Posted by PintofStout on June 12, 2008
If I had a quarter every time I heard some news story about gas prices or food prices breaking some kind of record I’d be rich. If I had pre-1974 1964 (oops) quarters, I’d be richer. There’s a reason for that, even though one wouldn’t hear it from any of the supposed “experts.” I heard the economics editor for a major financial newspaper on NPR yesterday speaking of inflation as if it was simply the cost of things rising. If a doctor thought food poisoning was simply when someone…er…evacuated a lot, we wouldn’t consider him an expert or even worthy of the title “doctor.” How can economists and financial experts look straight into the camera (or speak directly to the microphone) and say inflation is rising prices? How can news agencies let this happen with a clean conscience? Since when could economic laws be changed and ignored because they were inconvenient? Don’t like the Law of Gravity? Fine, just ignore it and see what happens. It’ll likely turn out the same way these new economic laws will. Sure, the fall was much longer and slower for those who followed Keynes off that bridge (and those they have dragged with them), but economic law will reveal itself again at the bottom.
Sure, oil looks expensive. Sure, prices for many things appear to be rising. But only the frame of reference we are stuck it is moving, if I could mix my physical laws with economic laws for the sake of illustration. Supply and demand is alive in well in our inhabited frame of reference; that of paper money and dollars. The supply of money has skyrocketed (should economists and central bankers be referred to as rocket scientists?) making it less in demand and therefore decreasing on a value scale. The frame of reference commodities inhabit is relatively stationary on a value scale, but when viewed from our frame of reference appears to be rising. People have a habit of messing things up when it’s perceived everything revolves around them.
David (a.k.a. Jeffersoniantoo), over at Freedom Port: Firefly has a very informative post about this as well.
Congress just had a bunch of oil executives testify before a committee on the high ‘dollar’ price of oil. Amazingly, none of these genius’ could put a finger on the cause.
He goes on to point out that as long as we are in this frame of reference with the inflatable dollar, it appears everything else is going up with the exception of our supply of dollars (that’s reserved for those of privilege). If we occupy a frame of reference with other commodities, such as gold, silver, oil itself, anything but the inflatable, practically make-believe dollar then we would only see the dollar falling in value. Inflation isn’t the dollar price of things going up; it’s the value of the dollar going down as the Federal Reserve prints more and more to cover the debt of the U.S. government.
The painful part of inflation doesn’t affect the producers, or the first couple of people to use this newly created money. It really hurts the people at the bottom who don’t have access to this new paper. While prices adjust to the supply of paper money pretty fast, the lag in the supply of paper money for the people who the money wasn’t printed for hits them hard. And really, printing money is so last century, so these days much of the money created (intelligently designed?) is electronic and not even tangible. But don’t expect to hear this from any sources in the top tier of users of this new money or the lackeys who get the good scraps, though. Instead go read Oil Pressure at Freeedom Port: Firefly and take in the rant of the Mugambo Guru and feed off of his energy to try and shake off this illusion.