Goodhart's law says that "When a measure becomes a target, it ceases to be a good measure." - This is what happened with inflation. The government's dual goal of attempting to measure inflation while at the same time keeping it low cannot possibly work.
In our fiat monetary system, there are plenty of incentives for people to hide the real inflation numbers. The kind of inflation we have right now mostly affects the stock market - That's why speculative investments like Bitcoin, Snapchat and Uber are so valuable; not being backed by any net intrinsic value makes them a good benchmark against which to measure real inflation. You could even argue that Bitcoin is backed by negative value (since it costs Bitcoin owners money to keep miners and the network running). So the problem is worse than you think.
Stocks are also a good measure of inflation. Many public companies are backed by real economic value but the value of this activity is often greatly exaggerated... Also, some stocks produce net negative value for society.
Being able to earn revenue or even profits doesn't necessarily mean that a company delivers net positive value to the economy. If the money is obtained through trickery or coercion, then the company adds net negative value. For example, companies like Oracle which derive most of their earnings from socially counterproductive litigation and ill-gotten government contracts add significant negative value to society and yet they are highly profitable. I would argue that companies like Facebook add close to 0 net value; they add a lot of positive value and also a lot of negative value.
There is no doubt that the fiat monetary system is to blame. big companies are essentially getting free money from the rest of us; when the Fed injects new money into the economy, big corporations are the first to get their hands into the pot. Big companies know where the newly printed Fed credit is flowing and they have the political and business connections to extract it. If we don't do something it will get worse. Big companies have shown over and over again that they cannot be trusted.
It's deeply frustrating that, as an honest working citizen, I constantly have to bear witness to the elites receiving free credit over and over while I am enslaved to them under some pretext that they somehow deserve their share. The fact that the information is out there in the public domain and yet nobody seems to be doing anything about it is disturbing.
My conclusion is that people are either evil, stupid or both. I guess people have not changed much since the time of slavery or the holocaust. Exactly the same kind of people running the show it seems. Even if you disagree with what I'm saying, you should at least support the intent.
Unfortunately, I don't have any research to back my claims... Can you think of a single corporation who would sponsor such research? Exactly. This perspective that I'm sharing is doomed to remain in the domain of 'fake news'. The idea of 'fake news' is a weapon invented by the elites to discredit any information that is not aligned with hypercapitalist incentives.
> The kind of inflation we have right now mostly affects the stock market
Annualized S&P 500 Return with Dividends Reinvested from april 2010 to april 2020 are 9.694% [0] which is entirely in line with historical returns [1]. I wouldn't call that inflation.
How is a guaranteed risk-free average return of 10% per year normal in any way? How is it not an indication of inflation at the top? Why is it so hard to believe that corporations may in fact be extremely inefficient and subsist and thrive almost entirely because of free credit from the Fed?
It's no coincidence that the stock market started to rally and corporate monopolies started to form at around the same time as the gold standard was abolished. We have never had so many massive companies in the history of mankind.
Most employees who work there don't feel that they're adding value (e.g. https://www.newyorker.com/books/under-review/the-bullshit-jo...), most of their customers don't feel that they're getting value (how long do they have to put you on hold on the phone? How many times do we only choose a company because there are no other alternatives?)... Who is getting value out of their existence?
If you invested 2 months ago, you are down 20%. It is definitely not risk free.
> It's no coincidence that the stock market started to really pick up, and monopolies started to form at around the same time as the gold standard was abolished.
Annualized DJIA Returns with Dividends Reinvested from 1897 to 1970 was 9.536% [0].
I said 10% average per year is risk free. If it collapses and never recovers for 50 years, then I'll agree with you but we both know that's not going to happen.
It's not going to happen precisely because the system is a scam and in reality there is no risk. The only real long term risk to stock prices is total societal collapse.
If the government keeps bailing out inefficient corporations, eventually they will get exactly that. Now there are many less painful options available, but by constantly brushing them under the carpet, the government and the fed are making total socio-economic collapse an increasingly appealing option to solve our systemic problems.
They could just try to solve the problems now, but instead they prefer to let the tension build... Just like it did before WW2.
In our fiat monetary system, there are plenty of incentives for people to hide the real inflation numbers. The kind of inflation we have right now mostly affects the stock market - That's why speculative investments like Bitcoin, Snapchat and Uber are so valuable; not being backed by any net intrinsic value makes them a good benchmark against which to measure real inflation. You could even argue that Bitcoin is backed by negative value (since it costs Bitcoin owners money to keep miners and the network running). So the problem is worse than you think.
Stocks are also a good measure of inflation. Many public companies are backed by real economic value but the value of this activity is often greatly exaggerated... Also, some stocks produce net negative value for society.
Being able to earn revenue or even profits doesn't necessarily mean that a company delivers net positive value to the economy. If the money is obtained through trickery or coercion, then the company adds net negative value. For example, companies like Oracle which derive most of their earnings from socially counterproductive litigation and ill-gotten government contracts add significant negative value to society and yet they are highly profitable. I would argue that companies like Facebook add close to 0 net value; they add a lot of positive value and also a lot of negative value.
There is no doubt that the fiat monetary system is to blame. big companies are essentially getting free money from the rest of us; when the Fed injects new money into the economy, big corporations are the first to get their hands into the pot. Big companies know where the newly printed Fed credit is flowing and they have the political and business connections to extract it. If we don't do something it will get worse. Big companies have shown over and over again that they cannot be trusted.
It's deeply frustrating that, as an honest working citizen, I constantly have to bear witness to the elites receiving free credit over and over while I am enslaved to them under some pretext that they somehow deserve their share. The fact that the information is out there in the public domain and yet nobody seems to be doing anything about it is disturbing.
My conclusion is that people are either evil, stupid or both. I guess people have not changed much since the time of slavery or the holocaust. Exactly the same kind of people running the show it seems. Even if you disagree with what I'm saying, you should at least support the intent.
Unfortunately, I don't have any research to back my claims... Can you think of a single corporation who would sponsor such research? Exactly. This perspective that I'm sharing is doomed to remain in the domain of 'fake news'. The idea of 'fake news' is a weapon invented by the elites to discredit any information that is not aligned with hypercapitalist incentives.