of groceries. you bet he is complaining for more and the social activists are out picketing.

Another misconception. There is no such benefit. $102 after a year of 2% inflation is worth exactly as much as $100 before that year.

You will have to rethink that one.

If at the beginning of the year new money enters the system, the banks get it first, loan it to the first consumers and circulate it with it's current purchasing power, at the end of the year the consumer finally sees that "new" money but it's purchasing power has been decreased by inflation.

Uniform inflation has no real effect on the economy except that all the numbers get bigger. Purchasing power remains the same.

The purchasing power of the dollar is "weakened" which is why the numbers get higher. It makes saving money a losing venture. It makes inports more expensive.

If wages are rising more slowly than inflation, that is an issue of stagnating/declining wages and has a lot more to do with the job market than it does with inflation.

Wages will generally lag increases and decreases in prices.

[Bonam]

I thought you were an advocate for small government?

I am.

It justifies increased taxation, not that the lives of those on welfare ever get any better, and the resultant increased bureuacracy. Increased taxation doesn't mean it gets to the poor. You aren't even trying to see it's disadvantages.

What does inflation have to do with increased taxation. Taxation goes up if the government wants to raise more money relative to the size of the economy. If the economy is $1 trillion and the government wants to make $100 billion in revenue, it's the exact same situation as if the economy inflated to $10 trillion and the government wants to raise $1 trillion in revenue. The only thing that's changed is all the numbers have been multiplied by 10, on both sides of every equation.

Why can't everyone invest in the market? The market is a risk. You just said the poor don't have much savings. They certainly don't and the can't risk those few dollars on a market they usually know nothing of. Besides, you need at least several thousand to make it worth while. When they are having trouble putting food on the table are they going to risk investing in the long term or even the short term?

Obviously if one has nothing to invest than one isn't gonna invest in the markets. But if one has nothing to invest, they also don't have any savings that are losing value.

Tell me of them. What are they?

Umm, a GIC/CD/Term deposit, for one? Or even a high interest savings account from an online bank?

Most of those marginalized by inflation are already struggling and will, if their situations do not improve, will fall into poverty.

Their poverty is a result of their spending exceeding their income, not inflation.

What about the guy in business for himself? He gets no guaranteed pay raises.

If his business makes money, and things inflate, he raises his prices by the rate of inflation, just like all his suppliers do. That's what inflation means.

If the economy sucks he loses and infaltion bites him even harder. Middle class jobs aren't all union jobs and there is no guarantee of infaltionary allowances.

You're right, a lot of people get raises a lot faster than inflation. My salary is about 300% of what it was 2 years ago...

Inflation isn't always 2% and everyone loses a bit of ground when it is 5, 8 or 10%.

Only to the extent that wages lag behind inflation. With well characterized and quantified inflation, everything inflates, including the wages. There is no loss of purchasing power.

It isn't negligible. If a persons budget for food is $50/wk he is losing $52 in one year. That's a whole weeks worth of food he won't have money for next year.

If someone can't find $50 for food for a week, he has bigger problems than 2% inflation, I can tell you that much.

That's just at the 2% you believe is the rate of inflation. The next year he won't have money for over two weeks of food and in a particularly infaltionary year he might lose 8 or 10%.

Where is this hypothetical individual getting his money and why isn't his money source inflating. If the cost of food is going up and wages aren't going up, that's not inflation. That's just a rise in the cost of food.

If at the beginning of the year new money enters the system, the banks get it first, loan it to the first consumers and circulate it with it's current purchasing power, at the end of the year the consumer finally sees that "new" money but it's purchasing power has been decreased by inflation.

You'll have to elaborate on what the heck you mean here. Why does the consumer have to wait a year? As soon as a consumer borrows it from the bank (for a mortgage, car loan, credit card, etc), they've made use of its purchasing power right then and there. They aren't waiting a year.

The purchasing power of the dollar is "weakened" which is why the numbers get higher.

