Inflation is not how many dollars it takes to buy gold,
but how much gold it takes to buy technology.
(This is the short summary of an 8 page essay. Link to it at bottom.)
Technology is an effective offset against inflation and often, far more so then Fed (capital) policies. Technology can leapfrog ahead inflation and does so regularly. In the case of gas, hybrids are doing this now.
Hybrids outperform inflation by double (maybe triple). In other words, if gas prices doubled tomorrow, a hybrid would leave you paying less per mile than Grandma did (as compared to her income in the 1930’s). Put simply, technology is the overriding variable to inflation rather than the cost of gold alone. Welcome to America’s real minting press: US Innovation and technology.
Commodities will eventual hit upon a phase of escalating prices. It’s the nature of any finite resource against rising consumption. Technology is just the opposite. Prices fall in direct relation to technologies expansion.
This recast technology from one of indulgence, performance or utility and into the official answer to a world of fast diminishing resources. A commodity’s utility is multiplied by technology. Greater the technology, greater multiple of a commodity’s utility.
This creates a direct and symbiotic relationship between the commodity and its tech counterpart. The real value of a commodity is not simply in how many dollars it takes to buy it, but also in how much more utility technology provides it. It’s therefore accurate to measure the commodity by our cost to purchase that Tech Utility. The ‘REAL’ measure of inflation is not solely in how many dollars it takes to buy gold, but rather, how much gold it takes to buy its corresponding technology.
How much gold did it take to purchase that same 1 mile with Grandma’s income as compared for us to buy a mile from a hybrid today? That’s where you find the true measure of inflation and the actual price of gold to the dollar. Our dollar can purchase a whole lot more miles (via hybrid technology) than Grandma could. Calling this the Grandma Index maybe a fitting name. Welcome to the Grandma Index. We call it the Tech Affordability Index: Tai.
Technology has hit that tipping point wherein each successive oil spike is now countered with the next wave of re-investment. This loops into lowering the cost of tech and so giving us broader market utilization. Higher the price = greater the investment for the next generation jobs and innovation.
A mere 1% the cost of the Gulf Wars could allow hybrids triple the impact to American drivers. Rather than ‘cheaper’ gas, hybrids hand us a whole lot more miles per gallon.
Compare (other) policies to our simple prescription for more hybrid investment. Nationalizing the fed, reverting to gold or further militarization of foreign policy would have a much smaller impact then hybrids.
Take milk as an example. Say the dollar lost 50% of its value. Let’s also say diary production doubled (and so its cost also fell by half). The cost of milk to us would be the same though the dollar itself was half its original value.
This happened to food prices once we left the gold standard after Nixon. America’s ag-tech dramatically expanded food production and so lowering food prices just as the dollar began to spike. The same would be true again if wages doubled. In either case, the affordability is not defined solely by the dollars rate of ‘inflation.’
In this example, the falling dollar would only be the first variable. Rising milk production would be the second and a counter balance to it. This production off-set is not accounted for in today’s inflation model though it is often the larger factor of a tech based world.
This gives us a duel track for indexing inflation. On the one side, we have inflation eating away at the ‘purchasing power’ of the dollar. On the other, we have technology that keeps allowing us greater utilization of that very same dollar.
Tech utility may represent one of history’s greatest power shifts of the modern era, if not millennia. It may recast tech as the official replacement to colonialism. A story not yet recognized.
Colonialism was built upon ever greater access to global resources. In this old paradigm, prosperity was largely decided upon by a nation’s access to commodities. It was a commodity based world; primarily won and secured through military might. Hence, the ever expanding military budgets and focus to weaponry and standing armies.
A market based, tech driven system replaces the role of military conquest with market gains won with hot, new products. Consumer and industrial tech are the guns of choice in this new paradigm for that is how territory is lost or won in the power struggles of the modern day. Meanwhile, commodities are measured more by ones utility of them rather than ones access to them. Put simply: Those with commodity riches or larger militaries are losing out to those winning over market share and building the latest gadgets and cutting edge tech.
A commodity rich country with a powerful army like we see of both Russia and Iran will lag those that are more tech and product proficient - like Japan and S Korea. It’s the dawn of a new era. Commodity utility will reign over its producers. Market reach offers greater prosperity over those of military might. It’s a new paradigm the US has not yet fully comprehended. Yes, our military budget is based upon an outdated paradigm.
Behold the 21st Century where guns and gold are no longer the baseline to power and prosperity. In this new world, commercial reach, tech savvy and marketing brawn are increasingly the deciding factor to wealth and influence. The Tech Affordability Index brings this new world into focus for the first time.
(This is the 2 page summary. For the complete article go to:
High Gas Prices Are Great for the Economy. New Inflation Index: TAI
The link below: