The Economy and You #10: What Is Inflation?
Typically, when you ask someone what inflation is, they respond it is the rise in prices that makes my money worth less. In most respects, this description can be considered fairly accurate. Inflation is the increase in overall price level of goods and services in our economy.
It is important to note that not all price increases constitutes inflation. Prices of individual goods and services are determined by the supply and demand of the free market. When prices of some goods rise while others fall, these are relative price changes. Inflation occurs when there is an increase in the overall price level. Therefore, a price increase of a specific good or service you buy does not indicate inflation.
Economists measure the overall price level by looking at all or a large number of goods and services in the economy. There are two measures generally used to measure overall price levels. The GDP Deflator measures the cost of goods and services produced in the economy relative to purchasing power. This differs from the Consumer Price Index (CPI), in that the GDP Deflator is not based on a fixed basket of goods and services. I will talk more about the Consumer Price Index in later articles.
Because inflation is the increase in the overall level of prices, it is linked to money. Some say, “Inflation is too many dollars chasing too few goods.” To better explain how this works, imagine a world that only has two goods: oranges picked from orange trees, and paper money printed by the government. In a year where there is a drought and oranges are scarce, we’d expect to see the price of oranges rise, as there will be quite a few dollars chasing very few oranges. Conversely, if there’s a record crop or oranges, we’d expect to see the price of oranges fall, as orange sellers will need to reduce their prices in order to sell all of their inventories.
Just as the supply of oranges can rise or fall, so can the supply of money. If the government decides to print a lot of money, then dollars will become plentiful relative to oranges, just as in the drought situation. Thus inflation is caused by the amount of dollars rising relative to the amount of oranges.
Therefore, inflation is caused by a combination of four factors:
- the money supply goes up
- the supply of other goods goes down
- the demand for money goes down
- the demand for other goods goes up
Still, there is more to inflation. There is “price inflation and monetary inflation. Price inflation is when prices rise and it takes more money to buy the same item. Monetary inflation is when the money supply has increased which usually results in price inflation.
Money inflation is often seen as the government printing money (economics students may want to look up the related topic of seigniorage or inflation tax). While theU.S.may not just print more money when needed, the federal government has tools available to increase the money supply.
So to conclude, when the government increases the money supply faster than the quantity of goods increases we have inflation. Interestingly, as the supply of goods and services increase, the money supply has to increase as well or else price will actually decline.
In my next article I will examine the widely used inflation index, the consumer price index (CPI), and how it is calculated and why there are different CPI estimates.
AJR 26 clears first hurdle
This afternoon, the Assembly Judiciary and Ethics Committee voted 6-2 to pass AJR 26, the Amendment to eliminate the offices of Secretary of State and State Treasurer from the constitution.
Voting Aye:
Representatiave Jim Ott (Chairman) (R-23)
Representative Tom Larson (Vice-Chair) (R-67)
Representative Samantha Kerkman (R-66)
Representative Andre Jacque (R-2)
Representative David Craig (R-83)
Representative David Cullen (D-13)
Voting Nay:
Representative Gary Hebl (D-46)
Representative Anthony Staskunas (D-15)
The next step in the process is the scheduling of the legislation in the general Assembly. I will post an update as soon as this happens.
Search For Cash While Enjoying All Things Apple!
(Madison) The State Treasurer’s Office will bring the Unclaimed Property Database to one ofNorthern Wisconsin’s biggest yearly events, the Bayfield Apple Festival. The Festival draws more than 50,000 visitors a year to a town that boasts a population of 600 people!
From Friday October 7th thru Sunday October 9th, anyone visiting the festival can search for cash they may have misplaced, forgotten about or didn’t even know they had! The Treasurer’s Office is holding more than $390 million.
The Unclaimed Property Tour this year has returned more than $750,000 to people we have visited across the State. From the State Fair in West Allis to the Northern Wisconsin State Fair in Chippewa Falls, we have met with thousands of people and helped them claim their cash. So far this year, the Treasurer’s Office has returned more than $24 million!
Stop by our booth in Downtown Bayfield and search for yourself, your family and your friends!
