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How The Banks, President And Congress Steal From You.
~ Karl Denninger Posted 01-12-2011 15:11 The Market Ticker
[edited ~R].
If you produce more with your labor and are paid slightly less - This is deflation in the economic sense.
In this case, if you produced on a wage-hour adjusted basis, 2.3% more (annualized) than you used to, what this means to you the common man is that you should be seeing an approximately 2.3% deflation in prices overall.
That is, for the CPI to be neutral on an economic balance basis, it should be reflecting a 2.3% decrease in the cost of everything bought (because everything bought has to be made, and thus labor always is the source of economic output). Note very carefully that this output improvement per-unit-of-labor-cost comes as a consequence of your efforts, and thus it belongs to you.
Well, how’s that been working out for you folks?
If you want to know why you have continually seen your standard of living destroyed over the last 30 years, here’s your answer in bright white-hot lights. Your productivity increase has been stolen by the banks and governments of the world – it is taken from you by compounded inflation!
Let’s assume a 2% productivity increase per year over 30 years. Let’s also assume a 2% inflation rate over 30 years. This is what it looks like. (starting with a baseline of 10,000)
Your cost of living has gone up by 78% in notional dollar terms but it should have gone down by 44%!
The spread between those two lines was literally stolen by the banks and government acting intentionally as a group.
They defrauded you, stealing your economic output and improvement in productivity, using it to hide the impossibility of continual deficit spending. Summed, the line is flat – but it should not be: that improvement in standard of living belongs to you, not them.
You’re being screwed by the politicians and banksters through an active and intentional series of confiscations of your labor, engendered through manipulation of the nation’s currency. Enabling trade, tax and government spending policies that cannot work in the long term.
Over the last 30 years you should have seen your purchasing power increase by nearly 100%. Instead your purchasing power has been robbed from you through intentional inflationary policies, depriving you of the fruits of that productivity improvement.
Wake up – to the attempt to extend the ponzi scheme a bit further, and the attempt to deflect attention from the above chart – the truth of how your wealth has been serially and intentionally stolen from you.
That which is rightly yours – the natural mild deflation that comes from improvements through increased labor productivity - has been stolen from you.
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This article highlights that inflation is a deliberate Policy choice designed to advantage the few at the expense of the many…
I would argue that it is also designed to exploit the reality that if the threshold of pain is kept low enough and spread far enough, you will overlook it.
Also, I would suggest that changing over to a policy of De-flation is probably our best hope for the future – even it it were to be a severe wrench to do so. Certainly it would destroy the business model of many financial systems, businesses and governments.
On the other hand, they have been getting a free ride off our backs for far too long already.
Coincidentally, this article very nicely leads into a much longer work on inflation I am currently editing (for readability – otherwise it is 125 pages long…) from the Mises Institute. I hope to have it up soon.
~ R.
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