Inflation.

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When I was a youngster, my mom would give me a quarter, and I would go down to the general store and buy, a coke, a candy bar, and a bag of chips. This was a long time ago because i'm old. Now, those same items, cost about three dollars and fifty cents. Granted, the wages weren't what they are today, but the wages have not kept up with inflation it seems to me. Why do things cost so much these days? I'm thinking of my kids. What is it going to be like a decade or so from now? Will they have to pay ten dollars for a loaf of bread? Will their wages keep up with this accelerating inflation? I worry about that. I'm hoping maybe a barter system will come into play. Now, my kids are all educated and career oriented. But, I'm wondering if they will have the same opportunities to enjoy this "American Dream" as the previous generations. Or, will inflation stunt their chance to grow. Bothers me a little.

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@Elmud,

We are talking trillions of dollars here.

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@VideCorSpoon,

And those dollars have gone, in an astoundingly disproportionate way, to people who were already wealthy.

The wealthy can handle inflation that outpaces growth in income far longer than the middle class and with greater ease. As for the poor, the doomed, well, as Nixon says in Where the Buffalo Roam "F*ck the doomed."

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@Didymos Thomas,

Elmud wrote:

When I was a youngster, my mom would give me a quarter, and I would go down to the general store and buy, a coke, a candy bar, and a bag of chips. This was a long time ago because i'm old. Now, those same items, cost about three dollars and fifty cents. Granted, the wages weren't what they are today, but the wages have not kept up with inflation it seems to me. Why do things cost so much these days? I'm thinking of my kids. What is it going to be like a decade or so from now? Will they have to pay ten dollars for a loaf of bread? Will their wages keep up with this accelerating inflation? I worry about that. I'm hoping maybe a barter system will come into play. Now, my kids are all educated and career oriented. But, I'm wondering if they will have the same opportunities to enjoy this "American Dream" as the previous generations. Or, will inflation stunt their chance to grow. Bothers me a little.

What you are referring to is the difference between nominal wages, what you are paid in some unit of currency, and real wages, what you are paid in some unit of currency accounting for inflation against some standard. You are correct, while nominal rages have constantly gone up, they have gone up less than inflation and real wages have gone down.

Generally lower real wages is a sign of a misallocation of capital and labor likely a result of government intervention into pricing mechanisms (although there could be other factors).

When government intervenes in lending and monetary markets, there is a disconnect between production and consumption, and production, rather than being solely motivated by consumption, becomes also motivated by arbitrage and specific overproduction occurs.

Didymos Thomas wrote:

And those dollars have gone, in an astoundingly disproportionate way, to people who were already wealthy.

The wealthy can handle inflation that outpaces growth in income far longer than the middle class and with greater ease. As for the poor, the doomed, well, as Nixon says in Where the Buffalo Roam "F*ck the doomed."

That is the way the central bank works. Money is issued through large lenders and large investors. Helicopter money is simply not a possibility with money issued by such a large organization.

The wealthy not only "handle" inflation, they benefit from it. They are the first users of money, and use it before inflation catches devalues their dollars.

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@Mr Fight the Power,

Stand back a moment and look at the bigger picture,will we want like our grandparents or for me my parents or even me? I certainly hope not but i survived and so will our kids or great grandchildren..When you have had nought it dont bother you half as much as when its taken away.As i say to my grandchildren i can remember when simple items of life where not available let alone be able to buy them.Toothpaste, toilet paper,shampoo..you can take my car but not my toilet paper.If life is bit harder its good for mans soul..Remember there are kids out there that are dying for the sake of a glass of clean water..

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@VideCorSpoon,

VideCorSpoon wrote:

Check this out...

But inflation isn't only from excess printing of money. Part of it is a very real growth in GDP over this period, as well as growth in population and secondarily growth in GDP worldwide.

It's estimated that the total amount of wealth in the world doubled between 2000 and 2007, and this is largely attributable to economic growth in China and to a lesser degree India, Brazil, Mexico, etc. The productivity of larger populations has led to greater tax revenues, therefore greater treasury holdings, therefore greater investment. In other words, GDP growth has led to self-generating wealth via investing. Unfortunately it also happened through investing in (ultimately) worthless crap like securitized subprime mortgages.

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@Elmud,

The way I see it, here in the Uk cash is being injected into the economy to try to resolve the crisis here, i wonder that although the wealthy seem not to be affected if the (poorer) masses cant afford to consume products anymore, in the long run the wealthy at the top will be affected

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@Caroline,

I can not imagine how money is created or how it rises to the nearest greedy glutton.I can not imagine what happens to the money that shares loose when they drop in value or how money appears then disappears so quickly. A house drops in value but the money that bought it does not disappear nor does the house..where does the money come from when the governments borrow and who are these rich grey figures that can continue lend us their money with no guarantees..How is it the governments cant let the banks go bust ? what is the real secret they hold? The answers out there..

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@Aedes,

Aedes wrote:

But inflation isn't only from excess printing of money. Part of it is a very real growth in GDP over this period, as well as growth in population and secondarily growth in GDP worldwide.

But this is not a decline in purchasing power.

There is a big difference between price inflation that is generated by money supply increases and price inflation that is generated by wage and demand increases.

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@Elmud,

The old timers use to have a saying. "I'm goin to town to do some tradin." Use to sit out on the front porch of a summer evenin. Listening to ole Virgil talkin about how it use to be. They'd go to town to the farmers market and the like, and trade goods for goods. Produce for poultry, this for this and that for that. In other instances, they would trade services for services. Maybe ole Doc would come to the homestead to deliver a baby, and accept a couple of chickens, dozen eggs or so, maybe a bushel of corn. Carpenter may do some work on the place for a good horse. Or a cow. Didn't have any money to speak of back in the hills of the Ozarks back in the day. But, they had the ability to provide goods and services for each other. They adapted to their circumstances by honest trading. Of course, that was back when someones barn burned down, the whole community got together and had a barn raisin. Didn't worry much about the GNP or the gold standard. Their worth was based upon the services and goods they were able to provide to each other. Things that were tangible. Useful. Necessary. But, that is a part of Americana that is long gone. Good memories though.

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Inflation.

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