Unclaimed Property Tour
Bayfield Apple Festival
Bayfield, WI
Oct. 7-9, 2011
10am-5pm
Related articles
- Wisconsin Through the Windshield – Northern Wisconsin State Fair (wistatetreasury.wordpress.com)
- 56 days, 5 Fairs, $500,0000! (wistatetreasury.wordpress.com)
- More Than $200,000 Claimed at the Wisconsin State Fair (wistatetreasury.wordpress.com)
Elimination of Office reaches important juncture tomorrow.
At 11:00 A.M. tomorrow the Assembly Judiciary and Ethics Committee will hold an executive session in which they will vote on AJR 26, the bill to eliminate the Treasurer and Secretary of State, which I authored in March, and which was introduced by Assemblyman Scott Krug (R-72).
The committee, which is chaired by Assemblyman Jim Ott (R-23), is made up of 8 members. Should AJR 26 pass through the committee, it will go before the full Assembly.
Please join me in supporting this legislation, and let your Assemblymen know your feelings. The members of the committee are listed below:
Representatiave Jim Ott (Chairman) (R-23)
Representative Tom Larson (Vice-Chair) (R-67)
Representative Samantha Kerkman (R-66)
Representative Andre Jacque (R-2)
Representative David Craig (R-83)
Representative Gary Hebl (D-46)
Representative Anthony Staskunas (D-15)
Representative David Cullen (D-13)
Testimony on AB 275
Yesterday, I explained my support for AB 275, which received a hearing today in the Assembly’s Urban and Local Affairs Committee. Today, I submitted written testimony to the committee.
Click here to read my testimony!
Representative Ed Brooks, Senator Dale Schultz, and BCPL Executive Secretay Tia Nelson all deserve to be commended for their work on this legislation.
Passing of Deputy Treasurer Peter Nelson
Deputy Treasurer Peter Nelson
It is with great sadness I report the passing of Peter Nelson. Peter was Deputy Treasurer under State Treasurer Charlie Smith. Peter served as Deputy until 1989 and was a committed public servant including spending time on the Stoughton City Council and Dane County Board of Supervisors. Peter is survived by his wife and three children. My thoughts and prayers go out to his wife and family.
Assembly Committee to discuss BCPL related bill, Treasurer to submit testimony.
Tomorrow morning, at 10 o’clock, I will be submitting written testimony in favor of AB 275 to the Assembly Committee on Urban and Local Affairs. The legislation, which was authored by Representative Ed Brooks (R-50) and Senator Dale Schultz (R-17), has bi-partisan support, including 13 co-sponsors in the Assembly – 7 Republicans and 6 Democrats.
AB 275 allows the Board of Commissioners of Public Lands to make revenue obligation loans to municipalities in certain circumstances, in addition to the general obligation loans that the BCPL already makes. This means that if a municipality is undertaking certain revenue generating projects, such as sewer improvements, that municipality could back the loan with projected sewer revenue, as opposed to tax dollars. This allows communities an added flexibility in dealing with funding options for improvements.
As a member of the BCPL, I am fully cognizant of how important it is that communities not default on the loans that come from the State Trust Fund Loan Program. Since the BCPL started loaning through that program in 1871, there has not been a single default. I support AB 275 because while it increases BCPL’s lending opportunities, it maintains safeguards that have protected us from defaults for 140 years.
By allowing the BCPL more safe loan opportunities, this bill has the potential to increase the Board’s contribution to the Common School Trust Fund. If we lend more money, we can achieve higher interest returns, and those interest returns end up going to public school libraries through the Common School Trust Fund.
AB 275 is good for BCPL, it’s good for public school libraries, and it’s good for community development.
Tomorrow, I will post the testimony that I submit to the committee.
Silver Bars in eBay Auction Driving Price High!
Despite last week’s downturn in the price of silver, a 100Troy Oz. brick of silver in this month’s eBay Auction has plenty of people excited about owning it.
The brick was found in a safe deposit box turned over to the state in 2006. It had been abandoned by it’s owners in 2001 and the bank, following the unclaimed property statute, turned it over to us 5 years later. We held onto it for another 5 years and it’s for sale now.
