posted on May, 1 2016 @ 03:53 PM
a reply to: FyreByrd
Do you have a summary of his ideas on causes and solutions? His page just links me to a whole bunch of videos and podcasts which I don't have time to
My thoughts on it are that in the Ford and Carter era we saw an increase in consumer spending as the transistor era hit and many new inventions were
unveiled. This caused people to spend more money, the problem is it was money people didn't have. This also coincided with women entering the work
force which doubled the labor supply. In the end there was far more to purchase, while there was also a greater supply of labor on the market meaning
work paid less.
New spending is an important component here because the way inflation used to be calculated is that it tracked the change in cost of goods from year
to year. When new products hit the market though you're not calculating the change in value but rather the initial value going from 0 to X instead of
X+Y. When this happens on a mass scale it causes inflation to skyrocket.
Rather than ride this out, Reagan changed the inflation calculations from 1982 forward which tracked the change in household spending per year. This
circularly defines inflation because if raises are given out at 3%, household spending will likely also raise 3% which in turn says inflation happens
at 3%. This didn't take into account credit lines though. Instead, raises would be given out at say 3% but credit lines caused spending to increase
at 4%. which would create a 4% inflation rate to the 3% raise. Compound this for 30, going on 40 years and we're at the breaking point.
There is no quick fix to this, economies can only be adjusted by a percent or two per year but we can start the process so that things are better 40
years from now and the process involves changing how CPI is calculated.