- the cost of living at what level, measured in what? Cost of living in Zimbabwe is impossible in Zimbabwe dollars, but you can live if you have money - gold or maybe other currencies.
Once a company gets large enough (e.g. Intel), they can engage in anticompetitive practices (i.e. bribing companies not to use a competitor's product).
- that's just normal business.
Without government intervention, Intel would have destroyed AMD years ago by either cheating or simply buying them outright.
- so what? Apparently AMD is doing just fine destroying itself all on its own. It's not a viable company.
But it doesn't matter. Intel is not a monopoly unless it gets government help and support, but it is a company that has a very good brand at giving people the best product at the best price. If the price or product are unsatisfactory and there is space in the market for profits building better products at maybe better prices, then without gov't intervention a company would emerge building that product, it's happens all the time.
Government intervention stops that happening.
- you are mistaken. Gov't intervention destroys viability of some companies to promote unviable businesses of their friends. Kodak was a company that was attacked by gov't in the nineties. Were they not attacked and were they able to restructure at that time, they possibly could have still continued their existence.
In 1979 GM was bailed out. Just a few years back it was bailed out again, and Obama says: here is a company that would have failed if it wasn't for gov't.
Well, that company DID fail, the bond holders got crashed by the government - that's the real end of the company. Companies only exist to provide their shareholders with profit on their investment, not for any other reason, not to hire people - to make money for investors.
That company DID fail, but bond holders had their property CONFISCATED, so the normal contract laws DO NOT APPLY ANYMORE IN USA.
And people are WONDERING why there is no manufacturing business in USA? What are you all, blind?
The solution is very simple - raise salaries and people will run to it
- demand/supply. Obviously it is useless to hire people in USA, otherwise they would have been hired there. The jobs are leaving and so there is no demand, and the demand/supply ratio is what drives prices up or down, and they are down, like on any other product or service that is not in demand.
It's not in demand.
It's not in demand in USA, it's in demand elsewhere, and that's because investment capital has moved out and instead, it's all government fake money that is sloshing around, fake credit, fake interest rates, fake banks, fake businesses like GM and GE, fake economy (service - ha! 50Billion USD/month trade deficit).
I have, I am certainly not posting from US, but bringing personal matters into a generic thread on economics is not useful to anybody, but those who have no useful arguments.
If the government wasn't allowed to print fake money and meddle with business, labour and asset costs, USA economy would have continued its domination in all aspects of production past 1913 to current era and there wouldn't have been any of this destruction of economy and money.
Employers are the ones in shackles, that's why they move their production capacity out. If it were employees, who were in shackles, there would have been an outflow in that category.
I don't follow. Offshoring exploits differences in the cost of living and is presumably an example of where the government isn't doing anything, since they don't prevent it.
- cost of living in USA is only high because of government destruction of currency, the free market and individual liberties.
Monopolies happen every so often without any government intervention. When they do, the only thing stopping them doing as they please is, in fact, government intervention.
You are forgetting something - in order to create the current 'globalisation' in the first place, there was a little something done by the government of USA, what was it?
Ah, yes, it was Nixon, defaulting on the American promise to pay gold for US paper dollar. You can't have what you want unless you limit the government it do only things it is authorised to do, and then you will not have what you want, but economy will improve and all sorts of jobs will emerge.
Public funding means 'public' (collective, the government) creating laws that are akin to what what a Mafia would do - "give us your money, you have a nice business going on here, it would be a shame if something were to happen to it."
Public funding is about the government force to steal money from individuals.
The fundamental reason behind this is government destroying the money - the only money that is left to be made is the fake money, and you must make it by the ton for it to make sense to spend time. Who can make money by the ton in a system that has the banks as the government?
By allowing government to take over function that it was never authorised to do, people have given the government the power to destroy, and the most lucrative thing to destroy is competition, while helping the monopolies. When there are only monopolies left, they will do as they please, and there can't be competition.
