Prices Have Always Been Rising; Deflationists Don’t Know the TRUE Story
This is my favorite sort of chart. In 2010, in my Random House Book – Coins and Precious Metals Values – I was able to generate charts looking back at Roman silver coinage from 300 BC to 600 AD. Somewhere around here is a chart of silver prices going back 1,000 years (silver was a lot higher in adjusted dollar terms 1,000 years ago). I like long term charts that can reduce the noise of the present and lend the perspective that people from hundreds of years in the past have been dealing with the problems that we’re saddled with today. Though certain elements of society think they are smarter than all previous generations and seek to expunge God from their politics, God’s word is quite right and useful: There is nothing new under the Sun.
Having said that, looking at the chart below evokes thoughts that maybe man has indeed created something new under the Sun: incredible inflation. Insidious as it has been for the past century there has been a huge rise in the inflation pace.
The chart above comes courtesy of Jim Reid’s fantastic “Journey into the Unknown” and featured on ZeroHedge.com.
From 1200 to 1913 there was inflation – roughly a 10x increase in prices over 700 years. But since the start of the 20th century, prices have jumped by nearly 1000 fold. Yes, since the time of the creation of the Federal Reserve, there has been this incredible increase in prices, along with (as discussed last week) a financial system close to a quadrillion dollars in size.
The other take from the chart? It’s an important one. The problem has NEVER been about long term Deflation. The chart above is all about prices rising prices – first at a slower and steadier pace – and recently prices rising at a rapid place.
Over the last 80 years, there have been 59 documented cases of HYPERinflation…. And guess what? ZERO cases of HYPERDEFLATION.
The Hanke Krus Hyperinflation Table
Why do I bring this subject up? The buying power of currencies is perpetually reduced by inflation. Yet, gold has maintained a long term acceptance as a unit of wealth through the span of 6,000 years. To be understated, that’s not going to change, but shall come to the rescue of many.
Related, following the cross of the national debt at $16 trillion
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Author Jim Kingsland
Market commentator with focus on Gold and Silver after long broadcast career at FNN, Bloomberg, and Fox. #RandomHouse published author on PMs. Jim has also been involved in projects for CAC and Coinplex.