A Visual Guide to Inflation

[Pat McCotter]

A Visual Guide to Inflation

Inflation. It's bad right? When prices rise your money is worth less and nobody wants to see their hard earned cash decline in value. But what is inflation anyway and what are its root causes? Turns out the situation is not as straightforward as it first appears. In this first of a two-part series we take a look at inflation and examine the pros and cons of this important barometer of the health of the US economy. Stay tuned for part two next week where we look at inflation's alter ego, deflation. We look forward to your feedback and comments below.

http://www.mint.com/blog/wp-content/uploads/2009/04/visualguidetoinflation3.jpg

[Russell Kanning]

"inflation sweet spot" hahahaha

[Ryan McGuire]

"inflation sweet spot" hahahaha

Typical American: "So hitting me over the head is bad right? I don't want my head to hurt."

The Gov: "Hitting you over the head can be a bad thing, but it depends on your situation."
The Gov: "If you don't give us your things, we hit you over the head 3% of the time. That's bad."
The Gov: "But if you give us some of your things, we only hit you over the head 1% of the time. Hitting you over the head is still bad, but manageable"
The Gov: "But if you instead agree to take other peoples things more often then you create things, we won't hit you at all, instead we'll hit the other person over the head. Hitting you over the head is good!"

Typical American: "OK, so if I take other peoples things, hitting other people over the head works to my advantage! But too much hitting people over the head can't be good right?"

The Gov: "That's right, you'll still feel the effects of unanticipated or excessive hittings over the head"
The Gov: "But the thing about hitting you over the head is soon you'll forget how many times you get hit over the head and we'll just start lying to you about how many times we hit you in our annual head hitting report"

Typical American: "Wha? We've got to stop this hitting over the head stuff!"

The Gov: "No we don't, a modest amount of hitting people over the head is a sign of a growing society. To avoid getting hit over the head, people get rid of their things as quickly as possible, which means our society will grow."

Typical American: "Ah, so there's a sweet spot for hitting people over the head!"

The Gov: "Thats right. Too little hitting people over the head will lead to chaos and anarchy, but too much hitting people over the head will stifle societies progress. We need a balance."

Typical American: "OK, I get it. Hitting people over the head is not inherently bad."

Typical American: "But what about this non-aggression concept I keep hearing about?"
The Gov: "Yea, Yea, Yea... there's all kinds of ideas out there... but none of that is done here in the US."

Typical American: "Oh, ok. When's my next head beating?"

[John Edward Mercier]

Inflation was created by Jacksonian Democrats as a means to break the back of corporatist-derived capital.
It works by making sure that currency is used as currency... and not capital (stored labor).
Labor is stored as commodity or investment. While the non-commodity investments (debt) tend toward a mutualistic real return.

The original Gold Standard (Currency Act of 1764) was a means to repress and control economic vitality in the Colonies... which had resorted to scrip, thus developing the means to economic independence from Parliament.
It was then re-established under Hamiltonian theory as a means for the federal government to exert control over the sovereign States.
Jackson destroyed it by removing the central banks power... returning it to the sovereign States and allowing under constitutional provisions (embedded by Hamilton) for the Bimetalism Standard. Which allowed the first US monetary expansion... because it was based on the silver/gold finds within the US borders, rather than true economics... it resulted in what appeared to many as market-based inflation rather than its true nature of currency inflation.

The current rendition of cotton paper money removes an inherent value, overcomes Grensham's Law, and enforces its use as currency... rather than a wealth storage method.
It the main reason the US has not had to continually physically print more currency... as the currency is more immediately exchanged for commodity.