Can't have public science funding, and it's an oxymoron anyway. There is nothing that 'public' produces, individuals produce and 'public' taxes them, and that's how 'public' gets its money.
Once the 'public' destroyed all incentives to produce and created all incentives to move savings, investment, jobs overseas, that's what is going to happen and then 'public' will not be able to fund anything at all.
You want to get people interested in science & engineering? Kill all the guest worker programs, prioritize citizens over internationals for university slots, and start working with business to guarantee long-term work to attract people back.
- and like all other government regulations aimed at destruction of competitiveness, you will only achieve the opposite of your goal - more jobs will leave US for other locations.
You are not following my point - inflation is destroying productivity of the economy.
The kings of the past had the gold but they couldn't fly in an airplane because there was no airplane. A person with gold but living in a poor economy is poor himself, he is just relatively more wealthy, so he can buy whatever exists in that economy, but he cannot himself create all sorts of new stuff that a vibrant economy creates.
The development of Minitel spawned the creation of many start-up companies in a manner similar to the later dot-com bubble of Internet-related companies. Similarly, many of those small companies floundered and failed because of an overcrowded market or bad business practices (lack of infrastructure for online retailers). The messageries roses ("pink messages", adult chat services) and other pornographic sites were also criticized for their possible use by under-age children. The government chose not to enact coercive measures, however, stating that the regulation of the online activities of children was up to parents, not the government. The government also enacted a tax on pornographic online services.
- Something weird about the French understanding a little more on freedom than Americans.
I understand owning stock and how most gold is bought is a certificate or IOU that could be revoked or dishonored by the issuer, leaving you with something worth no more than Confederate money. I think you are the one that doesn't know how such things work.
- gold is not bought with paper, gold is traded with paper. People who buy gold, take possession.
Owing a company stock means being an owner, depends on type of stock, but in the glorious USA even the top tier owners can have their companies confiscated, that's what happened to GM bond holders, as I said - no US denominated assets.
The messenger taints the message. Your messages are grossly tainted.
- I am comfortable with both, the message and myself. You on the other hand seem to be sweating too much.
Your ownership of them (as well as most ownership of gold) is ownership of a paper IOU. For whatever reason, the "fiat" loonies think owning paper dollars is insane, but paper showing ownership in a company or of a commodity is completely different.
- you don't even understand ownership of a business.
You are wrong on this. You act like you know everything, but if you did, you'd be Warren Buffet. Instead, you are some crackpot rambling semi-anonymously on the Internet about your economic theories.
- you don't know who I am and it's really irrelevant.
Land ownership always appreciates. I can buy more cotton or oil with my land now than when I bought it
No more than 1/3, that's your purchasing power since you took possession.
I've returned 10%+ for the past 20 years in the US stock-ish market, without a single year of loss.
- thus you are underwater, not even making real positive return.
. You ignore the fact that I'd do fine working within the system,
- of-course, and you'll go down with the ship.
And I have divested myself of American assets as much as possible. I stated that before, and you ignored it. You just foam at the mouth and continue ranting and raving.
Population growth aside, if people don't have jobs, how are they going to afford houses without debt, and if government keeps counterfeiting US dollars, how would it keep the interest rates down forever?
If the interest rates do go up, then the US economy will fall into and amazing depression for a couple of years, it will be just awful, how about 80% unemployment, 95%? What if the only 'employer' is the government based on hyper-inflation numbers, and what if the money that is paid to the workers can't buy anything, because USA cannot import anything with hyper-inflated money?
You are falling into this little trap, that many people fall into, missing one important point about the market and government:
1. Market always searches and finds way to bring prices down. 2. Government always pushes prices up.
The problem becomes when government and market become one entity, so then there is no market, there is ONLY government, then prices can only go up.
But given the first lemma: Market always searches and finds way to bring prices down, then you will realise, that a growing population is only an opportunity for more profit but also for more choices and lower prices.
How is that possible? It's simple - real increased demand (the kind of demand that is backed up by real savings and ability to spend), is a new market, which allows new production capacity to be created with less expectation of risk.
