Inflation and M3
Submitted by Wayne on Thu, 2008-12-11 14:31.
Economics
The Austrian school of economics suggests the M3 money supply is more closely related to inflation than, say, CPI (Consumer Price Index). M3 growth represents the new money "printed" (created out of thin air) by the Fed, the bulk of which is in lending to banks. As the money supply grows, the value of each dollar is diminished. (In other words, inflation is essentially government-sponsored theft of your net worth.) Inflation, then, is properly defined as the growth in the money supply and its requisite loss of value, and not the growth in prices, the latter being an effect of the former. I was perusing some charts on M3's recent history, to see how much the Fed has stolen from us over the years. I found some startling data.
Between 1975 and 2005, thirty years, the dollar effectively lost 90% of its value. Between 1960 and 1975, it lost at least 75% of its value. That means, from 1960 to 2005 (45 years), the Fed is directly responsible for the loss of over 97.5% of the value of the dollar! If inflation were experienced evenly across industries (it's not), it means that whatever cost $10 in 1960 would cost $400 in 2005. The CPI, using only a subset of "typical" household expenses, would suggest that a $10 item in 1960 would only cost $66 in 2005, representing a loss of "only" 85% of the value of the dollar and effectively hiding the true cost of inflation.
This is a good reason to suspect numbers coming out of Washington, especially numbers that indicate the magnitude of their theft. The CPI is a crock. The growth in the untracked TMS (True Money Supply) is the best indicator of inflation, but M3 comes close (TMS would be slightly worse). Note, too, that as of 2006, the Fed stopped reporting M3, presumably to hide the most subtle and most rapidly growing method of introducing new money and therefore devaluing the dollar (i.e., creating inflation).
Some sources:
http://en.wikipedia.org/wiki/Money_supply#Uni...
http://www.shadowstats.com/alternate_data/mon...
http://mises.org/content/nofed/chart.aspx?ser...
http://www.measuringworth.com/uscompare/
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All economies today suck
Submitted by Wayne on Fri, 2008-12-12 09:17.
I should note that all major economies worldwide presently follow a similar model of centralized banking.
On the lack of M3 reporting
Submitted by Wayne on Mon, 2009-03-23 10:38.
Mean income
The Census Bureau says the median household income in 1985 was about $41,000. In 2005, 20 years later, the median income was about $46,000. This would appear to be an increase in the standard of living, right? However, inflation (the growth in the money supply [M3]) shows that to remain on par with 1985's $41,000, the median income in 2005 should have risen to over $136,000! That means the standard of living (if household income is any indicator) in 2005 was less than one third that in 1985.
Until Americans correctly define inflation and get really pissed about the theft of their hard-earned wealth, there is little hope of fixing this problem.