Yes, the numbers get higher. The purchasing power of an individual dollar goes down. But you have more dollars, because everything has inflated. You're $1.02 gives you as much purchasing power as your $1.00 did a year ago, and you now earn $10.20 an hour instead of $10.00 an hour. Nothing has changed.

It makes saving money a losing venture.

Only in your mattress. It encourages people who have lots of money to put that money into savings accounts, GICs, stocks, bonds, real estate, etc. That stimulates economic activity, which is a good thing.

It makes inports more expensive.

But it makes exports less expensive, and makes the country more affordable for tourists to visit. In any case, most Western countries have comparable inflation rates, and swings in the relative value of currency have much more to do with economic conditions and the supply and demand of commodities than with inflation.

Wages will generally lag increases and decreases in prices.

Sure, wages change more smoothly over time. They don't change from day to day and minute to minute like the prices of commodities do. But I see no evidence that they lag behind over time.

Anyway, my opinion is inflation isn't nearly the issue you make it out to be.

[Pliny]

I am.

well, I see that but the whole concept of government intervention in the economy is price stability.

It does it through a policy of inflation. The problem is that government once it gains control over the money supply engages in overspending and inflation eventually and inevitably gets out of control.

What does inflation have to do with increased taxation. Taxation goes up if the government wants to raise more money relative to the size of the economy. If the economy is $1 trillion and the government wants to make $100 billion in revenue, it's the exact same situation as if the economy inflated to $10 trillion and the government wants to raise $1 trillion in revenue. The only thing that's changed is all the numbers have been multiplied by 10, on both sides of every equation.

I just told you what it has to do with increased taxation. The government takes an increasing amount of the economy and hides it with inflation, which is a further form of taxation.

Obviously if one has nothing to invest than one isn't gonna invest in the markets. But if one has nothing to invest, they also don't have any savings that are losing value.

And an increasing amount of people, in the middle class, are living paycheck to paycheck. They are not saving or investing. I think this is a direct result of inflation. Government encourages consumption by inflating the monetary unit, decreasing it's purchasing power in the future, and saving a few thousand dollars over a year seems a futile exercise. If a person earns $40K/yr., a lower middle class wage, his purchasing power decreases, at 2% (a low figure in my estimation) he loses $800 dollars in purchaisng power. That may not mean much to you but it does to him. He can barely afford to save $2000 grand and any emergency could eat into that in no time.

Umm, a GIC/CD/Term deposit, for one? Or even a high interest savings account from an online bank?

There are several examples of how these things never keep up with inflation. There are several examples in Milton Friedman's book "Monetary Mischief". One is as follows: Say you bought a government bond in 1968 and held it until 1978 and cashed it in. you would have paid $37.50 for a ten year bond with a face value of $50 and would have recieved $64.74. By 1978, it took $70 to buy as much as 37.50 would have bought in 1968. Not only would you have gotten back only $64.74 you would also have had to pay income tax on the $27.24 difference between what you paid and what you received - in effect, you would be paying for the dubious privilege of lending money to your government.

Their poverty is a result of their spending exceeding their income, not inflation.

Their income shrinking in purchasing power is a contributor and that perception discourages saving and encourages spending.

If his business makes money, and things inflate, he raises his prices by the rate of inflation, just like all his suppliers do. That's what inflation means.

Inflation means an increase in the monetary supply.

If production levels are kept in pace with inflation all seems well. But inflation means there is more money chasing less goods and that is why prices increase. you seem to think this balance is sufficient for a healthy economy and that is what government thiks also. That it can maintian this stability. We see that it can't as demonstrated by our boom bust economy.

You're right, a lot of people get raises a lot faster than inflation. My salary is about 300% of what it was 2 years ago...

Lucky you. I don't believe you are representattive of the average middle class individual.

Only to the extent that wages lag behind inflation. With well characterized and quantified inflation, everything inflates, including the wages. There is no loss of purchasing power.