More production capacity satisfies the demand for more goods and prices fall. That's the case with TVs, computers, cars, oil (yes, oil), food, medical care, student tuitions, insurance, everything.
At the moment there is heavy government involvement in medical care/insurance, students debt, food but also money.
On the other hand things like lasic eye surgery, veterinary care, computers, phones, Internet businesses, most cars, and much more - these things have much less government control over them and so prices for them fall, even though the technology is getting more complex and more sophisticated, the companies find ways of making everything cheaper, more energy efficient, more interesting, everything.
Imagine your government running your phone systems. Well, you don't have to imagine, just look back to the time when you could only RENT AT&T phones (and AT&T had a government monopoly).
The point is, that you believe that increased demand for housing in a NORMAL market, without government guaranteed insurance and money being destroyed, drive prices up, but it is a mistake.
Companies are always searching for ways to be more competitive if they don't have a government monopoly license, because somebody else will come and eat their lunch and dinner.
My point is that prices for houses are falling, and that is a good thing, that's what the free market force is doing - trying to rebalance the inflated bubble equation.
The Fed, OTOH, decided to keep the nominal prices of the houses up, because it's politically expedient for the government. Many people think that their houses are investment and many even believed that buying a house was equivalent of getting a job, because of appreciation + drawing of the equity allowed them a lifestyle they couldn't afford otherwise.
Inflation is terrible for everybody, even those, who have real assets, because it destroys the economy and prevents good stuff from happening, good companies from starting, good businesses offering new goods and services, we are all poorer for it, gold or not.
It's very sad, I've been posting here about real money when an ounce was still USD500, it's always the same weird response - gold has no 'intrinsic value'.
Right, and green pieces of paper have 'intrinsic value'? What would one rather do with their money, if they couldn't invest into income bearing assets, put the cash into a box and bury it into the ground for 10 years, put some DOW ETF there or put a few bars of gold (or maybe a tanker full of oil)? What would keep value and what wouldn't and what's wrong with the education system that it produces people unable to understand simple concepts?
Oh, and you should stop looking for fake sources on inflation rate, simply take any commodity or best - monetary metal, gold, look at the value of dollar in terms of gold in March of 2009, it was exactly 1001USD/ounce.
Now it's 1721/ounce (it's bouncing around).
In 1971 after gold shock, the price went from 25USD/ounce to 800USD/ounce by 1980 and then interest rates went up to 21.5% and only then the bleeding stopped. From about 1985 to 2003 the prices on gold were mostly moving sideways, and it started gaining momentum by 2003, which is consistent with 0% interest and all the money pumping.
Real values of houses went down by almost 50% since 2009 (in gold ounces) and went down somewhat in nominal terms too.
- fine way to skip the issue of numbers and arithmetic. With that sentence it looks like you can say anything, for example that 4.2=9 Why not, 4 grew by 0.2 and 10 lost 1, so it make it all the same.
You keep saying "real prices," "real money," and "real value." As if what the market chooses to pay for things isn't the actual value of those items. What is your benchmark for "real" exactly?
- real vs nominal.
Nominal is the face value stamped on a piece of currency. But just like face value of a bond, it's not the true value of that currency. Bonds with face value of 100 can sell for 30 or for 200, whatever, and it's proportionate to the interest rate. As real value of a bond goes down, interest goes up for the bond holders to keep them and as bond value goes up, interest goes down. Bond value is related to the risk (real or perceived) of holding that bond for whatever amount of time.
Same with currency - the number of the dollar is irrelevant, the question is, what does this dollar buy? 1 dollar used to buy around 1/19th of an ounce of gold back in 1913. Today 1 dollar will buy you about 1/1719 of an ounce.
Real money is weight of gold, it's a constant and everything else can be measured around it. I explain in more detail here. So back in those days one Model T Ford could be bought for about 20 ounces of gold, or about 4 months of salary of a Ford worker.
