Does anyone know which currencies have had the lowest annual inflation over lets say the last 40 years?
Currencies or economies? What is inflation of a currency? Do you mean depreciation or devaluing? The most Devalued or depreciated currency award would go to the Zimbabwe dollar (they had a $100 Trillion dollar bill at one point; they’re using US dollars now) If you’re talking about the economy with the lowest inflation over the last 40 years? Out of the industrialized countries; my educated guess would be Japan
Japan - Historical Inflation Rates http://www.rateinflation.com/inflation-rate/japan-historical-inflation-rate.php?form=jpnir
Wait - Japan? You mean the country that has run massive deficits and done quantitative easing all over the place? You mean to tell me they have a strong currency and low inflation? How can that be? Everyone knows that in the US we are running deficits and doing quantitative easing so that is going to lead to massive inflation and currency devaluation… 
The only currency index I pay attention to: http://www.oanda.com/currency/big-mac-index Kind of ironic that India has the cheapest Big Mac.
Ironic? It makes sense, given that a very large percentage of their population is vegetarian. I believe the Big Mac in India is a mutton mac, anyway. Perhaps it tastes different.
bchadwick Wrote: ------------------------------------------------------- > Ironic? It makes sense, given that a very large > percentage of their population is vegetarian. > > I believe the Big Mac in India is a mutton mac, > anyway. Perhaps it tastes different. maharaja mac. according to wikipedia, its made of chicken now…
Dwight Wrote: ------------------------------------------------------- > Wait - Japan? You mean the country that has run > massive deficits and done quantitative easing all > over the place? You mean to tell me they have a > strong currency and low inflation? > > How can that be? Everyone knows that in the US we > are running deficits and doing quantitative easing > so that is going to lead to massive inflation and > currency devaluation… > > the difference in our trade balances doesn’t matter, eh?
jbaldyga Wrote: ------------------------------------------------------- > the difference in our trade balances doesn’t > matter, eh? Please clarify your point.
Dwight Wrote: ------------------------------------------------------- > jbaldyga Wrote: > -------------------------------------------------- > ----- > > the difference in our trade balances doesn’t > > matter, eh? > > > Please clarify your point. I don’t think Japan is a good comparison because our external balances (trade and sovereign debt) are very different.
jbaldyga Wrote: ------------------------------------------------------- > I don’t think Japan is a good comparison because > our external balances (trade and sovereign debt) > are very different. What is a good comparison then? You could make an argument about any historical parallel being a poor comparison just because “x variable is different this time”. Japan is an excellent comparison to the problems of the current day US. Deflating asset bubbles, excess savings, low interest rates, demographic pressures, developed economy, calls for austerity. You cannot throw the entire example out just because the US has allowed other countries to run trade surpluses against it while Japan has practiced interventionist policies. That is one variable among many. You need to explain why that one variable makes more difference than all of the others.
well last time i checked the USD was the world reserve currency. next time I check, it may not be. central banks and sovereign wealth funds have begun diversifying out of the dollar. what happens in a secular shift out of the dollar?
jbaldyga Wrote: ------------------------------------------------------- > well last time i checked the USD was the world > reserve currency. next time I check, it may not > be. central banks and sovereign wealth funds have > begun diversifying out of the dollar. what > happens in a secular shift out of the dollar? You are attacking a straw man argument of your own creation that I did not say. I said nothing about the world reserve currency status. I said “Japan has had high debt/deficits for decades and has one of the strongest currencies, lowest inflation rates, and most prosperous economies in the world”. Contrast this with the claims of the mainstream that the US debt/deficits will lead to a weak currency, high inflation rates, and wealth destruction. The argument is not consistent with the evidence. If anything, by your logic the fact that the Japanese Yen is not the world reserve currency should hurt their situation right? Yet we do not see that happening in exchange rates, interest rates, inflation, etc. What is going to replace the dollar as the world currency? Even if something else were to replace it that would not concern me, but let’s just go with the hypothetical. Are you going to use Euros? Gold? The Yuan? The Swiss Frank? Each of these has major issues that are worse than the dollar, which is why the free market has established the dollar as the world reserve currency. Why do you think that would be a problem even if it changed in the future?