When the auction ends on Saturday October 1st, the money made in that lot will go right back into the unclaimed property account here in the state and sit there waiting to be claimed by the original owner of the silver! The State of Wisconsin CANNOT do anything with that money or ANY of the $390 million we are holding.
Would you like to bid on that silver bar? How about some nice jewelry pieces or Silver Coins? Click here to be taken to our eBay page.
Have you searched for your name among the $390 million we are holding? Click here to do that!
The Economy & You #9: Comparison of National GDPs
TheUnited Stateseconomy (or GDP) was estimated to be $14.6 trillion in 2010 making it the largest national economy in the world. Still, how does theU.S.gross domestic product compare to other nations? One way people compare GDP between countries is with GDP per capita. This divides the country’s economic output by the number of people. It provides a general idea of how wealthy a nation may be.
According to estimates (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP), theU.S. economy is larger thanChina (#2) andJapan (#3) combined. The list ranks the countries by their GDP which is the market value of all final goods and services produced within a nation in a given year. The GDP dollar estimates are calculated using market or government exchange rates.
According to some sources, the European Union economy is larger than that of the United States. Because these are estimates, this may or may not be true. Still it is important to note that the Eurozone is comprised of 10 nations (http://en.wikipedia.org/wiki/Eurozone).
Comparisons of national wealth are also frequently made on the basis of purchasing power parity (PPP), to adjust for differences in the cost of living in different countries. PPP largely removes the exchange rate problem, but has its own drawbacks; it does not reflect the value of economic output in international trade, and it also requires more estimation than GDP per capita.
The rankings do not take into account differences in the cost of living in different countries, and the results can vary greatly from one year to another based on fluctuations in the exchange rates of the country’s currency. Such fluctuations may change a country’s ranking from one year to the next, even though they often make little or no difference to the standard of living of its population. Therefore these figures should be used with caution.
Nevertheless, if you are still wondering just how big our economy is, take a look at this map that renames our 50 states with countries that have a similar GDP. http://www.economist.com/blogs/dailychart/2011/01/us_equivalents From this one can see that our economy is the strongest and largest economy in the world, even with the recent downturn.
Monthly eBay Auction Kicks-Off Saturday, September 24th
The eBay Auction starts at Noon Saturday. We have the usual coins and jewelry, but one lot has a 100 Troy oz Bar and other lots contain old currency and valuable coins.
Click here to head to our website for more info and click here to head to our eBay Page!
I also wanted to share these photos with you – they are at the appraiser’s shop in Monona – Capitol City Coins and Jewelry. Jerry and Marc look through all items and let us know what they would purchase the items for if we sold them there – that’s how we appraise everything! In one of the pictures, you can see Jerry and OST Staffer Jeff Schultz guarding the items!
-
- Checking over the foreign coin lots
-
- Jeff Schultz keeping guard
Related articles
- July eBay Auction About to Begin! (wistatetreasury.wordpress.com)
National Public Lands Day is Tomorrow!
As 1 of 3 members of the Board of Commissioners of Public Lands, I am pleased to join Governor Walker, as well as the Governors of 26 other states, in acknowledging that tomorrow, September 24th, is National Public Lands Day.
(View Governor Walker’s proclamation here).
Our state has many fine wildlife refuges and state parks, and Wisconsinites should take the opportunity to enjoy our beautiful state in these settings. Additionally, I encourage everyone to take advantage of public lands that are a little more off the beaten path.
The Board of Commissioners of Public Lands administers a little less than 78,000 acres in the state of Wisconsin. This land is what remains of the Trust Lands, the majority of which were sold more than 100 years ago. This map shows how many acres of public land still exist in each of the state’s counties – most of the land is situated in the northern and western parts of the state.
Wisconsinites can hunt, fish, trap, and engage in other recreational activities on these properties. If you’d like to utilize public land in your area, please contact BCPL’s Forest Supervisor. He can help you identify the easiest access points to the land that you want to use.
Whether you decided to visit BCPL administered lands, a state park, or a wildlife refuge, I encourage everyone to enjoy the natural beauty of Wisconsin.
The Economy and You #8: What Makes Up the U.S. GDP?
In my last article, I wrote about how gross domestic product (GDP) is used to measure the health of our nation’s economy and how this number can be calculated in two different ways – the income method and expenditure method.
