US Inflation

[phrost]

http://www.shadowstats.com/alternate_data/inflation-charts

[Torque]

Yep, it's bad. WAAAYY higher than the govt is reporting. And could actually get worse.

If people really sat down and thought about the implications of ~6-8%/year inflation rate on their lives and standard of living over the next decade or two, they'd be buying up every deflationary asset they could get their hands on RIGHT NOW and holding on for dear life.

Bitcoin, people! Buy it! Wake the fk up! Or continue to get poorer by the minute.

Here's some more reading:
https://www.peakprosperity.com/blog/99392/burrito-index-consumer-prices-soared-160-2001

[matuson]

This is only the beginning. The emergence of bitcoin may have the most negative impact on the dollar. In many countries people used to keep their money in dollars. The local currency is too weak to store savings in them. Now people prefer bitcoin. All released dollars will begin to put pressure on the US economy. 6-8% inflation is just the beginning of this process.

[alyssa85]

This is only the beginning. The emergence of bitcoin may have the most negative impact on the dollar. In many countries people used to keep their money in dollars. The local currency is too weak to store savings in them. Now people prefer bitcoin. All released dollars will begin to put pressure on the US economy. 6-8% inflation is just the beginning of this process.

I disagree. If you look at dollar charts, it spent 1980 to 2014 falling in value against other currencies. Then in 2014 it started rising and has continued that way. That means the dollar is getting more valuable.

Bitcoin really poses a threat to the currencies of the weak countries in the world - Venezuela, Argentina, Zimbabwe, those are the places most likely to adopt it. The dollar will be one of the few currencies unscathed by it.

[Torque]

I disagree. If you look at dollar charts, it spent 1980 to 2014 falling in value against other currencies. Then in 2014 it started rising and has continued that way. That means the dollar is getting more valuable.

Relative to other world currencies maybe. But NOT relative to U.S. purchasable goods and services! 6-8% rise/year! And ALL world currencies are devaluing together relative to world GDP output.

[BartS]

This is only the beginning. The emergence of bitcoin may have the most negative impact on the dollar. In many countries people used to keep their money in dollars. The local currency is too weak to store savings in them. Now people prefer bitcoin. All released dollars will begin to put pressure on the US economy. 6-8% inflation is just the beginning of this process.

I disagree. If you look at dollar charts, it spent 1980 to 2014 falling in value against other currencies. Then in 2014 it started rising and has continued that way. That means the dollar is getting more valuable.

Bitcoin really poses a threat to the currencies of the weak countries in the world - Venezuela, Argentina, Zimbabwe, those are the places most likely to adopt it. The dollar will be one of the few currencies unscathed by it.

But being the best of the worst is not really that good, even if the dollar is not losing as much value as other currencies the most important thing is that it is losing value at an alarming rate, if you hold a million dollars in fiat form another million in gold and another in bitcoin for 10 years you will find that your bitcoin buys a lot more than it could originally and most likely gold will have a similar effect but your 1 million in fiat buys a lot less.

[flynn]

well, maybe it's worse than that:

http://alt-market.com/articles/3310-the-economic-end-game-continues

[MiningSensei]

I dont know why dollar is going so bad, during this year they had more than 8% of inflation, and only 11 months have passed since this year started.
They are not having a good government, i know that they are one of the most biggest countries if we talk about money, but they have a lot of debt.
Euro is ganing much more power than Dollar at the moment, just look at the charts, it is 1.17 eur/usd, and it is increasing day by day.

[pitham1]

Inflation is not what a government indicator says. Inflation is what the man on the street experiences, when he takes his dollar to a store. The government cannot hide inflation for too long.
These kind of monetary policies will provide a boost to Bitcoin, once people realize it.

[Samarkand]

...
Euro is ganing much more power than Dollar at the moment, just look at the charts, it is 1.17 eur/usd, and it is increasing day by day.

This isn´t as exciting as you claim it to be. Open up a 5-year chart of the EUR/USD trading pair.
You will see that in 2013-2014 the exchange rate was roughly 1.35 for quite a long time.

The Euro is just gaining back a bit of the ground that he lost compared to the Dollar since 2014.
However, both of these currencies are subject to a high inflation, which makes assets
like Bitcoin even more attractive.

[Torque]

How about this lovely chart? See anything odd for one of the largest countries in the world whose GDP is comprised of 70+% pure consumption?

https://fred.stlouisfed.org/series/M2V

[Samarkand]

How about this lovely chart? See anything odd for one of the largest countries in the world whose GDP is comprised of 70+% pure consumption?

https://fred.stlouisfed.org/series/M2V

Interesting chart, Torque!

However, I don´t really know what to say about these stats. The US economy is obviously heavily reliant on consumption and most people happily
oblige by wasting their entire paycheck on consumption. A big part of the population goes even further by going into debt for the purchase
of consumer goods.

Nonetheless, the chart implies a falling velocity of money, which in my opinion would indicate that people have shifted their preferences from
pure consumption to saving money for the future (lower time preference). It gets really interesting when you look at the saving rate development in the
same time frame from the same source:
https://fred.stlouisfed.org/series/PSAVERT

As you can see the savings rate hasn´t really increased and most people are still busy with pure consumption. However, as the chart posted by you shows the
velocity of money has been on a constant decline, which is rather contradictory.

[Torque]

How about this lovely chart? See anything odd for one of the largest countries in the world whose GDP is comprised of 70+% pure consumption?

https://fred.stlouisfed.org/series/M2V

Interesting chart, Torque!

However, I don´t really know what to say about these stats. The US economy is obviously heavily reliant on consumption and most people happily
oblige by wasting their entire paycheck on consumption. A big part of the population goes even further by going into debt for the purchase
of consumer goods.