Dwight Wrote: ------------------------------------------------------- > Contrast this with the claims of the > mainstream that the US debt/deficits will lead to > a weak currency, high inflation rates, and wealth > destruction. The argument is not consistent with > the evidence. ^all true. ask a middle class family if they think prices are not going up. Yes prices are not going up…as long as you don’t have to eat or go anywhere. 1 point me. ask a retiree how attractive they find investing in fixed income instruments at 2% to fund their basic needs over the next 10 years. 1 point me. what is the value of a dollar relative to an ounce of gold compared to when the Fed was created? 1 point me.
jbaldyga Wrote: ------------------------------------------------------- > ^all true. ask a middle class family if they > think prices are not going up. Yes prices are not > going up…as long as you don’t have to eat or > go anywhere. 1 point me. > > ask a retiree how attractive they find investing > in fixed income instruments at 2% to fund their > basic needs over the next 10 years. 1 point me. > > what is the value of a dollar relative to an ounce > of gold compared to when the Fed was created? 1 > point me. Nice game where you can assign points to yourself haha. Do you ever lose when you play this game? Food and energy prices are going up world-wide. Those are global markets not US markets. Domestic policy has relatively little influence on them. This is why the government targets core inflation. Furthermore food and energy prices have been falling so far this year. Furthermore this sidebar discussion has nothing to do with the point that I made, which remains (as much as you try to distort it) that Japan has had low inflation and a strong currency while running high deficits and doing QE for decades. I have no idea where you are going with the retiree investing at 2%. Is this a sob story meant to evoke sympathy? What is your point? What was the value of a dollar in tulips during the tulip bubble? How about the value of the dollar relative to tech stocks in the late 90s? You should have sold all of your dollars for real estate back in '07 right? Did those bubbles fundamentally change the function of the dollar as purchasing power? You must exchange your bullion for dollars in order to do anything with it and pray that there will be buyers then.
Dwight Wrote: ------------------------------------------------------- > jbaldyga Wrote: > -------------------------------------------------- > ----- > > well last time i checked the USD was the world > > reserve currency. next time I check, it may > not > > be. central banks and sovereign wealth funds > have > > begun diversifying out of the dollar. what > > happens in a secular shift out of the dollar? > > > You are attacking a straw man argument of your own > creation that I did not say. I said nothing about > the world reserve currency status. I said “Japan > has had high debt/deficits for decades and has one > of the strongest currencies, lowest inflation > rates, and most prosperous economies in the > world”. Contrast this with the claims of the > mainstream that the US debt/deficits will lead to > a weak currency, high inflation rates, and wealth > destruction. The argument is not consistent with > the evidence. > > If anything, by your logic the fact that the > Japanese Yen is not the world reserve currency > should hurt their situation right? Yet we do not > see that happening in exchange rates, interest > rates, inflation, etc. > > What is going to replace the dollar as the world > currency? Even if something else were to replace > it that would not concern me, but let’s just go > with the hypothetical. Are you going to use > Euros? Gold? The Yuan? The Swiss Frank? Each > of these has major issues that are worse than the > dollar, which is why the free market has > established the dollar as the world reserve > currency. Why do you think that would be a > problem even if it changed in the future? CHF has issues worse than the dollar? What?
the point is that japan and the us are structurally different economies so the same government/central bank actions can have very different outcomes. yes food and energy have gone down recently. maybe i’ll stock up for the next couple decades now. the sob story is to illustrate the wealth destruction of current gov’t/central bank policy. your average retriee is going to get destroyed in the coming decades when their real income yields go negative. if it lasts 100 years, is it still just a bubble? gold has been around a lot longer than USD. your assumption that you will need to exchange your gold for USD in order to do anything illustrates your inability to see the bigger picture. you assume that there is no way USD can fail, when history says that there is no way it won’t fail. true likely not in my lifetime, but at some point it is inevitable given our current political and monetary system and “mixed” economy.