Today a car can be bought for much less than 20 ounces of gold, that's because of increase in production, cars are manufactured much more efficiently and cheaply, and their prices are really only as high as they are because there is more and more stuff put into a car. Obviously Model T didn't have all sorts of stuff that's found in a car today, if Model T was still produced today with current technology, it would probably cost 1/20th of an ounce of gold.
The U.S. is a mixed economy. Manufacturing hasn't been the dominant economic sector in a long time and it's only going to fall further behind. We will never be a significant world power in terms of making physical things again. We would do better to focus our efforts on sectors which are growing, like information (technology), finance, and services.
- USA is mostly service economy, which means it has no economy.
Again: service economy is not an economy, it's a delayed time bomb, that will destroy that so called economy. Why is that you ask? Because somebody must produce the stuff you consume, because 90% of all seafood is imported from Asia and because you are not exporting anything to Asia to justify this consumption.
Because people in USA will be demanding wage and price controls on things like oil, obviously some will want the illegal (completely unconstitutional) export taxes, some will want to illegally nationalise the oil companies, etc. All so that the people who actually manufacture and grow and prepare stuff you buy, can't get anything out of you in exchange for it.
You can't export your services to Asia, if you COULD, you would be able to pay for the imports, but I will simply put this number: 50 Billion USD/months.
50 Billion USD/month trade deficit. That means that with ALL YOUR SERVICES, your net balance by the month end is negative 50 Billion USD.
This means simply that you can't pay for your imports, and it's been that way and getting worse for near 2 decades.
For the past few decades, the average effective tax rate has waffled between 20-25%. (source) The U.S. has lower tax revenue as a percentage of GDP than many (most?) other first-world nations. (source)
- one more time. GDP number is mostly consumption (70%), and it's also various other financial activities, and in order even then to be reported right the inflation must be accounted for (deflater must be applied.)
What gov't uses as deflater value is even more pathetic than their ridiculously cooked CPI of just under 4%. The real inflation rate is 11-15%, has been there for near 2 decades, this means you are looking at the numbers that are completely fake. GDP has been in DECLINE for near 2 d
I am talking about mostly housing prices in US and Europe, not industrial use of land, and there is nothing about houses that should keep their prices going up.
First: inflation and pro-bad debt regulations and the mortgage bubble associated with it.
Second: destruction of manufacturing base, which ends up destroying production economy and so jobs leave, and nobody can afford to buy houses when there are no jobs available.
Housing prices rest on the viability of the location, and the problem with USA and most of Europe is that these locations are now lacking production capacity, lacking real jobs, lacking ability to pay for things that others produce.
House prices cannot remain high, market is requiring them to drop to correspond to the ability of the people to buy those properties, people used to buy houses without debt, and that's the way it should be, most people are not creditworthy enough to give them loans to buy properties, they should rent. Free market wouldn't be giving them these loans, it's only possible for them to get these by allowing gov't to power that does things that are unauthorised for the gov't to do, like guarantee private loans or print money.
Prices of houses must correspond to ability of people to actually pay for them, that's how everything should be priced, but it can't be priced that way when gov't is involved. Same with health insurance. Same with education loans. People can't afford these, while they used to be able to pay for them out of pocket without too much trouble. Students used to be able to pay for their education with summer jobs, very good health insurance for a family of 4 used to cost 25USD/year, that's before Medicare came to town.
So to reiterate: houses are not investment.
Again: houses are not investment.
A house is an expense. There are maintenance fees and property taxes, but there is no income; well, unless it's a rental property, but then it's the same question of location - are there jobs around and can people work and pay?
Slashdot Mirror
why is the cost of living lower in Zimbabwe
- the cost of living at what level, measured in what? Cost of living in Zimbabwe is impossible in Zimbabwe dollars, but you can live if you have money - gold or maybe other currencies.
Once a company gets large enough (e.g. Intel), they can engage in anticompetitive practices (i.e. bribing companies not to use a competitor's product).
