Originally posted by TruthxIsxInxThexMist
Yeh...... well we get taxed on almost everything over here.... soon we'll be getting taxed for the air we breathe

You already are being taxed for the air you exhale if your country
has any kind of carbon tax based on Co2 emissions.

Done deal, most ppl don't see it thou, lol.

We will always have inflation. People will not lend money to get the same amount back sometime in the future. This is called opportunity cost. Why would you lend your money at zero percent when you can earn something on it otherwise? You won't. This means that a dollar today is worth more than having that same dollar in the future. That is inflation in a nutshell.

To limit the amount of inflation you must have low interest rates. Low interest rates mean people will settle for less income on their extra money. As a result the disparity between the worth of the dollar today versus tommorow is lower, thus lower inflation.

Supply of money is also a factor. Low interest rates aren't really the culprit. The problem is that when rates are low, more money is lent. Once the money supplygrowth is increased more than the prevailing interest rate, then money supply outgrows opportunity costs and you have more inflation.

Raising rates to stem inflation is folly. Higher rates increase costs which in turn increase prices. What we need is a flat interest rate, and the loosening and tightening of bank capital requirements in order to keep the economies growth at a stable level. Otherwise is is all bust or boom.

So to sum it up, inflation is natural, but the wide variations in inflation from from year to year are the result of a faulty federal reserve policy of trying to control the economy through interest rates rather than bank capital requirements.

Originally posted by sligtlyskeptical


So to sum it up, inflation is natural, but the wide variations in inflation from from year to year are the result of a faulty federal reserve policy of trying to control the economy through interest rates rather than bank capital requirements.

No, I feel there is nothing "natural" about inflation. Take the bartering system for example. A coat traded for a cooking pan in the 1930's would be a coat traded for the same cooking pan in 2009.

Money, creates un-natural inflation.

It's not really the cost of living that has increased it is the value of the dollar.
In simple terms.

A real silver dollar is worth $3.45 .
A gallon of gas is worth around $2.50.
So 10 gallons of gas costs around $25.
If the US dollar was backed by silver it would really cost a little over $7.
for that 10 gallons of gas.

The simple fact is our dollar is backed by faith which is about 2cents to $1
dollar, "Thank you , LBJ, Richard Nixon and the Federal Reserve.

the reason the cost of living is on a ever increasing scale is
1. all money in the USA is created out of debt
2. all money is lent with interest
3. if all money is debt - and only the principal is created where does the money come from to pay the interest...?
4. bankruptcy and foreclosure are built into the system.
5. its a self fulfilling conclusion of 100% at a speed of 6% annum.

Originally posted by sligtlyskeptical
We will always have inflation. People will not lend money to get the same amount back sometime in the future. This is called opportunity cost. Why would you lend your money at zero percent when you can earn something on it otherwise? You won't.

slightlyskeptical,


You have made a very good point that I have overlooked and I minored in econ in my university days.


Ok, opportunity costs, do, indeed factor in; however, if the opportunity costs are properly accounted for and mitigated, there would be no inflation from those costs -- and why?


It's this: productivity increases.


If opportunity costs are smartly handled, the productivity increases would more than offset the opportunity costs, hence there would be no inflation.


There is a long historical record to prove that. In the time period between 1787, which dates from the formal establishment of this country under the Organic Constitution, to 1913, which dates the establishment of the Federal Reserve, the prices -- based on a constant basket of goods like sugar, wheat, tobacco, lumber and other goods that were constantly-available and consistent throughout that time period -- remained constant during that time and did NOT increase, i.e. inflate.


And during that time, there was a lot of lending going on -- with interest rates charged on the loans -- but the costs of those loans were more than covered by the productivity gains that were to be had when the people were industrious and productive with the money that they borrowed, so they were able to repay those loans in timely manners and were able to keep the difference afterwards.


The rate of increase in that 1787 to 1913 time period stands alone as the greatest increases in widely-distributed wealth in world history. Think about that. The aggregate wealth of America alone increased many-fold and the Illoonynaughties clearly saw that and wanted very, very badly to capture that wealth and siphon it off for themselves, so they schemed for a 100 years trying to get the central-banking model established and they finally succeeded with the fateful establishment of the Federal Reserve.


So, if the opportunity costs are properly handled, they would NOT contribute do inflation at all.

You might look into the nature of the Federal Reserve and banking practice of fractional reserve banking. Inflation is simply built in to the system. Simply put, "Cost of living" or Inflation is the percent skimmed off the top by the criminals. No cost of living adjustment simply means that those people will be taking the loss themselves. The skimming will be done no matter what.