Using the expenditure method, GDP is calculated by totaling the entire amount spent on goods and services created in our country’s economy. To do this, we need to identify the main types of expenditures in an economy.
First we must recognize that there are four main groups in the economy: households, firms, the government, and the rest of the world. These groups create all of the goods and services transactions that take place in the economy. Now that we have identified the participants in the economy we can distinguish the four main categories of expenditures that are used to calculate a nation’s economic output. Those categories are personal consumption, investment, government purchases, and net exports.
Personal consumption, often identified as the letter C, is the amount of household spending on consumer goods. Investment identified as “I” is spending by firms and households on new capital like plants, equipment, inventories, and residential housing. Government purchases (or G) is all government spending (federal, state and local) on goods and services. This includes salaries, school building, and nuclear submarines as just a few examples. Government purchases do not include transfer payments like social security and veterans’ benefits because no goods or services are purchased. Finally, net exports signified by NX is the net spending by the rest of the world for our exports minus our purchase of imports. The expenditure approach to calculating GDP adds together these four components of spending to attain the nation’s GDP.
More than 70% of our GDP can be classified as personal consumption. This means that over 70% of what theU.S.produces is spent on consumer goods. In dollar terms, this amounts to more than $10 trillion of the U.S $14.6 trillion GDP in 2010. Nearly half (47%) of GDP that is classified as consumption is for services, not products. These include everything from legal and financial services to health care.
Goods or products are nearly a quarter of the economy. These are further divided into two sub-categories. Non-durable goods are 16% of GDP. The three largest components of non-durable goods are food, clothing and fuel. Durable Goods, such as automobiles and furniture, is the smallest category, at only 7% of GDP.
Business investment, such as software, business equipment, and manufacturing, comprise 16% of economic output. It includes construction of housing and commercial real estate, but doesn’t count the resale of real estate.
Government spending is 20% of total GDP, up from 17% in 2000. State and local government produce 12% of GDP. The Federal Government produces 8% of GDP, and two-thirds of this is related to defense.
Net exports have an opposite effect on GDP. Exports add to the GDP, while imports subtract from GDP. U.S. imports are greater than exports, and so the net effect of trade is negative and reduces the size of GDP.
In 2010, the United States GDP was approximately $14.6 trillion. The U.S. is the largest national economy in the world. Still, how does the U.S. compare to different countries in terms of GDP. Stay tuned to my next article see a comparison of economic output among countries throughout the world.
Getting Everyone On Board the Compliance Train
This is an Unclaimed Property FAQ written by Unclaimed Property Unit Manager Mary Celentani
One of the Treasurer’s responsibilities is to ensure that all Wisconsin businesses are in compliance with the unclaimed property law and reporting requirements. Unfortunately, many corporate entities and sole proprietors are not aware of the reporting requirements and may rely on their professional consultants, such as attorneys or certified public accountants, to ensure compliance in government-related reporting matters.
With all the recent national coverage of unclaimed property outreach efforts and activities, Treasury staff members have been contacted by corporate compliance officers, CPAs, accounting firms and law offices asking for assistance in helping their clients get into compliance with unclaimed property laws.
The Treasury is taking a few steps to help explain the unclaimed property law and reporting requirements. The Treasury already has a “2011 Holder Reporting Guide” and the Unclaimed Property Statues available on our website. Postcards were sent to over 13,000 medium to small Wisconsin businesses in late spring to increase awareness at the corporate level. In addition, Treasury staff members have been focusing on identifying businesses that are the owners of unclaimed property, and sending claims and postcards to demonstrate the mutual benefits of all Wisconsin businesses complying with the law.
Shannon Churchill, the Treasury’s Holder Reporting Coordinator will be featured in a website video explaining the importance of compliance, how to use the reporting software options, and the annual reporting deadline. Step-by-step video instructions for use of the web-based UPExchange software will also be available on our website next month.
Also being planned for later this year are live webinars featuring Treasury staff, unclaimed property experts and reporting software representatives to answer questions from the business community. Invitations will be sent to CPAs and law firms with a high volume of corporate clients. If you would like to participate in the webinars, please contact Shannon at (608) 264-6997 or Shannon.Churchill@wi.gov.
