Equedia Letter

Forget Ebola, Worry About the Coconut Virus10 min read

Comments (15)
  1. Chester Vincentz says:

    The Fed and government are brain washing the public that deflation is bad for the public but it is bad for people in debt like the government. Inflation is a tax on people with cash and allows the debtor to pay back with cheaper dollars.

    Anyone who reads the history of the Fed understands the central banks make the living on debt – bring on the wars, etc.

  2. Wes Evans says:

    Yea the US minimum was still $1.00/hr, Gas was 25-35 cents/gal, a new VW bug $1300, As 2nd Lt USMC I was paid $248+ $56 food allowance/ Month, coke cola $.25, at the O club beer $.25, Average starting pay A&S degree $400-500/month. Stamp US 4cents. When it comes to commodity type necessities. Their price increase approximates the increase in the minimum wage. There are exceptions.

  3. Richard Vedder says:

    When I went to grade school in the 40s occasionally my mother would treat my brother and I with a nickel with which we each got a fresh sweet roll at the bakery.

  4. Albert Franco says:

    IN MY COLLEGE YEARS OF 1952-1956 EACH YEAR’S COST OF TUITION at Columbia College was $750 (that did not include room and board as I commuted from Brooklyn and the cost of a one way subway ride was 15 cents).
    One year later, my Brand New 1957 Turquois and Ivory Chevrolet Bel-Air with anodized aluminum side panels and air conditioning cost $2425. When I got married in 1960, my parents bought a 1 bedroom coop in Brooklyn for themselves. The purchase price of the coop was $600.

    1. David Young says:

      Do you mean co-op? I keep my chickens in a coop. LoL

  5. tom says:

    I = Inflation = increase in Currency supply
    D = Deflation = decrease in Currency supply
    $ = Dollar = unit of weight of silver (317.25g)
    E = Eagle = unit of weight of gold
    M Money= Gold /and/or silver

    GDP = total of all goods and services of a country

    +GDP = Economic growth = increasing GDP
    -GDP = Economic contraction = decreasing GDP

    S = Saving = delayed consumption
    T = Time
    x = Price
    Y = value

    You just sent out a fine 1/2 correct explanation that
    begins to explain WHY the price of things increases over
    time (Variable x) in a twenty variable equation.
    Without defining any of the variables

    To explain the economy to someone utilizing words that have
    no fixed definition is like defining the economy in units of feathers. Or worse yet going to a weight loss clinic where the value of the pound changes each day. How do you have any idea if you are loosing or gaining weight?

    1. James T says:

      What world or timeframe are you living on?

      $ = Dollar = unit of weight of silver (317.25g)

    2. Franco says:

      Tom, your explanation of variables is the stupidest thing I have ever seen. Dollar does not equal silver and deflation does not mean a decrease in the money supply.

      I normally bite my tongue when I see stupid comments from people who believe they are smart, but this comment, Tom, was utterly useless.

      The posts talks about inflation and the Fed’s currency – not the economy. What were you reading, brainiac?

  6. Fred says:

    Bring on the coconuts and watch out for the helicopters!

    Love the coconut illustration as it makes pretty clear the difference between monetary inflation which is a result of a debased currency because of too much central bank printing vs supply or demand induced price increases with a stable amount of currency.

    The takeaway from all this is that even with all the productivity gains over the last few decades, standards of living have little to show for it.

    Where did that ‘dividend’ from those decades of productivity growth go to? Hmmm, the bankers and those closest to the monetary spigots?

    Of course, we now have a lot more debt and unfunded liabilities that are likely to be dealt with in the same way so lots more monetary debasement to come….even if the unfunded liabilities reneged upon.

    Can they debase the coconuts before loading on the helicopter(s)?

  7. SS says:

    Wonderful letter. You don’t really think about this in these terms very often. I remember having a conversation with an older coworker who was nearing retirement as few years ago. He was the first person to bring to my attention the extreme discrepancy in the increase in the price of goods and services and wages. I remember him telling me that wages haven’t kept up with the price of things. We are tradesmen so you would think the wages of the people who build and maintain the economy would correlate rather well with the increase in goods. But he remembered exactly what he made in wages back when he bought his first house. And it was something like 2-3 times your annual salary for a standard home. When we had the conversation I think it was closer to 5-6 times. It was basically the same idea with cars and some other items. I would assume it is no better now and likely far worse.

    I guess the question would be, what can you do about it? I assume the answer is nothing really. The people in control of the system have lost touch with reality, and the only course of action is to keep the game going as long as possible. Because the alternative is likely a lot of pain for a lot of people for many years. It will take a long time to unwind the mess that has been created. I believe the US is the biggest perpetrator of this, and I believe some countries have had enough. I think Russia and China are leading the charge to dethrone the US. Question is how much is that going to hurt…..

  8. Mike says:

    If I know I can buy something cheaper in the future, I won’t buy it until I absolutely have to. If housing prices are deflating, who in their right mind would ever buy a house!

    Credit underlies consumer spending and business investment. If my debts become more expensive in the future, I would never borrow money for anything. If I owned a business, I would invest only from cash on hand.

    Deflation has the potential to bring an economy to a standstill.

    1. Dominic says:

      Contrary to what you may believe about housing deflation, here in Vancouver, BC, when the housing prices dropped (deflated) after 2008, demand actually increased and caused another increase in construction etc. because housing became more affordable.

      You are correct that credit can underlie consumer spending, but don’t forget, credit is what caused the financial crisis to happen just five years ago. Credit is good, but too much credit is extremely horrible.

  9. Lee says:

    All here is well said however complicated to some. Lets keep it simple.

    In nature there is an opposite to everything. So for inflation there is Deflation. And what is deflating is what I call the black hand. The hand that keeps on robbing all of us of real value.

    INFLATION; serves only the banking lords for so doing they make sure that we keep on borrowing. The higher the prices the more we live in debt to their system
    Example: the first house I bought in Toronto cost me 55k 1981. same house today nothing much added cost now 600k
    Now you know why the FED demands and places policy on countries to achieve a certain inflation number. This is for their own survival.

    DEFLATION; what is depreciating another words if inflation means values go up then What is going down. The currency value is what is going down or being deflated. Interesting is how this phenomena is well hidden from everyday thinking.
    Do I really need to live on a home that is value 600K after all not much has changed on the home.

    WORST OF ALL; is that north America currency is at 90% devalued (deflated) so what happens when we get to 100% devaluation..The FED then takes over all the assets of a nation as it is bankrupt.


  10. jrj90620 says:

    Inflation is just the “hidden” tax,that makes up for the amount regular taxes don’t cover govt spending.So many people are ignorant and don’t understand economics,so politicians use the inflation tax,rather than regular taxes,that people would notice.So,you can’t get something for nothing,no matter what Obama Claus and other politicians promise.

  11. Vinnie in Sun City says:

    I still haven’t figured out the “Reverse Coconut” scam. Reverse mortgage offers abound and I fail to see the bankers advantage.

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