Income inequality has been increasing since the 1970s, so I submit the underlying cause cannot have been a policy change in 1986.
- slavery
- the civil war
- the industrial revolution
- two world wars
- huge growth in population and in the economy, which makes it inherently less volatile
- a bunch of other important events that would obviously affect currency prices
(sometime WolframAlpha doesn't display the chart you might need to reload the page until it does, then click on the button that say "Linear scale" to display in a linear scale instead of a log scale)
If I instead look at the log graph, it looks more like the value of currency was approximately stable before 1900, and then started to trend upwards some time after that. I'm not sure how to interpret that, but if you were intending to point to the end of the gold standard, this data doesn't really support that. There is a slight surge around 1970, but only relative to a general trend.
And when I look at the average rate of inflation from 1970 to 2017, it is 4.01% per year: http://www.wolframalpha.com/input/?i=1000+1970+dollars+in+20...
Both of them are exponential growths, but with quite different rates.
As I said, there was a surge around 1970, so yes, if you take a period that includes that surge, it will probably have a higher rate than one that does not.
By eliminating the tax shelters and correspondingly lowering the tax rates, Reagan brought about much more efficient allocation of investment capital.
Perhaps say the severing of our money from gold maybe?
Look it's rather simple. You can wax and wane about tax policy until you are blue in the face. The answer lies in the currency, not taxation.
I give this example every single time these stories surface.
Take a pre-1965 quarter when our money still was constitutional and made with silver. 6.25 grams of silver in that quarter. That silver content has a melt value today, right now, of $3.37.
Items that silver quarter can buy today:
A gallon and a half of gas = .25 cents
1 gallon of milk = .25 cents
1 loaf of bread = .25 cents
The point illustrated is, the problem is your currency is worthless, it has been devalued by the banking cartel of the federal reserve to the point of almost complete worthlessness. And every year prices go up it's your currency losing more value, more purchasing power. It's not rocket science. You have been robbed by bankers. They own you. Washington and company learned their lesson after the continental dollar. Fiat currencies are fraud, and worthless. They always have been and always will be. Our dollar is no different. That's why the constitution has as the supreme law of the land that our currency must be backed by gold or silver. Which can't ever be valued at zero. Because it has intrinsic value. Fiat currency always throughout history, always, hits zero.
This is only true if wages don't go up to match it, and if they don't, then we should be asking why not. People should be insisting on raises at least in line with inflation, and if they're not able to get even that, then it suggests a power imbalance.
And besides, currency devaluation isn't some secret conspiracy, or even an inherent property of fiat currency, it's the explicit and stated aim of our monetary policy. Most economists seem to believe a constant low level of inflation is a good thing and so that's what we do. If you disagree, you should argue with that directly. And if you want a stable currency value, I would suggest monetary policy would be far more effective at achieving that than the gold standard.
To be blunt, that really is SV cuckoo-land thinking.
In 22 years of employment, 18 in IT with Fortune 100s, I have never had a job in which that was possible.
Why would a company voluntarily increase its personnel costs by the rate of inflation?
Because you have a society where not doing so would be rightly recognised as a defacto wage cut, and considered outrageous by your employees. This is generally the case in Europe, and I'm arguing that this not being the case in the US is exactly the problem.
Also FWIW, I don't think tech companies are remotely representative. It's an industry with high employee turnover, and where people are expected to argue for their own raises.
Nonetheless, I work in tech, and I got an inflation based salary bump last year, which was applied in addition to a performance based raise, and I'm expecting one this year as well. But then, I don't work in the US.
You know, because you actually fought for your interests instead of accepting your lot as a constantly-devalued cost center.
The gold-backing was dead by 1970. Petro-dolarisation occurred in 1974. The UK all but went broke in 1979. The USSR did go broke in 1987-89, courtesy the US and Saudi Arabia (something Putin may well have in mind now).
Money is weird. And the gold standard and "end the Fed" nonsense is ... complete bullshit.
1. We want slight 1%-2% inflation to prevent hoarding from slowing the economy to a crawl. Why invest or buy something today when the cash stuffed in my mattress will buy something better in 6 months.
2. If you agree with the first statement, why tie the rate of growth of money to how fast you can dig a metal out of the ground? Let "experts" survey the economy and decide how much more money there should be this year as opposed to last year.
I am not saying I agree completely with either statement, but that is one argument against a gold tied currency.
So I just assume it's Wall Street vampires down voting or those who hear the word constitution and down vote because clearly that makes me wrong or insane.
Let's say that on Jan 1, 1970, you took your pre-1964 quarter and pulled out the 6.25 grams of silver in at the price of $12.37 a troy ounce. You'd get $2.48.
If you put that $2.48 in a money market earning just half the fed discount rate for the last 47 years, it'd be worth $7.99 today. The silver would be worth $3.37. (The currency would likely be a lot more that $7.99, because the difference between money market rates and fed discount rate historically hasn't been as high as the very conservative 50% markdown I used here.)
There are a lot of moving parts in an economy that affect cost of living. A lot of stuff has changed since 1970 beyond going off the gold standard. Massive productivity changes, energy and raw material price shocks, demographic changes, policies and laws changing behaviors all across the individual and business landscape. It's difficult to isolate one individual factor as the sole cause.