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Posts Tagged ‘Bureau of Labor Statistics’

One of the main selling points of a gold standard is the claim that it holds the line on inflation.

However, what is the track record of the gold standard in the U.S. given the earliest reliable numbers?

From the Bureau of Labor Statistics Inflation Calculator, we see:

  • From 1913 to 1932, while the U.S. was on a gold standard domestically and externally, inflation was 27.5%, or 1.45% annualized.
  • From 1933 to 1970, while the U.S. was on a gold standard externally, inflation was 66.4%, or 1.79% annualized.

We see that going off the gold standard domestically did correspond with higher inflation, but only marginally so.

While low inflation is generally regarded as a good thing, deflation isn’t. What the gold standard didn’t prevent was the massive deflation of 31.5% from 1929 to 1933, which greatly contributed to the annualized inflation rate of 1.45% from 1913 to 1932, instead of the 2.27% it would’ve been if there was no deflation from 1929 to 1933.

That’s significantly higher than the 1.45% annualized inflation from 1933-1970, when the lack of a domestic gold standard, according to gold standard proponents, should’ve pushed inflation far higher.

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According to Gary North of LewRockwell.com, it is.  That is, when you have to justify gold’s embarrassing performance from 1980-2001, from a closing high of $850 USD an ounce in January 1980, to a low of $255 an ounce in 2001.

He writes:

The case for gold as an investment is different. First, it is an inflation hedge over long periods of time, though not necessarily in the medium term, e.g., 1980–2001. Second, it is a crisis hedge when the international capital markets are in turmoil. (So, for that matter, is the U.S. dollar.)

Official inflation from 1980-2001 was 115%, according to the BLS, while gold declined by 70% over that period. Gary North has to rely on making the arbitrary claim that 21 years is the medium-term in order for his claim about gold being an inflation hedge over the long-term, to not be utterly embarrassing.

BusinessDictionary.com defines a long-term investment as one “that matures in more than 10 years,” and to me, 21 years falls well within the scope of a long-term investment, and outside that of a “medium-term investment”.

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The Bureau of Labor Statistics, a non-military department of the federal government, refers to Americans who aren’t members of the military, as “civilians.

The Merriam-Webster Online Dictionary defines a “civilian” as:
1: A specialist in Roman or civil law.
2 a: one not on active duty or in the armed services or not on a police or firefighting force.
2 b: OUTSIDER

The last definition is particularly revealing. Does the non-military Bureau of Labor Statistics really regard Americans who are not members of the military, or police or firefighting forces, as outsiders? That would include themselves, by definition.

Why the use of the military term “civilian,” to refer to Americans who aren’t members of the military? Why not a non-military classification such as the categories of Americans who aren’t members of the military, police or firefighters, and those who are?

If the majority of Americans are outsiders to their government, according to the terminology implied by definition of the Bureau’s classification system, then what does that say about the form of American government today?

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On February 15, 2009, President Obama’s special advisor, David Axelrod, stated on Meet the Press with David Gregory: “this is the worst economic downturn we’ve had since World War II.

So why is anyone surprised that on November 6, 2009, the Bureau of Labor Statistics reported that the U.S. unemployment rate had reached 10.2%?

Since World War II, the unemployment rate had previously already hit double-digits. Specifically, as late as 1983. The unemployment rate is a key metric of the economy, so why would anyone expect it to not go into double-digits during this recession?

When asked about whether the recently passed stimulus package would prevent the unemployment rate from reaching double-digits, Axelrod responded:

Well, that’s our hope. That’s our hope. There’s no doubt that without it that’s what–that’s where we were looking, double-digit unemployment. And that’s what we’re trying to forestall. We want to turn this thing around, and we think that this will, will happen.

Notice that he only talked about hope, and no promises. If a politician doesn’t even bother to make a promise about something happening that they want to happen, you can be pretty certain it won’t happen.

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