Consumer Purchasing Power At All-Time Low

EDITOR NOTE: As the saying goes, a picture is worth a thousand words and the charts below provide multiple angles on two pictures in focus: the dollar’s consumer purchasing power and money velocity. The matter of eroding purchasing power has been a constant topic of ours, its effects steady and constant. Money velocity concerns the circulation of money. When economic health is predicated on spending, money does no good if it's stashed away and prevented from circulating. The Fed can continue printing money, but if it doesn’t circulate, the effect of the printing will be muted if not halted altogether. Both are seeing record lows. The problems come in when money velocity picks up. Then, the effect of inflation ticks up, further plunging the dollar’s purchasing power. This is when the anticipated rise in inflation shifts into high gear, soaring beyond controllable limits. This is also when non-CUSIP gold and silver prices rise, not only hedging against dollar depreciation but generating growth on the dollar’s accelerated decline.

The Federal Reserve, the central bank for the United States, was signed into law by President Woodrow Wilson on December 23, 1913. And consumer purchasing power has dropped ever since to an all-time low.

Rent CPI is declining rapidly.

While auto and truck CPI have been fairly level since 1995.

But as Wolfstreet noted, the CPI for new vehicles didn’t capture the rising price of America’s most popular pickup truck, the Ford F-150 which has risen dramatically since 2009.

M2 Money velocity (GDP/M2) is now near an all-time low along with consumer purchasing power.

Bitcoin is rising … again.

Just keep on printing.

Originally posted on Confounded Interest