How Inflation affects Prices

I keep hearing inflation rates are only 2%, but I keep seeing sky rocketing energy costs, food costs, and don't forget the rest of the commodities market.

The Dollar keeps loosing value on the international market, while the Fed and government continues to produce more and more money through deficit spending, extremely low interest rates, and pumping money into failing financial institutions that caused their own problems through programs that are more gambling then investment strategies.

All these new Federal Reserve Notes being pumped into the economy and we wonder why things are getting more expensive? Actually the truth is that things are actually getting less expensive through technological advancements, but the dollar is losing its value many times faster.

Changes in the price of oil vs. other currencies and Gold:
http://www.downsizedc.org/_i/8ajy8ad.gifhttp://www.thedailygreen.com/environmental-news/latest/oil-gold-commodities-47041507http://www.goldmoney.com/en/commentary/2008-01-02.html

Compared to Gold the value of Oil is actually the same as it was 7 years ago.

Most things that do go down in cost do so because manufacturers, wholesalers and retailers find ways to make move and sell them cheaper. When you truly compare quality to quality versus the dollar, you'll find that handmade high quality products similar to the one's you might have bought 60 years ago (before the gold standard was dropped), are much more expensive today than they were back then. But compare them to other things like their equivalent value in Gold or silver, and the cost is usually very similar.

More information on this issue can be found here:

http://www.downsizedc.org/blog/2008/may/13/fighting_the_inflation_tax_with_gold


- Posted by Spaldam

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