North Korean dictator Kim Jong Un is 5’7”. It’s easy to imagine him redefining the foot as 6 inches so that he can be 11’2”.
Except that as readers are aware, an alteration of the foot would in no way alter reality. 5’7” is 5’7”.
A foot is always a foot. It’s twelve inches in length and there’s no getting around the length. Which means you can’t adjust your height for a change in the length of a foot. The foot is constant.
It recalls the tendency among self-proclaimed inflation watchers to adjust modern prices for inflation. They try to measure them in terms of a year ago, a decade ago, or more. Which is a fine exercise, though likely not very accurate. And it’s not because “inflation” as we know it today is guesswork at best based on a basket of goods chosen by bureaucrats, and an utter falsehood at worst as economists define it as “too much economic growth,” too much government spending, too much debt, rising prices regardless of the reason for rising prices, or all four.
Inflation is one thing: a shrinkage of the measure, meaning it’s a policy choice. In height or length terms, inflation is the equivalent of redefining the foot as six inches so that 5 feet is suddenly 10. Adjusting 10 for the shrinkage or “inflation,” people who are 10 feet tall are 5 feet tall.
It exposes the shocking stupidity of inflation. If addressed as actual inflation as opposed to what confused economists, politicians and pundits want it to be, inflation is an attempt to rewrite reality in plain sight, and without fooling anyone. Which means inflation isn’t “stealth” as Keynes said anymore than redefining the foot as 6 inches wouldn’t be stealth. Everyone would see the fakery right away.
Some, including economic advisers close to Donald Trump like Stephen Miran, believe currency shrinkage (meaning inflation) makes U.S. companies more competitive. It’s amazing even the ignorant could believe something so at odds with reality, let alone someone who advises a president and who thinks he knows economics. How could Miran think anyone would be fooled?
It’s like a wannabe NBA player imagining a smaller foot will improve his chances of being drafted. No, a smaller foot won’t alter reality, even in North Korea. Neither will a smaller dollar. Implicit in a shrunken dollar is that since it buys less, then goods priced in dollars will cost less. Except that those same dollars are spent on labor and inputs necessary to produce whatever American good will supposedly be rendered more competitive by devaluation. Get it?
Which brings us to gold. Some are prone to suggesting that at roughly $3,200/ounce, gold isn’t really at $3,000. Supposedly we must adjust the gold price for inflation. No, we shouldn’t, nor could we.
Gold is constant. Though not as constant as the foot, inch, or tablespoon, it’s very close. Which is the market point. Producers around the world didn’t happen on gold as the premiere way to measure money just because, or because it’s so beautiful. Gold became money par excellence precisely because it has foot, inch and tablespoon-like qualities. If it weren’t constant like the foot et al, it would never have become global money. Which is why adjusting the gold price for inflation is like adjusting the foot. It’s mindless, and no one is fooled.
All of which speaks to the towering stupidity of inflation itself. Why shrink the measure? No one is fooled, including those thieved by the shrinkage of the dollars in their possession. Inflation is theft, no one is improved by theft, which means Miran is much more than wrong.
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