- that's just normal business.
Without government intervention, Intel would have destroyed AMD years ago by either cheating or simply buying them outright.
- so what? Apparently AMD is doing just fine destroying itself all on its own. It's not a viable company.
But it doesn't matter. Intel is not a monopoly unless it gets government help and support, but it is a company that has a very good brand at giving people the best product at the best price. If the price or product are unsatisfactory and there is space in the market for profits building better products at maybe better prices, then without gov't intervention a company would emerge building that product, it's happens all the time.
Government intervention stops that happening.
- you are mistaken. Gov't intervention destroys viability of some companies to promote unviable businesses of their friends. Kodak was a company that was attacked by gov't in the nineties. Were they not attacked and were they able to restructure at that time, they possibly could have still continued their existence.
In 1979 GM was bailed out. Just a few years back it was bailed out again, and Obama says: here is a company that would have failed if it wasn't for gov't.
Well, that company DID fail, the bond holders got crashed by the government - that's the real end of the company. Companies only exist to provide their shareholders with profit on their investment, not for any other reason, not to hire people - to make money for investors.
That company DID fail, but bond holders had their property CONFISCATED, so the normal contract laws DO NOT APPLY ANYMORE IN USA.
And people are WONDERING why there is no manufacturing business in USA? What are you all, blind?
The solution is very simple - raise salaries and people will run to it
- demand/supply. Obviously it is useless to hire people in USA, otherwise they would have been hired there. The jobs are leaving and so there is no demand, and the demand/supply ratio is what drives prices up or down, and they are down, like on any other product or service that is not in demand.
It's not in demand.
It's not in demand in USA, it's in demand elsewhere, and that's because investment capital has moved out and instead, it's all government fake money that is sloshing around, fake credit, fake interest rates, fake banks, fake businesses like GM and GE, fake economy (service - ha! 50Billion USD/month trade deficit).
As I said way back: Lose your manufacturing economy and you'll lose your knowledge economy, or did you think you could have the cake and eat it too?
There can be no production and thus no knowledge, and there can't be fake money, gov't regulations and massive taxes and production in the same place.
I have, I am certainly not posting from US, but bringing personal matters into a generic thread on economics is not useful to anybody, but those who have no useful arguments.
If the government wasn't allowed to print fake money and meddle with business, labour and asset costs, USA economy would have continued its domination in all aspects of production past 1913 to current era and there wouldn't have been any of this destruction of economy and money.
Employers are the ones in shackles, that's why they move their production capacity out. If it were employees, who were in shackles, there would have been an outflow in that category.
I don't follow. Offshoring exploits differences in the cost of living and is presumably an example of where the government isn't doing anything, since they don't prevent it.
- cost of living in USA is only high because of government destruction of currency, the free market and individual liberties.
Monopolies happen every so often without any government intervention. When they do, the only thing stopping them doing as they please is, in fact, government intervention.
- that's a common misconception.
You are forgetting something - in order to create the current 'globalisation' in the first place, there was a little something done by the government of USA, what was it?
Ah, yes, it was Nixon, defaulting on the American promise to pay gold for US paper dollar. You can't have what you want unless you limit the government it do only things it is authorised to do, and then you will not have what you want, but economy will improve and all sorts of jobs will emerge.
Public funding means 'public' (collective, the government) creating laws that are akin to what what a Mafia would do - "give us your money, you have a nice business going on here, it would be a shame if something were to happen to it."
Public funding is about the government force to steal money from individuals.
you are going to put employers in shackles and force them to work? Well, you are on the right track, comrade.
The fundamental reason behind this is government destroying the money - the only money that is left to be made is the fake money, and you must make it by the ton for it to make sense to spend time. Who can make money by the ton in a system that has the banks as the government?
By allowing government to take over function that it was never authorised to do, people have given the government the power to destroy, and the most lucrative thing to destroy is competition, while helping the monopolies. When there are only monopolies left, they will do as they please, and there can't be competition.
