http://www.usagold.com/gildedopinion/puplava/20020301.html
When central banks create money, they oftentimes can't control where it goes. In the 1970's the money went into things. In the 1980's, 1990's and our current decade, it went into paper. Inflation has two outlets. It can manifest in higher prices of goods and services or in higher prices of paper assets. They are one and the same. The only difference today is that we no longer call it inflationary. It is known as "investment return." If stocks go up 20% for five years in a row, it is called a new era or new paradigm. If real estate prices rise 20% a year, it is called a boom. The very fact that few question the inflationary implications of these two phenomenons is another example of the lack of economic literacy.
John Q. Investor and his cousin John Q. Public know that their monthly bills keep going up. They just don't know why. Whenever the inflation index rises, we strip it of its meaning by either changing how it is measured or subtracting the elements from the index that make it rise. The result is that most Americans now live on a steady diet of new debt to augment their living needs. As this graph indicates, the ratio of consumer and mortgage debt to disposable personal income is now at 105%. Would anybody argue that a rise in housing prices of over 20% is not inflationary? Inflation has been with us. It's just that we no longer have the intelligence to call it what is. Even the current real estate boom is being explained in terms of rising demographic trends and a new era in demand for housing.
