Ohio miners forced to attend Romney rally without pay...

[kandrathe]

Please take the following in the best light possible, and in the most friendly of manner. Let this kvetching go. On the general subject shipping cost IMO is what drives most prices up or down for most things.

I think you are talking about prices. I'm not really. I'm talking about how the relative aggregate change in price is measured and communicated.

We got here because we were discussing whether the benefit of productivity was to drive down prices. In many ways it has. And, we've all pointed out the ridiculously low prices of most imported consumer goods, like TV's, Computers, Appliances, and to some extent cars. Things that cannot be imported, or traded like that have experienced above average inflationary growth (education, health care, lawyers, etc).

If we were allowed to manufacture and sell a 1960's technology (mid-sized passenger) vehicle, it would sell new for less than $10,000. We've layered on about $3000 in safety and emission standards, and about $10,000 in quality improvement. Be that as it may, we all enjoy our longer lasting, less polluting, higher quality safer vehicles. Maybe that is worth doubling the price.

Are we experiencing the price benefit of the 18% productivity increase in Real GDP from 2001 to 2011? In that same period, purchasing power declined 20%, and labor force participation declined from 68% to 63%. I'm not seeing prices decline. Why? Well, I'd say Treasury, and Federal Reserve intervention through mechanisms like quantitative easing have ensured that the inflation rate remains positive. In some ways, that is a good thing.

Otherwise, we'd experience price deflation. The nightmare Jester warns about is that our economy is based upon growth. The fear is that as prices fall, profits evaporate and producers would start to go bankrupt. The resulting loss of jobs results in less consumer money to buy things, resulting in less demand for products and further falling prices, and then more layoffs as the entire structure of production of goods and services dismantles itself. Having a large idle population of angry, starving people is a revolutionary powder keg. In recent history it led to WWII, and regionally many other wars.

The cup is not just half full though. The half empty side is that for every action there is an equal and opposite reaction. When the Feds create money out of thin air they devalue all the money everywhere that is based upon it (e.g. the Petrodollar). So, maybe gas isn't really 4$, it's maybe still 2$ in 2004 dollars. Maybe my salary, savings, and pension funds were cut in half due to the rapid decline in the value of a dollar. It's probably not that drastic, but the past 4 years have seen an unprecedented amount of money supply manipulation (and therefore subsequent devaluation). The other negative is that they don't really create dollars out of thin air... Our dollar is a debt obligation. The Fed is a private banking cartel whose ownership is divided up among the world's largest banks. Every dollar they create is a debt that is owed them with interest. In addition to the Fed, the banking system itself can create money out of thin air with fractional reserve banking by using ridiculously low reserve requirements. Combined, our money supply growth is accelerating at an alarming rate.

So, is there a Big Lie™? Sort of... through the ignorance of the people, their inability or unwillingness to understand complicated topics, and the failure of leadership to communicate what is happening. We are mortgaging ourselves and future into feudalism. This should be our main concern right now as a world population, rather than distributive egalitarian idealism or sectarian bull crap. So, yes, I'm enjoying the party while it lasts. I'm afraid though that the bill hasn't come yet... The piper will need to be paid, and I'm not sure we can afford it.