Eventually there will be a drop in production and it will matter if you have kept pace with inflation.

If someone can't find $50 for food for a week, he has bigger problems than 2% inflation, I can tell you that much.

It can only add to his problems. Usually unseen.

Where is this hypothetical individual getting his money and why isn't his money source inflating. If the cost of food is going up and wages aren't going up, that's not inflation. That's just a rise in the cost of food.

Inflation is entirely an increase in the money supply. The result of an increased money supply is an increase in the general price level.

You'll have to elaborate on what the heck you mean here. Why does the consumer have to wait a year? As soon as a consumer borrows it from the bank (for a mortgage, car loan, credit card, etc), they've made use of its purchasing power right then and there. They aren't waiting a year.

The increase in the money supply is what increases prices. His added money to the economy benefits him and has less purchaisng power to the later borrower. today it is mostly governemnt that spends new money in the economy so they get first advantage of buying at the higher purchasing power of the dollar and the consumer using it later has less purchasing power.

Yes, the numbers get higher. The purchasing power of an individual dollar goes down. But you have more dollars, because everything has inflated. You're $1.02 gives you as much purchasing power as your $1.00 did a year ago, and you now earn $10.20 an hour instead of $10.00 an hour. Nothing has changed.

[/quote}

You are correct, all is well if the balance is maintainted and that is why governments have been given the responsiblity in the first place - to maintain price stability. As long as thinga are gradually going up all is well. Prices and wages tend to adapt. The probelm is government tends to increase spending beyond what the economy can afford and it will eventually ruin the currency.

Only in your mattress. It encourages people who have lots of money to put that money into savings accounts, GICs, stocks, bonds, real estate, etc. That stimulates economic activity, which is a good thing.

Those are all good things that inflation discourages. We have been talking about a low inflation rate but if you make the rate say 20% the detrimental efffects become very apparent that you not save in dollars and spend as quickly as possible. You can invest to hedge the loss to inflation but are you going to get 20% on your investment. And it doens't help those wallowing in ignorance of how or where to invest. This high rate of inflation is not an impossibility. Looking at inflation as being an injection of money into the economy Obama wants to spend like crazy.

But it makes exports less expensive, and makes the country more affordable for tourists to visit. In any case, most Western countries have comparable inflation rates, and swings in the relative value of currency have much more to do with economic conditions and the supply and demand of commodities than with inflation.

Inflation makes exports more expensive and tourism as well. You are always referring to the optimum scenario. If that were the case, I agree, national economies would be stable. One has to ask what is going on in the US then??? Europe? Obviously not the optimum scene.

Sure, wages change more smoothly over time. They don't change from day to day and minute to minute like the prices of commodities do. But I see no evidence that they lag behind over time.

this would take some study on your part. But wages, generally do lag behind changes in consumer prices.

No one would clamor for COLA increases if they kept up to inflation but we do see people demanding them

illustrating their necessity.

Anyway, my opinion is inflation isn't nearly the issue you make it out to be.

I see that.

It is an unseen and thus incidious form of taxation though that is another form of governments making winners and losers. The incidiousness of it may not even impinge upon you in your life but you seem young enough that you will finally realize goverenment cannot maintain the price stability you envision and are experiencing today. Unless governement restrains itself and stops deficit financing you will see stronger and stronger restraints on the economy and more and more freedoms and liberties are lost.

[Oleg Bach]

Was over at one of the established pawn shops yesterday - brought them a few pounds of sterling silver...The place was weird - looks like the old owners sold the place to a bunch of east indians..they really like the pile of precious metal that I brought in...waited for about half an hour while the staff dickered about - did their testing and consulted with each other...turned out that it was silver plate - so I walked home and as I crossed over the bridge on the Don River - I tossed the scraps of useless metal over the side - really thought that my old ash trays were going to be worth something...oh well -