Comment Re:Why on earth would I save? (Score 1) 182
We'd be damn lucky to see only 8%. Food costs went up 4% month over month in February alone, the greatest monthly increase since 1974. Assume the February increase is double the "actual" rate and we'd still be looking at 25% year-over-year inflation.
Core inflation in 1974 was about 12% over the entire year. It was
over 30% for the period from 1973-1975. This is significant because
there is general agreement about the causes of the violent inflation
of the early 70s: The global financial order fundamentally changed in
1971 and 1972, when Nixon ended the Bretton Woods agreement and took
the US entirely off the gold standard. We had to go off gold because
we were printing too much money to pay for the war in Vietnam, which
devalued the dollar.
Sound familiar?
Spending on Vietnam created an arbitrage opportunity for [french]
people to buy dollars, exchange them for gold at the US-pegged price
of $35 per oz of gold, and then sell the gold on the market for
$40ish. When the US went off gold and floated our currency, there was
a long (5-10 year) period of economic shock while everyone had to work
out what happened. Part of the consequence was widespread price
inflation in the US. This turned out to be a good thing for
people who had 30-yr fixed mortgage payments, but not such a great thing for profits at banks.
The spot price for an ounce of gold today is hovering around $1400
Last month's food and energy price increases will not show up in
CPI-based adjustments to wages and durable-goods prices because the US
bureau of labor statistics excludes those costs from its calculations.
Good thing people don't include the cost of food or gas in their
estimated cost of living.