> the increasing worthlessness of the USD
I think you must be using words different from what I take them to mean, which means you can draw radically different conclusions from how I read them.
If everything in the economy is tied together, such that $10 is still an hour of work at a grocery store, and $10 still buys you a lunch or three gallons of milk, and $10 still buys you 4 gallons of gas, etc etc, then I don't see how you can say that there has been some kind of "secret" sky-high inflation over the past few years that is only detectable "from the outside."
Inflation is defined by the purchasing power of money within the economy. If that's not changing, inflation isn't happening.
Pointing to a single asset whose price is fluctuating wildly and insinuating that that is the only real source of truth, and that literally everything else is hiding the true cost of living seems to be just showing what you want to believe.
(Note, I'm not saying that there's been no inflation. It's been about 2.5%/yr over the past 20 years. But simply that the notion that it isn't visible from "inside" the economy is contradictory.)
What's being asked is, "is what we're seeing a warning sign of inflation-yet-to-come?" Rephrased, "are people bullish on technology stocks and Bitcoin because they're speculating that there's major fiat inflationary risk and these asset classes are most likely to hold value?"
The key ingredient missing from your calculation is time. If you are simply measuring how much an hour of work can purchase now, you are completely ignoring that some people want to save money.
If $10 is the measurement for an hour of work and 4 gallons of gas today, in a decade or so, you might need $20 to pay for 4 gallons of gas, and you might get paid $20 for an hour of work. But somebody who saved $10 worked today, and chooses to spend it a decade later, will only be able to acquire 2 gallons of gas. The result of their labour would have been reduced to half.
This is what Bitcoin intends to fix. We want to be able to store wealth into the future - so that an hour worked today is still worth an hour (or more) tomorrow. The potential appreciation in purchasing power is reward for thrift.
As it stands, if one wants to preserve wealth into the future, they must put money into risky investments to ensure that the dollar value of the savings appreciates at a greater rate than its purchasing power is lost to inflation. They also run the risk that their savings or pensions could be lost with companies going bust or if hyperinflation occurs.
Bitcoin is a pension plan.
As for using Bitcoin as a reference frame of measurement, there's a good reason to do this. Bitcoin is a fixed system of measurement which is disjoint of time or other externalities. There is an absolute maximum of 21M bitcoin, so any whole bitcoin is always 1/21M of the total supply. This is a truth that holds today and in a decade. It is immutable.
Consider measurement of length. If you only have cows in a field, how do you measure the length of a field? You could say it is 100 cows long and 80 cows wide, but how long is the cow? The cow grows as it ages. Once you get hold of an external tool of measurement - a meter (or yard, etc), then you can measure both the field and each cow against it.
The same is now true for economic value. Before Bitcoin, there was no fixed scale of measurement. The dollar was flexible, just as any other commodity. Bitcoin OTOH, is not flexible. The exchange rate of BTC/USD might be flexible, but when you use BTC as the frame of reference, you can instead measure how much value the dollar is losing against bitcoin. https://usdsat.com
As you can see, the dollar is losing value so rapidly that inflation of the dollar is negligible. It is the perception of inflation which is causing it to plummet far quicker than the actual rate of inflation.
So? They can still be idiots. Idiocy does not have an age limit.
>> Inflation is measured in many ways, most often by looking at a basket of goods where the prices are relatively non-volatile.
Meaning you remove the items from the basket if it's price jump too much ? so if you tamper with the items in the basket you can project(pretend) that the inflation is not happening.?
>> using the USD/Bitcoin ratio as a yardstick for inflation seems very misguided, as Bitcoin is heavily speculated.
No it doesn't need to be a yardstick as Bitcoin is not yet in full circulation in the economy but it's growth indicates people are increasingly prioritising it over paper to store value.
Re: speculation, everything is a speculation, there are those who keep holding USD in cash and banks and keep speculating that the economic prophets will do the right thing to retain value in their chosen currency.
You can look up the methodologies used to determine the basket of goods. By non-volatile I mean that they’re aggregates over purchasing categories - for example, it’s not the simply the price of a “40inch TV” or cod fillet (which may change in ways non-representative of general purchasing practices - as TVs of a given size get cheaper, or cod has a good year) but an aggregate over the entire purchasing category (fresh fish, consumer electronics) based on typical purchasing habits.
https://www150.statcan.gc.ca/n1/pub/62f0014m/62f0014m2019001...
When things are added or removed it’s because people have stopped buying that thing (DVD rentals for example).
Or simply that there are thousands of speculators. (Which isn't even that many people considering the number of people who speculate in stocks.)
Everything else is just a derivative of this. You're measuring the side effects of inflation. If you want the deeper cause, it's here.
Everything else–money supply, borrowing costs, etc are linked to it, but do not necessarily correlate. The price of a Big Mac is almost certain to be a far better approximation than any of those indicators.
This really isn't that complicated.
If you have a lot of unemployment and inflation is low that basically means there is very little work for your people. This is the reason why 2% inflation is a policy goal. You always want there to be just a tiny little bit more work than there are workers. If there is a way to do more work thanks to technology that is increasing productivity it will be done.
Historically, inflation always meant inflation of the money supply. Its definition has changed over time and you've been swindled.
If you have a name for something, name the root cause, otherwise you're obfuscating its study, and perpetuating the non-identification of the root cause.
"Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation." [0]
But it doesn't happen without the prerequisite of money being printed.
but this chart doesnt take into account increases in productive capacity. If there exists production capacity to match this growth in money supply, goods will remain relatively priced the same, even if more is printed.