I’m not sure why I get certain “suggested posts” in my Facebook feed, but I assume it’s the company I keep. For instance I get articles on Native American issues (which I like getting) despite being as Euro-American as they come, and frequent articles from the Tablet (which, in fact, I do find interesting) despite being as goyim as they come. And then I get the goldbug articles, which I don’t like and don’t find interesting and which make me roll my eyes in wonder.
I’m not going to bother linking to it, as it’s just a thinly veiled ad trying to sell you gold. And as my one brother said to my other brother once, if these folks really believed what they were saying about the need to buy gold they wouldn’t be selling it to you for your paper dollars.
But what irks me is their focus on how the American dollar is buying less and less!!
Which is true, but generally irrelevant. If we have enough more of those dollars, then the fact that each one buys less just doesn’t matter. If I have $1 and a burger costs $1, I can buy a burger. If the price of the burger increases to $2, but I also now have $2, then I’m not a bit worse off than I was before. That’s why the best way to really understand price changes is to consider how long a person has to work to afford something. If I used to work 1 hour to get that $1 for that $1 burger, but now I work 45 minutes to get the $2 to get the $2 burger, I’m better off, regardless of the fact that each dollar buys less.
This is why intelligent people focus on the real dollar value, not the nominal dollar value, and, consequently, on real prices, not nominal prices, and real wages rather than nominal wages. Because the real issue is your purchasing power, not that piece of paper’s purchasing power.
That’s not to say inflation can’t be bad. I’m actually something of an inflation hawk. If the dollar loses value too quickly, then people do lose purchasing power. But the steady 3% annually that the Fed shoots for is not a purchasing power problem. Especially when technological and efficiency gains keep pushing down so many prices, sometimes even in nominal terms (which means the real price declines are phenomenal).
A lot of the folks who over-worry about inflation consider themselves in the Austrian economic strain. I consider myself so, too, to the extent that I am quite Hayekian and find a lot of value in reading the economists associated with GMU’s Mercatus Center. Autrianism doesn’t require shallow thinking, though. In fact a lot of Austrians, in my experience, like Bastiat, who emphasizes looking past the superficial to see the fuller dynamic. Or Hazzlit’s Economics in One Lesson, where that one less is,
The bad economist sees only what immediately strikes the eye; the good economist also looks beyond.
We can criticize the Federal Reserve, of course. It’s an institution run by humans, and subject to human error. It may not be the best system for managing a society’s monetary status (although I’ll argue it’s a damn sight better than letting electorally responsive parts of government do so). But keep in mind that part of its dual mandate is to keep inflation in check (maintain stability of (real) prices), and since President Carter’s appointment of Paul Volcker as Chair of the Fed, it’s taken that part of its mandate seriously. The Fed could go haywire under some future Chairs, of course. But anyone telling you the 3% inflation mandate is destroying your standard of living is trying to sell you something.