Hidden inflation in the U.S.

Posted: August 20, 2010 in Economy

I keep reading stories like this one that glibly mention the U.S. inflation rate is below one percent. Disingenuous at best is what those statements are. You don’t run the money printing presses wide open without causing substantial inflation. They’re just measuring it in a way that is politically convenient.

I’ve been wondering what the real U.S. rate of inflation is and how would one measure it. For me at least, this chart is a good measure.

That’s the exchange rate for U.S. dollar to Thai baht for the past year. It shows a seven percent drop. Does that seem about right for what the true U.S. inflation rate is? It seems about right to me. It certainly hits me as inflation, making everything I buy cost more when I transfer dollars to pay for it. Thailand didn’t have a big bubble pop or experience much exposure to the collapse of the financial scam giants. It just suffered from a slow down in exports when the U.S. economy imploded which has been fairly modest since exports remained pretty strong to the world’s number two economy China. So the Thai baht has been a fairly strong and stable currency over the last few years, and useful for measuring dollar weakness against it.

The U.S. government is inflating at a pretty high rate with all these bail outs and cooking of the books, all the while talking about risk of deflation. Mustn’t let housing prices decline or the stock market turn south. It’s go go go, growth growth and more growth. I wonder what end game the planners have in mind? Endless growth? That’s not an end game.

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