The Fed Hits 3,000 Percent Inflation

[KenH]

"As of June, the economy hit another dubious milestone: Inflation has now reached 3,000 percent under the Federal Reserve.
...
US inflation was not always as persistently high as it has been under the Fed. Before the Fed, the purchasing power of the dollar was determined by supply of and demand for gold. Consequently, the purchasing power of the dollar was relatively stable.

Figure 1. Index of the US price level, 1774-2022

Figure 1 shows the US price level back to 1774. After a brief turmoil during the American Revolutionary War, the price level was about the same in 1784 as it was in 1914.

That’s approximately zero percent inflation over 130 years compared to 3,000 percent inflation in less than 110 years under the Fed."

- rest at The Fed Hits 3,000 Percent Inflation | AIER

 

[Salty]

what was the % of pay increase?

 

[KenH]

what was the % of pay increase?

An increase in pay does not eliminate the issue. Destroying the value of a nation's currency is one of the worst things that a government can do. It distorts everything else and enables government to go into debt and, as we see, even tremendous amounts of debt that cannot be repaid.

 

[Salty]

Not saying it automatically eliminates the issue

For example,
Back in 1978, I bought a brand new car for 4,000 dollars
My E-5 base pay was about $700 a month

In 1983 I bought another brand new car for about $7,000
my E-6 base pay was about 1100 a month

 

[Van]

Rather than pointing to the Fed, note that in about 1971, the USA came off the Gold standard, and as the chart indicates, the rest is history. Now the government creates inflation by overspending, then pays the debt off using inflated dollars. The chart shows the result.

Over the last 50 years the price of cars and houses has increased about 15 times. For example a car in 1973 might cost say $3,500 and today, about $50,000. Or a house that cost about $50,000 might cost about $750,000 today.

 

[RighteousnessTemperance&]

Excerpt from another article may be a bit more insightful (boldface added):

The post-1965 increase in Federal Reserve Note liability (i.e., dollars) paralleled the rapid increases in both the U.S. federal budget and the U.S. Federal budget deficit associated with President Johnson’s “guns and butter” policies, otherwise known as the “Great Society” and the Vietnam War. LBJ’s focus on “guns and butter”, and his removal of the gold cover, ushered in a new paradigm in how the U.S. economy would be run. Free market capitalism was “out”; government controlled “creditism” was in … and has ruled us, and the rest of the world, ever since.
…
But after LBJ’s changes, politicians quickly realized that they no longer had to increase taxes (unpopular among the voters) in order to increase spending, especially vote-buying spending on their favorite special interest groups. The government could borrow to fund ever increasing deficits, secure in the knowledge that their servants at the Federal Reserve, freed by LBJ from the weight of any necessary gold reserve to back their Federal Reserve notes, would simply create the money out of thin air and buy the debt obligations not absorbed by the credit market (the definition of quantitative easing). Moreover, banks, as a result of substantially reduced reserve requirements, courtesy of the Federal Reserve, could easily create even more money simply by making new loans. For the first time in human history, it appeared that there actually was a “free lunch” (as well as free dinners, free healthcare, free education, free …). Just borrow and roll the debts forward, at successively lower Fed-engineered interest rates, forever (or until some distant generation had to pay the price for “free”).​

Who Really Killed the Gold Standard?