Saturday, February 21, 2009

Doing the media's job

Ok, maybe 'The Media' no longer exists, and thus the job has devolved to where the responsibility has always been.... with the people.

Doing my share of irresponsible 'net' reporting, here
are some money numbers.

This chart shows a recreated M3 money supply indicator. Traditionally taken as a sure sign of inflation/deflation and used as a barometer of the nations financial health for generations, it was 'discontinued' by the Federal Reserve a few years ago. They said it just didn't apply anymore. Take that for what you will, it's back again and in private hands. If official numbers are your bag, the M1 and M2 are still out there, and still being announced by the Fed.

Click on the above image to find my source for this graph.

Money is the medium of exchange we use to trade wealth. Be it wealth in terms of commodities or in terms of labor (mental or physical). We accumulate wealth in all it's various forms, but cash (or bank ones/zeros) is how we usually measure our material wealth.

Money... specie.... cash..... is valued for what it can buy, and that is determined by how much cash is in the system. The less cash there is, the more value it has. The more cash, the less value. That is because the money, no matter how much there is, all chases a definite and tangible amount of wealth. Cash is not wealth, it just represents it so we can trade easily.

The chart above shows the money supply as per the Federal Reserve banking system numbers. Notice the violent spike upwards of money supply in the last year?

Folks..... that spike means every dollar you hold just got worth less. A lot less. It's called inflation. It's what happens when a government cranks up the mint's printing presses to hyper speed and vomits that money out into the system.

Inflation means more money chasing the same goods and services, which means the money is worth less.

See that spike on the graph? The value of your paycheck, and your bank account, and your pension fund, and your mutual fund... all went down at the same rate that spike went up. We just haven't had time for it to spread through the economy yet.

Who is paying for what Congress has done to us? You and I.... and this is how. Inflation steals away the value of our money and transfers it to those who run the presses.

Give that some thought.


Scott from Oregon said...

The rabbit hole gets deeper and deeper... I am totally with you on the government's boondoggle and creation of inflation...

Keep up the good fight.

You might enjoy Max and Stacy...

Old NFO said...

I hate to see what it's going to spike to this year... sigh... $20 cup of coffee anyone???

Crucis said...

NFO, my wife has a friend, a widowed lady, who goes through a 10lb can of coffee each week! She'll be climbing the walls if she can't get her daily bean.