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The Road To Poverty Is Paved With Small Inflations

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http://bastiat.mises.org/2014/10/the-road-to-poverty-is-paved-with-small-inflations/

If you talk about a catastrophe of the money, you need not always have in mind a total breakdown of the currency system… [Price] changes are not the same, nor [do they occur] to the same degree in various countries. But one should not exaggerate the difference in the effects brought about by the greater inflations as against the smaller inflations. The effects of the “smaller inflations” are also bad. […] If the government destroys the money, it not only destroys something of extreme importance for the system, the savings people have set aside to invest and to take care of themselves in some emergency; it also destroys the very system itself. Monetary policy is the center of economic policy (
)
[W]hat we have to realize, what we have to know when we are dealing with money and monetary problems, is always the same… the increase in the quantity of money, the increase of those things which have the power to be used for monetary purposes, must be restricted at every point (
)

http://www.zerohedge.com/news/2014-10-03/change-cost-living-1938

20141003_cost.jpg

How times have changed average rent $27 now in the UK affordable rent is defined as £2800 a month.... (I think that was the figure quoted for the new affordable London new builds....)

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Well in 1938 you could buy a home for two years wages.

Here in Yorkshire you still can .... if you get a job as local Council CEO and decide to live in a 'back to back'

Edited by aSecureTenant

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The way I have seen it explained as to why there is a target inflation rate and that it is a positive 2% rather than strict 'price stability' is that in a capitalist economy it is easier to manage changes in wage rates between industries by differential rises in wages than by cuts in wages.

Nonsense...it is to guarantee a 2% fee in the finance industry.

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Ratios between those costs might be a useful comparator. Which is the most out of line with eggs or milk might be useful.

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The way I have seen it explained as to why there is a target inflation rate and that it is a positive 2% rather than strict 'price stability' is that in a capitalist economy it is easier to manage changes in wage rates between industries by differential rises in wages than by cuts in wages.

+1

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Wages? See below. Great page - followed by all manner of prices

http://www.paper-dragon.com/1939/priceguide.html

ANNUAL INCOME 1932-1934 Airline Pilot $8,000
Airline Stewardess $1,500
Apartment House Superintendent $1,500
Bituminous Coal Miner $1,500
Bus Driver $1,373
Chauffeur $624
Civil Service Employee $1,280
College Teacher $3,111
Construction Worker $907
Dentist $2,391
Department Store Model $936
Doctor $3,382
Dressmaker $780
Electrical Worker $1,559
Engineer $2,520
Fire Chief (30,000 - 50,000 pop) $2,075
Hired Farm Hand $216
Hired Gun $5,200
Housemother - Boys School $780 Lawyer $4,218
Live-in-maid $260
Mayor (30,000 - 50,000 pop) $2,317
Pharmaceutical Salesman $1,500
Police Chief (30,000-50,000 pop) $2,636
Priest $831
Public School Teacher $1,227
Publicity Agent $1,800
Railroad Executive $5,064
Railroad Conductor $2,729
Registered Nurse $936
Secretary $1,040
Statistician $1,820
Steel Worker $423
Stenographer - Bookkeeper $936
Textile Worker $433
United States Congressman $8,663
Waiters $520
Average salary $1,368

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As a rule of thumb I think of L.S.D 100 years ago as being in modern money something like this (very approximately, like +-50% or more)

£1 => a couple of hundred

1/- => a tenner

1d => a pound coin

farthing = twenty p.

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Wages? See below. Great page - followed by all manner of prices

http://www.paper-dragon.com/1939/priceguide.html

ANNUAL INCOME 1932-1934

Airline Pilot $8,000

<snip>

Fast forward to to-day.

A senior BA 747 Captain makes about £150k per year or about 80% of the average house price (the most generous comparison for house prices relative to wages). In 1938 an airline pilot made about 205% of the average house price.

The rough rule of thumb that house prices need to fall by about 50% to reach an economically supportable value seems to hold up no matter how we look at the problem.

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Cambridge, Oxford, UCL, Imperial etc are at least as good as the Ivy League at about 1/3rd of the annual tuition fees with 3 instead of 4 year undergrad degrees.

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Where can I get a job as a "hired gun" earning almost as much as an airline pilot in Hampshire in 2014???

Seriously though, what economic cycle was the USA going through then? Post depression, climbing? I would love to see the same figures for UK PLC from that era up to today.

Do the ONS hold this data?

The "basket of goods" on which RPI/CPI are based?

Let's see how boiled these frogs are....

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