ManMythLegend Wrote: ------------------------------------------------------- > CHF has issues worse than the dollar? What? I will concede the point that CHF has been strong relative to many currencies this year for a variety of reasons. The issues I am referring to are mostly structural. CHF is not a viable replacement right now as Switzerland’s economy is small relative to the global one. You need a huge liquid stable market to support reserve currency functions. That leaves you pretty much with Dollars, Euros, and Yen. As a side note Switzerland most definitely does not WANT to be the world reserve currency. This month the Swiss National Bank has been intervening to weaken the Franc. Being the world reserve currency is not really all it is cracked up to be. Sure you get cheaper imported goods and perhaps lower interest rates which sound good in theory but really they are not. Most countries are more concerned about employment and income than they are about importing so they would rather not have a strong currency. I think of the dollar as a world reserve currency as sort of a public good the US provides the rest of the world.
jbaldyga Wrote: ------------------------------------------------------- > the point is that japan and the us are > structurally different economies so the same > government/central bank actions can have very > different outcomes. My point is that you cannot ignore history when thinking about economics and policy. Sure Japan is not a mirror image of the US in every aspect. I did not say that. What leads you to believe that government and central bank actions in the US will be different from the Japanese experience? Please expand on this point. > yes food and energy have gone down recently. > maybe i’ll stock up for the next couple decades > now. Knock yourself out. I would advise you that commodity markets move in boom and bust cycles and we are near the peak of a cyclical boom cycle right now. If you think they will continue to go up you should have an idea of what is “different this time”. > the sob story is to illustrate the wealth > destruction of current gov’t/central bank policy. > your average retriee is going to get destroyed in > the coming decades when their real income yields > go negative. Ahh I understand your point. Did not catch it in your previous post. Sure low yields are bad for savers. I believe and hope that interest rates will rise again. However for a fiat currency like the US inflation expectations, growth expectations, and central bank policy are the only influences on interest rates. If people start loosening their purse strings again (or the federal government does so) then economic activity will pick up and returns on saving will rise. In the current environment there is a glut of savings so naturally rates are low. > if it lasts 100 years, is it still just a bubble? > gold has been around a lot longer than USD. your > assumption that you will need to exchange your > gold for USD in order to do anything illustrates > your inability to see the bigger picture. you > assume that there is no way USD can fail, when > history says that there is no way it won’t fail. > true likely not in my lifetime, but at some point > it is inevitable given our current political and > monetary system and “mixed” economy. Gold has been around for a long time yes. It has gone through bubbles and crashes before and will continue to do so. There is no fundamental value created by holding it - you must assume that a future bidder will come along at a higher price. The bigger picture is that you simply cannot buy anything with gold without exchanging it for dollars. Try it and let me know how it works out for you. In an “end of the world” event your gold will be of little comfort. Even in the crisis of 2008 gold fell 30% or so.
Dwight Wrote: ------------------------------------------------------- > ManMythLegend Wrote: > -------------------------------------------------- > ----- > > CHF has issues worse than the dollar? What? > > I will concede the point that CHF has been strong > relative to many currencies this year for a > variety of reasons. The issues I am referring to > are mostly structural. > > CHF is not a viable replacement right now as > Switzerland’s economy is small relative to the > global one. You need a huge liquid stable market > to support reserve currency functions. That > leaves you pretty much with Dollars, Euros, and > Yen. > > As a side note Switzerland most definitely does > not WANT to be the world reserve currency. This > month the Swiss National Bank has been intervening > to weaken the Franc. > > Being the world reserve currency is not really all > it is cracked up to be. Sure you get cheaper > imported goods and perhaps lower interest rates > which sound good in theory but really they are > not. Most countries are more concerned about > employment and income than they are about > importing so they would rather not have a strong > currency. I think of the dollar as a world > reserve currency as sort of a public good the US > provides the rest of the world. Right I’ll agree with you on the point that the CHF could not serve as the world’s reserve currency. I thought you were arguing the currency is weaker than the USD.