Can't have public science funding, and it's an oxymoron anyway. There is nothing that 'public' produces, individuals produce and 'public' taxes them, and that's how 'public' gets its money.
Once the 'public' destroyed all incentives to produce and created all incentives to move savings, investment, jobs overseas, that's what is going to happen and then 'public' will not be able to fund anything at all.
You want to get people interested in science & engineering? Kill all the guest worker programs, prioritize citizens over internationals for university slots, and start working with business to guarantee long-term work to attract people back.
- and like all other government regulations aimed at destruction of competitiveness, you will only achieve the opposite of your goal - more jobs will leave US for other locations.
You are not following my point - inflation is destroying productivity of the economy.
The kings of the past had the gold but they couldn't fly in an airplane because there was no airplane. A person with gold but living in a poor economy is poor himself, he is just relatively more wealthy, so he can buy whatever exists in that economy, but he cannot himself create all sorts of new stuff that a vibrant economy creates.
The development of Minitel spawned the creation of many start-up companies in a manner similar to the later dot-com bubble of Internet-related companies. Similarly, many of those small companies floundered and failed because of an overcrowded market or bad business practices (lack of infrastructure for online retailers). The messageries roses ("pink messages", adult chat services) and other pornographic sites were also criticized for their possible use by under-age children. The government chose not to enact coercive measures, however, stating that the regulation of the online activities of children was up to parents, not the government. The government also enacted a tax on pornographic online services.
- Something weird about the French understanding a little more on freedom than Americans.
I understand owning stock and how most gold is bought is a certificate or IOU that could be revoked or dishonored by the issuer, leaving you with something worth no more than Confederate money. I think you are the one that doesn't know how such things work.
- gold is not bought with paper, gold is traded with paper. People who buy gold, take possession.
Owing a company stock means being an owner, depends on type of stock, but in the glorious USA even the top tier owners can have their companies confiscated, that's what happened to GM bond holders, as I said - no US denominated assets.
The messenger taints the message. Your messages are grossly tainted.
- I am comfortable with both, the message and myself. You on the other hand seem to be sweating too much.
Your ownership of them (as well as most ownership of gold) is ownership of a paper IOU. For whatever reason, the "fiat" loonies think owning paper dollars is insane, but paper showing ownership in a company or of a commodity is completely different.
- you don't even understand ownership of a business.
You are wrong on this. You act like you know everything, but if you did, you'd be Warren Buffet. Instead, you are some crackpot rambling semi-anonymously on the Internet about your economic theories.
- you don't know who I am and it's really irrelevant.
Land ownership always appreciates. I can buy more cotton or oil with my land now than when I bought it
No more than 1/3, that's your purchasing power since you took possession.
I've returned 10%+ for the past 20 years in the US stock-ish market, without a single year of loss.
- thus you are underwater, not even making real positive return.
. You ignore the fact that I'd do fine working within the system,
- of-course, and you'll go down with the ship.
And I have divested myself of American assets as much as possible. I stated that before, and you ignored it. You just foam at the mouth and continue ranting and raving.
- you project things.
Population growth aside, if people don't have jobs, how are they going to afford houses without debt, and if government keeps counterfeiting US dollars, how would it keep the interest rates down forever?
If the interest rates do go up, then the US economy will fall into and amazing depression for a couple of years, it will be just awful, how about 80% unemployment, 95%? What if the only 'employer' is the government based on hyper-inflation numbers, and what if the money that is paid to the workers can't buy anything, because USA cannot import anything with hyper-inflated money?
You are falling into this little trap, that many people fall into, missing one important point about the market and government:
1. Market always searches and finds way to bring prices down.
2. Government always pushes prices up.
The problem becomes when government and market become one entity, so then there is no market, there is ONLY government, then prices can only go up.
But given the first lemma: Market always searches and finds way to bring prices down, then you will realise, that a growing population is only an opportunity for more profit but also for more choices and lower prices.
