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Tuesday, 05 November 2013

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GDP is such a manipulated indicator I wonder. (All that 'welfare' money moving about is counted as a positive you know?)
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Did you see this?:

http://zerohedge.blogspot.co.uk/2009/05/annihiliation-of-dollars-purchasing.html

I wonder what the same for the pound would look like. I vaguely remember a description on the effects of inflation on buying power phrased in a useful (LIV proof) manner:

'In 1920 a gentleman could buy a nice bespoke Saville Row suit for an ounce of gold (≈ £20). In 2010 a gentleman could buy a nice bespoke Saville Row suit for an ounce of gold (≈ £1500). The suit is the same, the gold is the same but the money? £1 is now worth 0.01333r (1%) of its worth in 1920. £1 in 1974 (gold price £154/ounce) is worth ≈10p now. So 99% since 1920, 90% since 1974 all due to inflation. You are being robbed by the government continuously, on a daily basis, and you don't even notice it.'

With QE, I wonder how much £1 is worth now?

XX As Nelson points out, with considerable relish, this is truly Bad News for the 'Milipede'.XX

Assuming, of course, that the voting public have an IQ greater than their shoe size, or can even SPELL "I.Q."

That is all logical and true, Able, but the fact is that more people today can afford to buy a Saville Row suit than they could in 1920 which points to a rise in prosperity. Even so, you are quite right to point up the underhand theft inherent in inflation.

And there was me, FT, thinking that *I* had a low opinion of my fellow subjects!

Prosperity? Wealth? Hmm, where did it all come from? New industry, technology - some certainly, oil especially. Price reductions/efficiency? Some certainly, food especially. But does a house cost so much less and is a wage so much more relatively now than then? Are we so much more productive and simply worth more now than then? (cost of living and houses prices compared to wages of 'trades' was an almost constant for over a century until rather recently you know - the difference is in what we can now borrow).

Nope, the 'prosperity' we enjoy is based on the differences, a fiat currency, printing a never-ending supply of new cash to pay for it all, and unbelievable amounts of borrowing. Hey Ho, lovely for us living on tick, but just wait till the kids see the bill!

"He knew nothing when he was Chancellor": really? I must have missed that.

The whole concept of relative wealth is hugely complicated, as you indicate, Abel. Not the least of the difficulties, again as you indicate, are the ingredients that go towards 'wealth'. But once they measured things in gold and then moved on to money, well, away we went. Now we are poised to do away with money altogether and simply have printed statements telling us what we are, or are not, worth. It's rather like that silly film (I never saw it!) in which the hero was on a bus which had to keep moving at a minimum of 30mph or a bomb would go off!

Now look here, DM, I can't have you coming in here picking my nits over simple things like facts! Dammit man, I was in full grump mode and whether or not Ed Balls was Chancellor, or just the man who pulled Alistair Darling's strings, is a footling fact of no importance.

Able, Oy! It's not Queen Elizabeth's fault! She's a very nice lady.

Very witty, Michael! Mind you, the first Queen Elizabeth managed her 'Quantative Easing' by chopping off a few heads. We might do worse than follow her example!

Now, if we may return to reality, yes 'Quantitative Easing' is just another form of the con of public economics. Yes, a Saville Row suit might not be the best choice as a comparator, since they are still hand made and labor costs might well rise, but the cost of a house? Even with the jump in building costs in the 1918 to 1922 period can not account for the huge inflation in the (paper) price of a house over that ninety three year period. Of course they inflate money. Of course they borrow money that they fully intend to repay only in part, because they will be paying with marked down money. That's a huge part of the Obama scam, running us into astronomical levels of debt, easy money now, 'easy payment plan,' later. Anyone who cares to know is fully aware that a two percent annual inflation rate is US government policy. Oh, and that suit? Not many people could afford a Saville Row suit in 1920, nor now, either. More people can afford those half factory/half hand made goods from Burton's. (They are still in business, aren't they?)That is a gain in productivity, and we can expect more of that, as computers get more involved in the process. Still, those gains in productivity only mask a bit of the inflation. It's still there. It's still government policy.It's still theft.

Michael

Ready for the release of 'Housing Bubble Part Deux - (The Wrath of Bernake)? Coming to a down-town multiplex near you, soon.

First time I've seen a chart like this - leader of the pack and whipping the Jerries into second place: -

http://www.telegraph.co.uk/finance/economics/10427815/UK-growth-to-outpace-Germany-for-next-two-years.html

Gotta Love that QE.

SoD

Well, I am buying gold, as much as I can afford on my income, and hoping for another housing collapse. I got to see one from the other side, twenty five years ago. Maybe it's coming around to my turn?

I'm very keen on gold. I save it.
I've also just bought my 4 year old grandson a drum kit.
The question must be asked, is this the start of dementia?
Knok and/or ring if an anser is required.

Apart, SoD, from the fact that you can't trust EU stats further thanyou can piss into a gale, it will all disappear the minute the BOE stops printing!

I think you might be on a long term winner, Michael. In the meantime, 'buddy can you spare a dime?'

Yes but, Andra, if you and I (and 'Big Sis') get dementia, will anyone notice?

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