Remember hearing your parents or grandparents grumbling, "when I was your age, 'such and such' only cost a quarter," and not caring at all? At the time I couldn't have cared less. Now that I'm older and have to worry about annoying things like "making money" and "real life," I can see it with my own eyes.
In 1913, a box of Kellog's Corn Flakes cost 10 cents (that's for everything, not just the box itself).
Last year, a box of Kellog's Corn Flakes cost $3.80.
In 1913, an ounce of gold cost $18.92.
In 2011, gold reached $1,917 per ounce.
Why am I choosing 1913 as a starting point? Because in 1913 the Federal Reserve was created. What is The Fed's responsibility? Adjust monetary policy to keep consumer prices stable and preserve the strength of the dollar, among other things.
The US Dollar has lost 96% of its value since the Federal Reserve was created.
Why? Because all the Federal Reserve does is print money out of thin air. Except now they don't even have to waste time and money on a press, paper, and ink. The Fed just adds a couple zeroes to a computer screen and viola - it creates a trillion dollars and distributes it to banks like JP Morgan and Goldman Sachs.
Now doesn't that seem a little unfair? Us little people have to break our backs to make ends meet, while the politicians and their financiers can just snap their fingers and make billions. But that's not the worst part.
Supply and demand. Every time they add money to the economy, which is called inflation, it makes the money in your pocket worth less. It loses purchasing power. Thus, food, fuel, education, healthcare, commodities and other things we need and want get more expensive. This is called price inflation.
Think of the economy as a balloon and the air as money.
Just remember that the balloon pops when you add too much air.
According to the Consumer Price Index (the only measurement that politicians ever refer to concerning inflation), the inflation rate is only at 1.7%. But anyone who does their own food shopping knows that's a lie. It turns out the CPI doesn't actually account for food, housing, transportation, and energy among other things. When you factor all that in, inflation skyrockets to 10% per year. That means every year, the money in your pocket is worth 10% less because of the hidden tax of inflation.
Obviously, this has a paralyzing effect on every single sector of the economy. So the government adds more money to the economy to make up for the vast decrease in that money's value, further decreasing the value of the money by doing so. It's almost comical.
As comical as a train wreck can possibly be.
So how does that make you feel about your next paycheck?