How is that possible? It's simple - real increased demand (the kind of demand that is backed up by real savings and ability to spend), is a new market, which allows new production capacity to be created with less expectation of risk.
More production capacity satisfies the demand for more goods and prices fall. That's the case with TVs, computers, cars, oil (yes, oil), food, medical care, student tuitions, insurance, everything.
At the moment there is heavy government involvement in medical care/insurance, students debt, food but also money.
On the other hand things like lasic eye surgery, veterinary care, computers, phones, Internet businesses, most cars, and much more - these things have much less government control over them and so prices for them fall, even though the technology is getting more complex and more sophisticated, the companies find ways of making everything cheaper, more energy efficient, more interesting, everything.
Imagine your government running your phone systems. Well, you don't have to imagine, just look back to the time when you could only RENT AT&T phones (and AT&T had a government monopoly).
The point is, that you believe that increased demand for housing in a NORMAL market, without government guaranteed insurance and money being destroyed, drive prices up, but it is a mistake.
Companies are always searching for ways to be more competitive if they don't have a government monopoly license, because somebody else will come and eat their lunch and dinner.
My point is that prices for houses are falling, and that is a good thing, that's what the free market force is doing - trying to rebalance the inflated bubble equation.
The Fed, OTOH, decided to keep the nominal prices of the houses up, because it's politically expedient for the government. Many people think that their houses are investment and many even believed that buying a house was equivalent of getting a job, because of appreciation + drawing of the equity allowed them a lifestyle they couldn't afford otherwise.
Inflation is terrible for everybody, even those, who have real assets, because it destroys the economy and prevents good stuff from happening, good companies from starting, good businesses offering new goods and services, we are all poorer for it, gold or not.
It's very sad, I've been posting here about real money when an ounce was still USD500, it's always the same weird response - gold has no 'intrinsic value'.
Right, and green pieces of paper have 'intrinsic value'? What would one rather do with their money, if they couldn't invest into income bearing assets, put the cash into a box and bury it into the ground for 10 years, put some DOW ETF there or put a few bars of gold (or maybe a tanker full of oil)? What would keep value and what wouldn't and what's wrong with the education system that it produces people unable to understand simple concepts?
Oh, and you should stop looking for fake sources on inflation rate, simply take any commodity or best - monetary metal, gold, look at the value of dollar in terms of gold in March of 2009, it was exactly 1001USD/ounce.
Now it's 1721/ounce (it's bouncing around).
In 1971 after gold shock, the price went from 25USD/ounce to 800USD/ounce by 1980 and then interest rates went up to 21.5% and only then the bleeding stopped. From about 1985 to 2003 the prices on gold were mostly moving sideways, and it started gaining momentum by 2003, which is consistent with 0% interest and all the money pumping.
Real values of houses went down by almost 50% since 2009 (in gold ounces) and went down somewhat in nominal terms too.
Real inflation can be calculated from these numbers, and it's very high - double digits. There are people who calculate inflation the way it was done before hedonics and substitutions and reverse engineering that they apply today. The way it was calculated during Nixon's time, when only 4% inflation caused him to introduce wage and price controls (another failing gov't policy).
ours dropped, chindia's went up.
- fine way to skip the issue of numbers and arithmetic. With that sentence it looks like you can say anything, for example that 4.2=9 Why not, 4 grew by 0.2 and 10 lost 1, so it make it all the same.
Fine logic.
You keep saying "real prices," "real money," and "real value." As if what the market chooses to pay for things isn't the actual value of those items. What is your benchmark for "real" exactly?
- real vs nominal.
Nominal is the face value stamped on a piece of currency. But just like face value of a bond, it's not the true value of that currency. Bonds with face value of 100 can sell for 30 or for 200, whatever, and it's proportionate to the interest rate. As real value of a bond goes down, interest goes up for the bond holders to keep them and as bond value goes up, interest goes down. Bond value is related to the risk (real or perceived) of holding that bond for whatever amount of time.
