Tuesday, June 10, 2008

The Ugly Truth About Inflation

So here is the ugly truth about inflation. This is not some 5 year aberration. This is not some minor statistical blip. This is a 41 year picture of the lie of generalized investment as a means to retirement comfort. (Click to see enlarged version.)

The chart to the left here shows two plots. The blue-green plot is the unadjusted DJIA from January 1967 to April 2008. The orange-red line is the inflation adjusted DJIA over the same period.

The scale on the left Y axis covers the actual values obtained by the DJIA. The scale on the right Y axis is the inflation adjusted value. There are lots of interesting observations in this chart.

First, note that $1000 invested in January 1967 would have taken until sometime in mid-1995 to even recover its base value after adjusting for inflation. Second, note that the unadjusted chart implies that new highs have been reached in the last few years, yet after adjustment we see that we have not yet regained the high point of January 2000. The third thing to note is that the only real growth in the DJIA over 41+ years was the five year period from 1995 to 2000.

This chart exposes the lie of generalized investing. The promise is that you invest and it will all even out. Yeah, really, sure. The truth is that real opportunities to get ahead come around once in a lifetime and then are gone until the next generation gets a shot at some random point in the future. A 41 year time chart does not lie. This chart covers someone who graduated high school to today and who has trusted the market all along. There are 36 years of losses or no gains in that market versus 5 years of real gains.

People who are going to invest and who trust "financial advisors" are being taken to the cleaners by liars and shills. Only by really understanding your target market and working it like a real job can you have any hope of getting ahead by investing. This is why the common man and woman was long better served by simple saving rather than complex investment schemes. However, the banks were not content to let all those savings sit at rest and have created fractional reserve lending and participated directly in a sustained multi-generational program of deceit via inflation to rob the common man and woman of their savings.

And they have succeeded. They have succeeded because you (and you and you and you) have allowed them to do so. Only one man has dared to stand up and run for president while at the same time declaring the true solution to our financial woes - Ron Paul. If you support anyone other than Ron Paul you are voting for a liar, a shill, and someone who is complicit in this multi-generational program to rob you blind. If you vote for anyone other than Ron Paul, you deserve whatever fate befalls you.