Treasury Notes September 2011
Click here to read this month’s Treasury Notes – a look at what’s happening in the State Treasurer’s Office as well as useful information about Unclaimed Property, Edvest (Wisconsin’s College Savings Plan), and news about the economy in general.
We welcome feedback on Treasury Notes – contact information is on the last page of the newsletter!
Image via Wikipedia
Good Morning America Story with WI State Treasurer on YouTube!
In case you missed it, here’s the story from GMA on how I surprised the Wisconsin Humane Society with nearly $60,000
While on our YouTube Channel, check out all the other videos we have!
Nearly $60,000 for the Wisconsin Humane Society!
I had the pleasure of surprising the Wisconsin Humane Society earlier this week with a BIG check!
A $59,358.85 check!
This will be put to good use at the WI Humane Society
The money was left in a trust by a Milwaukee area resident. Somehow, after the woman passed, the trust fund check got lost and the money came into the Unclaimed Property Unit.
Earlier this summer, my Unclaimed Property Analysts were pouring over large amount properties in our system and came across this money that belonged to the Humane Society. At the same time, we were contacted by Good Morning America searching for a story just like this!
Let me tell you, it’s hard to keep a secret like this one…especially when it involves giving back such a large amount of money to such a deserving organization! And…this wasn’t the only one! But, I also can’t share that secret just yet…stay tuned!
This should be a reminder to you and to organizations, non-profits and even small business and large businesses: check our database at least once a year for your name, your company’s name, your favorite store’s name! We could be holding a large amount of money that we are trying to give back but might be having trouble finding the rightful owners.
It’s easy – www.statetreasury.wisconsin.gov – click on the magnifying glass right there on the home page!
Related articles
- Treasurer Unearths Bone for Humane Society (wistatetreasury.wordpress.com)
Treasurer Unearths Bone for Humane Society
Earlier this week, I was able to surprise members of the Wisconsin Humane Society in Milwaukee with a check for $59,358.85. I always enjoy returning money to Wisconsin families and businesses, especially when the money is owed to a great organization like the Wisconsin Humane Society.
A cameraperson from Good Morning America was on hand to witness the surprise presentation, and the video will air tomorrow morning during the program’s “Show Me the Money” segment, which is in the 2nd hour – between 8:00 and 9:00 A.M. .
So tune in tomorrow morning, but before you do, make sure you check my website to see if you have any missing money at my office. You might be surprised by what you find!
http://www.statetreasury.wisconsin.gov/
Education in Wisconsin
The temperature is cooling, the leaves are turning, and and a new school year has begun. What better time than now to focus on the future of education in Wisconsin.
Tomorrow, Deputy State Treasurer Scott Feldt will represent my office at the annual State of Education Address, which is given by DPI Superintendent Tony Evers. The Superintendent will discuss the future of education in Wisconsin, highlighting our schools’ successes and challenges, as well as suggesting new initiatives and policy proposals.
A highlight of the annual address is the Teacher of the Year Recognition. This year, 4 Wisconsin teachers are being commended. These 4 were selected from among 86 Kohl Teacher fellows, who themselves were named this past spring. This year’s winners are Marsha Herman , Donna Sturdevant, Bradley Markhardt, and Kimberly Brown. Congratulations to these great teachers!
Also being honored are 5 organizations and 6 individuals, who will be receiving Friend of Education awards. The recipients are the Children’s Health Education Center, the Honorable Pedro Colon, Danae Davis, Junior Achievment of Wisconsin, the Marshfield Area Coalition for Youth, Tom and Sharon Metz, John and Tashia Morgridge, the Northwest Chapter of the Great Lakes Timber Professionals Association, and Project 16:49. Read this DPI press release to find out more about these award winning individuals and organizations.
To view the 2010 address:
Part 1: http://www.youtube.com/watch?v=DzVG2WbyuCI
Part 2: http://www.youtube.com/watch?v=mIkv7ep45Ss&feature=list_related&playnext=1&list=SP890FFF86E24AEAF4
To view the 2009 address:
http://www.schooltube.com/video/89a803226c36470a85dc/Everss-State-of-Education-Address
The Economy and You #7: What is GDP?
