The Business Insider reports:
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33 percent over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.
An increase in the price level of 2 percent in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.
But, an increase of 2 percent a year over a period of 20 years will lead to a 50 percent increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.
Of course, this inflation “target” is predicated on the bogus core CPI statistic which uses hedonics to interchange the price of poor quality substitutes for the goods that people actually want to purchase. The core CPI also leaves out food and energy prices, which just happen to be the categories of goods that are the most sensitive to price inflation. Real inflation, as calculated by Shadow Stats using the original CPI model, is already hovering around 6% per year.
In other words, the headline should really read “devalue the dollar by 99%” not 33%. If history is to be our guide, that 99% devaluation over 20 years isn’t too far off the mark. Consider the price of a new car in 1980: $7,210. Today a new car averages $29,217.
Since the government wants to rob you blind and leave you starving in the streets by devaluing your money, I recommend promoting the use of Bitcoins as an alternative to the dollar. I know the gold bugs will stomp their feet and say the only real money is gold, but as far as I know, you can’t ram gold down a telecommunications wire. Because gold cannot be transmitted by wire, it must be represented by digital units of account. Again, if history is to be our guide, digital units of account can be inflated and manipulated. With Bitcoin, such manipulations are impossible because the digital tokens are secured by cryptography which makes them impossible to counterfeit or inflate. In other words, there is no need to trust a third party not to inflate the number of digital coins in existence because the currency system prevents that from occurring.