Same with currency - the number of the dollar is irrelevant, the question is, what does this dollar buy? 1 dollar used to buy around 1/19th of an ounce of gold back in 1913. Today 1 dollar will buy you about 1/1719 of an ounce.
Real money is weight of gold, it's a constant and everything else can be measured around it. I explain in more detail here. So back in those days one Model T Ford could be bought for about 20 ounces of gold, or about 4 months of salary of a Ford worker.
Today a car can be bought for much less than 20 ounces of gold, that's because of increase in production, cars are manufactured much more efficiently and cheaply, and their prices are really only as high as they are because there is more and more stuff put into a car. Obviously Model T didn't have all sorts of stuff that's found in a car today, if Model T was still produced today with current technology, it would probably cost 1/20th of an ounce of gold.
The U.S. is a mixed economy. Manufacturing hasn't been the dominant economic sector in a long time and it's only going to fall further behind. We will never be a significant world power in terms of making physical things again. We would do better to focus our efforts on sectors which are growing, like information (technology), finance, and services.
- USA is mostly service economy, which means it has no economy.
Again: service economy is not an economy, it's a delayed time bomb, that will destroy that so called economy. Why is that you ask? Because somebody must produce the stuff you consume, because 90% of all seafood is imported from Asia and because you are not exporting anything to Asia to justify this consumption.
Because people in USA will be demanding wage and price controls on things like oil, obviously some will want the illegal (completely unconstitutional) export taxes, some will want to illegally nationalise the oil companies, etc. All so that the people who actually manufacture and grow and prepare stuff you buy, can't get anything out of you in exchange for it.
You can't export your services to Asia, if you COULD, you would be able to pay for the imports, but I will simply put this number: 50 Billion USD/months.
50 Billion USD/month trade deficit. That means that with ALL YOUR SERVICES, your net balance by the month end is negative 50 Billion USD.
This means simply that you can't pay for your imports, and it's been that way and getting worse for near 2 decades.
For the past few decades, the average effective tax rate has waffled between 20-25%. (source) The U.S. has lower tax revenue as a percentage of GDP than many (most?) other first-world nations. (source)
- one more time. GDP number is mostly consumption (70%), and it's also various other financial activities, and in order even then to be reported right the inflation must be accounted for (deflater must be applied.)
What gov't uses as deflater value is even more pathetic than their ridiculously cooked CPI of just under 4%. The real inflation rate is 11-15%, has been there for near 2 decades, this means you are looking at the numbers that are completely fake. GDP has been in DECLINE for near 2 d
I am talking about mostly housing prices in US and Europe, not industrial use of land, and there is nothing about houses that should keep their prices going up.
First: inflation and pro-bad debt regulations and the mortgage bubble associated with it.
Second: destruction of manufacturing base, which ends up destroying production economy and so jobs leave, and nobody can afford to buy houses when there are no jobs available.
Housing prices rest on the viability of the location, and the problem with USA and most of Europe is that these locations are now lacking production capacity, lacking real jobs, lacking ability to pay for things that others produce.
House prices cannot remain high, market is requiring them to drop to correspond to the ability of the people to buy those properties, people used to buy houses without debt, and that's the way it should be, most people are not creditworthy enough to give them loans to buy properties, they should rent. Free market wouldn't be giving them these loans, it's only possible for them to get these by allowing gov't to power that does things that are unauthorised for the gov't to do, like guarantee private loans or print money.
Prices of houses must correspond to ability of people to actually pay for them, that's how everything should be priced, but it can't be priced that way when gov't is involved. Same with health insurance. Same with education loans. People can't afford these, while they used to be able to pay for them out of pocket without too much trouble. Students used to be able to pay for their education with summer jobs, very good health insurance for a family of 4 used to cost 25USD/year, that's before Medicare came to town.
So to reiterate: houses are not investment.
Again: houses are not investment.
A house is an expense. There are maintenance fees and property taxes, but there is no income; well, unless it's a rental property, but then it's the same question of location - are there jobs around and can people work and pay?