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What Inflation?
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What Inflation?

If you pay any attention to the Federal Reserve and Ben Bernanke, you probably have noticed his constant statements that claim inflation is under control. He cites statistics that claim inflation is only up one or two percent per year, thanks to his miraculous ability to handle the money supply. While his version of events is definitely calling for the Wall Street crowd, it’s not good enough for the average consumer. Is inflation basically non-existent, like Mr. Bernanke claims it is? In a word, no. In fact, it is much worse than he would claim, although the statistics that they use to measure inflation may not be showing it. Some might say, this is done deliberately so that they can keep doing what they’re doing.

What’s the Deal?

So where is this inflation coming into play? The Federal Reserve has essentially been printing trillions of dollars and giving it to banks ever since the financial crisis of 2008. Banks have been taking the free money and using that to buy bonds like United States Treasury bills and other securities. This has lead to a massive decrease in market interest rates, because there are plenty of buyers with plenty of money to buy. The Fed has created more than $2.5 trillion for these purposes. This has lead to inflation in the bond market and a re-inflation in the real estate market. Real estate prices have gone up nearly 10 percent in the last year. Stock prices have gone up drastically since this all began.

Is this rise in stock prices due to the recovery of the economy? Are people actually going out and spending money and helping these companies on the stock market performebetter than they did a year ago? Or is it due to the manipulation of the markets with the help of the Federal Reserve and the banks?

The so-called recovery that people point in the stock market as verification, isn’t really that much of a recovery at all. It is a form of market manipulation by the powers that be to make it seem as though everything is alright. The big problem with this scenario is that it’s going to hurt the middle class more than anyone.

Have you noticed the prices of things like food, gas, and consumer goods rising in the last few years? The two biggest things that most people spend their money on are food and gas. Unfortunately, these items are left out of the core consumer price index number that the Fed uses to cite inflation numbers. They say that those prices are too “volatile” to include in a true measure of inflation. The problem with this is much of their volatility is due to the practices of the Federal Reserve and the major banks. As the Federal Reserve continues to increase the money supply, the purchasing power of the dollar relative to other currencies and gold declines. As the purchasing power of the dollar is eroded, it buys fewer barrels of oil than it use to. As the price of oil goes up relative to the dollar, this makes the price of gas go up for the average consumer.

The price of food is also largely affected by these policies. Although there is some natural volatility in the food market because of weather and harvest, that isn’t the only thing at play here. Food has to be transported to stores with the help of trucks. When the prices of gas are high, this adds to the cost to get the food to the stores for people to buy. This means that a good chunk of the cost of food is from the rising costs of gas, which are impacted directly by the Federal Reserve.

What it Means for the Future

If you think things are expensive and times are tough now, it’s probably only going to get worse. If you are having a hard time making ends meet, you may want to buckle up for even harder times. Unless these policies of the Federal Reserve are somehow changed or stopped, then inflation is going to continue on until it’s out of control. As a consumer, stocking up on hard assets is one of the best ways to combat these policies.

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