Since the invention of the microchip in 1971, the device has multiplied by the trillions at exponentially lower costs, creating more chips per person and a revolution in human communication.
Yet people have trouble applying the same logic to the multiplication of dollars.
Why not? With more dollars we’ve been able to foster a revolution in urbanization. It’s allowed the specialization of skills and trade, all of which has raised our standard of living – even when adjusted for inflation.
So why is this not seen as a sign of progress?
I’ll tell you.
It’s because economists and financial analysts, for the most part, are idiots.
More specifically, the analysts who misinterpret the most meaningless chart in all of economics.
You’ve no doubt seen this chart dozens of times.
At face value, it is rather shocking. That’s why people who see it are quick to jump to faulty conclusions.
But it doesn’t mean a damn thing they say it does.
Looks bad, doesn’t it? Our All-American dollar has gone down 97%!
Guess again. This chart holds about as much meaning as my left toenail!
Yes, overtime the so-called “value” of the dollar has decreased as we’ve created more of them, like microchips…
But since 1900 we have dramatically increased our standard of living. Yet many continue to whine and complain that, collectively, our wealth has been devoured by evil inflation.
It’s moronic, but who can blame them?
We’ve all been conditioned to believe that inflation is a bad thing. Gold bugs and fiscal hawks tell us over and over again there’s irrefutable proof that the dollar is going to hell in a hand basket. And this ridiculous chart is used as evidence.
But the truth is, inflation – when held in moderation – is actually a good thing.
Think about how people lived back around 1900 when the U.S. was emerging as the up-and-coming new global leader.
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