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10A047
Fresh Out of COLA
by Jim Davies, 10/19/2010
Such news would cause consternation in the soft-drinks aisle, but it fell last week from the pretty though uncomprehending lips of the nation's newsreaders with barely a thud. Inflation has been measured by the FedGov's supposedly impartial experts to have been so low as to justify no raise for recipients of its largess, so our fixed incomes will remain actually fixed; this year, there's to be no Cost Of Living Adjustment. It may not be wrong. In the same aisle, I've seen the price of Ocean Spray juices rise by 20% since 2009, and across in the hard-drinks one that of box wine has been hiked 15% by the State liquid-drug monopoly - but on the other hand lettuce heads this week were down to 99 cents, and there are 226 grams of a tasty new Nabisco snack called Cheese Nips on intro-offer for only $1, so on the whole my personal basket of goods probably hasn't become much more expensive. On the other hand, since June silver prices have risen 33%, gold ones by 10%, Euro ones by 16% and Pound ones by 9.3% - even though the latter two are not true commodities people have to mine or grow, but bits of paper that central bankers in Frankfurt and London can fabricate whenever they see fit; so the annualized inflation rate for that particular basket of goods during the last four months has been 60%. Perhaps it's a harbinger of a general price rise. I still doubt it, though, for while I lack the tools of clever government economists, I do have access to a good free-market estimate of the key statistic they no longer publish, M3 - and that appears here to have been essentially unchanged since 2008 (the green line on the second chart.) As my 2009 article suggested, the recent massive, $2T money-printing bonanza must have merely replaced wealth that was lost in the 2008 debacle. Normally, price rises follow money-supply increases after about 18 months. Since there have been none of the latter, probably there will be none of the former, through 2011. And after 2011? - watch this space. In the zero government society I expect a few years later yet, money will be what its members choose it to be (probably gold, in my opinion) - not what government chooses it to be. Therefore, it will be impossible to mess with its supply, so causing false price signals and thereby disrupting plans to make and deliver stuff that people want to buy. Therefore, prosperity will accelerate. The the real cost of allowing government to exist and manage "money" is the often-unseen but devastating loss of growth. It's not just that inflation is frequently high, the worst part is that it's unpredictable - as seen above, you and I can guess how prices will move, perhaps correctly, but we don't know. We have to guess. When government has gone, everyone will be able instead to budget with an honest standard of measure. |
 
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