I agree. We are suffering with the deflation of bubbles which were blown up in earnest during the 90s. By the mid 90s Greenspan admitted cheap money had created a bubble in stocks. Cheap money after 9/11 moved the bubble over to housing.
How did we get away with cheap money for so long without inflation? Thank the Clintonites and 'free trade' for creating a decade long 'productivity boost' which in actuality was the effect of high paying US jobs being replaced by overseas cheap labor.
We look to the Gummint to tell us what the official inflation rate is. And of course, they always understate... aka LIE ABOUT IT! My sense is that the real inflation rate was 5-8% per year since the "money pump on steroids" began in 1982. One obvious example... the Toyota Land Cruiser. First time I saw one was 1970. It cost $2795. By 2006, $56,000.
I will say that both of you are wrong. Simply printing more will increase base money supply, but it will not necessarily increase money velocity. And in our case, I will flat out say it will not. This also is not necessarily true. Simply look at a chart of our monetary base and a chart of gold. One has truly skyrocketed and the other has not. Gold has appreciated, yes, but only at a fraction compared to the the monetary base. You guys are missing the point entirely. We can print all the money we want, and it will have little effect in this environment of massive debt and depreciating asset prices. Banks will not lend the money that they are given. Why would they? And if they do not, it will not make it into the hands of businesses and consumers. So how can you get any significant increase in the exchange of money let alone inflation? If the treasury prints a gazillion $20 bills, but it never leaves the building, does it make a difference?
True, the inflation numbers haven't seemed subjectively accurate of late. Still, I remember the late 70s early 80s inflation- inflation of that magnitude can't be hid. Comparatively, the last 10 years we have major deflationary forces at work balancing out the inflationary effect of chronic easy money.
CPI is not inflation. Inflation is just increase in the money supply. Because there are many types of money, we do not have a high rate in CPI. However, what about asset inflation??? Asset inflation is the key to "Bubble Economics". It creates artificial equity while the ratio Asset/income diminishes the ability to repay debt.
Disagree. The inflation of the last 5 years or so was nearly the equal of the late 70's.... two differences, however. 1. There was no "wage and price spiral"... which is why the Fed could get away with lying about the real inflation rate... all thanks to "outsourcing" well-paying middle class jobs.... however, many "things" increased in price dramatically, though wages did not. (I recall a checker at my local grocery commenting, "the price of food is sky-rocketing, but my wages have stayed the same"...) 2. Because wages did not keep pace with the real inflation rate, citizens actually suffered a DECLINE in buying power and standard of living. Of course, it appeared like they were doing well with home equity increase... which ultimately turned out to be ethereal.