I very well remember when gasoline was 17-cents per gallon, and the local gas stations would have 'price-wars' to attract customers by lowering prices from that level. I could give you a lot of other examples from the 1960's, but this is a pretty good one since we ALL see the price at the pump when we fill-up today...the difference is a perfect illustration of two things, the primary thing is INFLATION and the secondary thing is TAXATION.
- Inflation is the decline in purchasing-power of the Dollar...it takes more of them to buy the same thing.
- Taxation....ptooey! This increases as politicians spend money they do not have, for our own good [read: to buy votes to get re-elected]...I also call this spending your money FOR you because they know better than you do what is best for you. Taxes always go UP, they never go DOWN.
When I was at University, ALL of my Economics professors were raging Keynesians. The very worst of the lot, while by far the most likeable, was Hubert H. Humphrey. I disagreed with everything they said, but at least HHH made me enjoy hearing utter and complete nonsense and drivel!
- Yes, you guessed it, I later came to appreciate Hayek, von Mises, and the Austrian School of Economics.
- BUT one doesn't 'need' University to understand that you cannot get out of debt by going further into debt. Spending money you do not have is sheer lunacy, but that's John Maynard Keynes for you....full-on barking mad.
While I do NOT agree with everything the NIA says or promotes, they have a lot to say and are worth listening to. I give them much more credibility than I do anything I 'see' or hear from MSNBC or CNBC, or the alphabet 'old' media (ABC-CBS-NBC).
Take a look at their site for yourself, and decide for yourself.
Sunday 28 November 2010
Inflation and Keynesians, NIA..............from Rico
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3 comments:
You omitted to quote the change in constant dollars. $0.17 in the 1960s would be about $2.00 today, so it's not much different in constant dollars.
And if you count out the increase in taxes, the amount the gas companies are charging now is exactly the same $2 equivalent of the 60s price. Those darn evil greedy oil companies, how dare they charge us the same price they did 50 years ago!!
Talk about missing the ever-loving point, PacRim. The takeaway on inflation is what it does to your savings, not what it does with new money. If you put your savings under the mattress in 1964 it'd have a lot less purchasing power today. That doesn't happen when hard money is used as the basis of a money supply (unless the economy itself is in collapse, and the same money has to be spread across less goods...but even that problem is reversed when the economy recovers).
But forget all that, let's take a look at the numbers. Where did you come up with the calculation that $0.17 in the "1960s" is worth $2 today? Entering 0.17 and 1960 into the inflation calculator yields only $1.24 -- a little over half as much as your $2 (which buys only 0.7 gal gasoline today BTW)... which if true points to a further problem with your pet issue of purchasing power.
RD
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