As I had written about in earlier articles, there are three main indicators used to measure the health of our economy: unemployment, inflation, and output growth or gross domestic product (GDP). Gross Domestic Product (GDP) is the broadest measure of economic activity and is often considered the best measure of the health of the economy. It represents the total dollar value of all goods and services produced in the country over a specific time period – you can think of it as the size of the economy.
GDP can be calculated in two different ways. While GDP can be calculated as the total amount of income of everyone in the economy (the income method), most view GDP as the total amount spent on the goods and services created by the economy (the expenditure method). GDP is computed every quarter by the Bureau of Economic Analysis which is a part of the U.S. Department of Commerce. Presented only quarterly, GDP is most often presented on an annualized percent basis. Annualized quarterly percent changes in GDP reflect the growth rate of total economic output which can fluctuate greatly from quarter to quarter. Usually, GDP is expressed as a comparison to the previous quarter or year. As an example, if the year-to-year GDP is up 5%, this is thought to mean that the economy has grown by 5% over the last year.
In calculating the GDP, data is taken from various sources and summarized into a single number that can represent the total dollar value of economic activity within those three months that are being measured. Most of the individual data sets being used in the calculation will be given in real terms, meaning that the data is adjusted for price changes, or inflation.
Many use GDP as a measurement of a country’s standard of living on the rationale that all citizens benefit from their country’s increased economic production. Still, GDP is intended to be a measure of a nation’s total economic activity which is a separate concept. I will write about the U.S. GDP and how it compares with other nations in a future article.
56 days, 5 Fairs, $500,0000!
Over the last 8 weeks, I’ve had the pleasure of taking the Unclaimed Property program on the road to 5 great Wisconsin fairs. I’ve had the opportunity to see Wisconsin in the summertime, take part in some great local traditions, and best of all, return approximately half a million dollars to Wisconsinites.
Whether we were in Chippewa Falls, Seymour, Milwaukee, De Pere, or Marshfield, my staff and I were always welcomed by Wisconsinites eager to see if they could find their name among the 1 million + records in our database.
If I didn’t get a chance to see you at the fair, don’t worry; my staff and I are already working on getting more UCP events on the calendar in late September/October!
In the meantime, make sure to check out the unclaimed property database at our website: https://statetreasury.wisconsin.gov/UCPWeb/ucpsearch.aspx
Staying connected
Below is a link to Robert Mentzner’s recent opinion piece from the Wausau Daily Herald concerning my social media presence:
Social media has been a great tool for stimulating conversation with Wisconsinites, and I appreciate the free flow of ideas and information that these mediums have facilitated.
If you don’t already, consider looking me up on twitter or facebook. Join the conversation!
http://twitter.com/#!/WITreasSchuller – twitter
http://www.facebook.com/#!/pages/Wisconsin-State-Treasurer-Kurt-Schuller/140188159376340 – facebook
Fast Track Threshold Raised to $1,000 and Remember to Search for Savings Bonds!
The Fast Tracking option for certain claims where the Social Security number matches what we have on file has a new threshold – $1,000. If your claim is $1,000 or below, you can safely enter your social security number online at our website during the claims process and if it matches, you will get your money in 10 days! The old threshold was $750.
Also, remember to search for missing savings bonds we might be holding in our vault!
Visit http://www.statetreasury.wisconsin.gov now and start your search!
Common Sense Needed at Fond du Lac School
After hearing about what was happening at a Fond du Lac elementary school and reading this article in the Fond du Lac Reporter, I offer an alternative to administrators from the school.
Here’s the statement I released to the media today:
“As a resident of Fond du Lac County, I am calling on the administrators at Waters Elementary to end their misguided attempts to curb bad behavior in a few children. Making all children walk in a circle around the playground for 10 minutes prior to school and during recess sends the wrong message to the children, their parents and the community. All children should not be punished for the acts of a few. As State Treasurer, I help provide funding to all public school libraries in the state through the Common School Fund. If discipline is the issue, I offer an alternative – force the misbehavers to walk to the library and have them read a book for ten minutes.”
Wisconsin State Treasury 
You must be logged in to post a comment.