Nonetheless, the chart implies a falling velocity of money, which in my opinion would indicate that people have shifted their preferences from
pure consumption to saving money for the future (lower time preference). It gets really interesting when you look at the saving rate development in the
same time frame from the same source:
https://fred.stlouisfed.org/series/PSAVERT

As you can see the savings rate hasn´t really increased and most people are still busy with pure consumption. However, as the chart posted by you shows the
velocity of money has been on a constant decline, which is rather contradictory.

Yeah, the reason why the savings rate hasn't increased in the U.S. during the same time period, is that people are up to their eyeballs in debt! Every extra dollar they make is going to service their existing debt interest payments instead of into their savings. And they haven't really paid down their existing debt very much. Savers are also punished now holding dollars in bank accounts, since they get no savings interest in return.

Couple that with the fact that 6-7%/ yearly inflation over the past decade has probably caused at least a 40% decrease to their purchasing power (because wages have remained flat over that same period), and people have had no choice but to shut down all extraneous consumption, including consumption that would include taking on more debt. Hence the M2 money velocity dropping like a rock to the lowest levels in over half a century.

And sadly this is not going to get better for most U.S. citizens... if they continue to just feeding their debt interest payments. Sure their debt will inflate away somewhat over time, but if their wages don't keep up with the REAL inflation, they will not be able to build 'wealth' and retire with anything.

[F3arl3ss]

http://www.shadowstats.com/alternate_data/inflation-charts

If this were the case then no one would be able to afford anything. Try compounding even 6% every year for 40 years... everything would cost 10x as much.  I can't find a scenario where their numbers actually make sense.

[chesthing]

Inflation is not what a government indicator says. Inflation is what the man on the street experiences, when he takes his dollar to a store. The government cannot hide inflation for too long.
These kind of monetary policies will provide a boost to Bitcoin, once people realize it.

Well in that case, 6-8% is complete bullshit. Gas is very cheap compared to the last decade, groceries aside from beef show very little price change, things like car parts, clothes, utility bills, home improvement supplies, tools, etc etc etc do not show any significant inflation. What has gone through the roof is real estate in many parts of the US, and of course stocks are way up.
I see no signs of the kind of inflation in everyday purchaes that people are talking about in this thread. It may happen, but it's not happening  as far as I can tell.Most likely it is just hype to get the btc price to keep rising, but it has no basis in fact.

[949miner]

The united states has been affected a lot by the crisis of the Petroleum in the last decade, and this is one of the major reasons of why their economy has dropped a lot in the last years.
But 6 or 7 % of inflation every year is crazy, they really need to stop right now because they are a potency.
There are 3rd world countries that are having at least 15% - 20% of inflation a year and nobody is worried about that, this is how the world works, everybody is worried about US right now.

[Torque]

Well in that case, 6-8% is complete bullshit. Gas is very cheap compared to the last decade, groceries aside from beef show very little price change, things like car parts, clothes, utility bills, home improvement supplies, tools, etc etc etc do not show any significant inflation. What has gone through the roof is real estate in many parts of the US, and of course stocks are way up.
I see no signs of the kind of inflation in everyday purchaes that people are talking about in this thread. It may happen, but it's not happening  as far as I can tell.Most likely it is just hype to get the btc price to keep rising, but it has no basis in fact.

chesthing, I'm gonna have to flat out disagree with you on that. Do you even pay bills, bro?

My electric bill has doubled since 2009
My health insurance monthly premium has doubled since 2007
My haircuts have doubled since 2007
My grocery bill is up about 40% per shop since 2009
My oil changes have doubled since 2007
My water bill is up about 50% since 2009
New cars cost 30-40% more than they did in 2007
Most fast food is up about 25-30% since 2009
A sit down fine dining experience is up about 50% since 2009 (just look at the cost of a single cocktail now!)

Things that don't affect me, but I've heard that:
Rent is up about 20% over the last 4-5 years in major metro areas.
Real estate is back up to pre-2008 crash levels, and climbing higher still.
Cost of an average college degree up about 30-40% since 2007.

You're right though in that gas has gone down, and shit from China (ie., clothes, tools, home supplies, etc.) hasn't gone up all that much. But everything else has!

And the MAJOR thing that hasn't budged in a decade across the board is.... WAGES.

[Samarkand]

...

And the MAJOR thing that hasn't budged in a decade across the board is.... WAGES.

There are probably several reasons for this.

Off the top of my head:
-women entering higher education and (later) the workforce in higher numbers, which obviously enhances the pool of potential employees for companies
-the slow decline of several labor-intensive industries (e.g. coal mining) industries
-automation, which enables companies to achieve the same output with fewer human workers
-downward pressure due to actual outsourcing of jobs to low-cost countries in Asia (I´d argue that even the threat of it keeps wages down)
-less powerful unions compared to a few decades ago in most countries
...

[Lieldoryn]

The U.S. dollar is experiencing not easy times. I think that inflation will only grow. I do think that the growth of bitcoin prices is kind of an indication that the dollar is losing credibility. This will inevitably lead to higher inflation. Perhaps 6-8% inflation in the year the Americans seem happy in a few years.

[Samarkand]

...I do think that the growth of bitcoin prices is kind of an indication that the dollar is losing credibility...

This conclusion is kind of problematic. Bitcoin has outperformed every other currency and every other asset class
on this planet as well. Therefore you can´t really argue that the dollar is losing credibility, because compared to
Bitcoin everything has lost credibility.

However, you are probably right that the dollar has lost credibility.

Take a look at the development of the purchasing power of the $ over the last decades: