[quote=Eugene][quote=jstoesz]you can not answer that question for yourself? I am curious what you are looking for here.
If you have 3 times the monetary base chasing the same number of goods. You have a currency worth a third as much.
Obviously, it gets way more complicated than that on the ground especially when you consider all the deflationary pressures, but that is the basic logical barebones…
It seems to me that increasing the monetary base by 3X, can be hidden for only a short time…[/quote]
My point is that the monetary base is not chasing anything at the present time. The monetary base is an abstract number. You don’t have any milk-drinkers whose disposable income has gone up 3x as a result of changes in that abstract number.
If you were to talk about M2 per capita instead of the monetary base, I might agree with you (conditionally) … but M2 per capita has not tripled, it has only gone up 4% in two years.
Hence, the claim that the Fed has destroyed anyone’s purchasing power, or even caused inflation in the price of milk, remains unproven.[/quote]
Eugene,
You can’t just look at the narrow definition of CPI and say, “Look, no inflation!”
You have to look globally, and at EVERYTHING that money can buy at a given point in time. Today, your money can buy far, far less than it could two years ago, and that’s a fact.
I don’t care about the price of milk alone; I’m looking at the bigger picture. As stated above, stocks, bonds, commodities, currencies, even housing (especially when you consider where prices **should be** without govt/Fed intervention)…almost everything costs more today in USD than it did two years ago. Right now, that money is chasing assets all around the world. At some point, it will likely creep into the goods that CPI calculates (it already is).
I think it’s foolish for our CPI numbers to look at such a narrow “basket of goods” to determine whether or not there is inflation. As a matter of fact, if the CPI had taken asset prices into consideration as well, the inflation numbers during the bubble would have (hopefully) sounded the alarm much earlier than having to wait for the “financial crisis” to be officially noticed by the dolts who only look at CPI.
