inflation for common items

[zdreg]

"For those who had to purchase their food, one record notes the following retail prices in 1818 in Washington, D.C.: beef cost 6 to 8 cents a pound, potatoes cost 56 cents a bushel, milk was 32 cents a gallon, tea 75 cents to $2.25 a pound. Shoes ran $2.50 a pair. Clothing expenses for a family of six cost $148 a year, though the record does not indicate the quality of the clothes."

the Fed and Central Banks are the largest creators of inflation ever invented.

 

[ironchef]

Clothing expenses for a family of six cost $148 a year, though the record does not indicate the quality of the clothes."

It cost you less today than in 1818 if you are willing to shop at 99 Cents stores or Walmart.

 

[lawrence-lugar]

It cost you less today than in 1818 if you are willing to shop at 99 Cents stores or Walmart

99 Cent stores are complete crap -- But Walmart definitely provides good value for the money,

I love their Great Value in house brand for food products -- I feel like I'm buying at 90's prices,

Walmart is kind of basically a physical Amazon store,
I buy my name brand pants and shoes at eBay -- Walmart clothes quality/selection is crap, but completely fine for everything else,

 

[ironchef]

Adjusted for inflation, per capita income today is still higher than back in 1818.

I also think someone living below the poverty line lives a better life today in some aspects than the very wealthy back in 1818: Better nutrition, better sanitary, better healthcare...

Given the choice, I would rather be the working poor of today than the top 1% of 1818.

 

[Martinghoul]

"For those who had to purchase their food, one record notes the following retail prices in 1818 in Washington, D.C.: beef cost 6 to 8 cents a pound, potatoes cost 56 cents a bushel, milk was 32 cents a gallon, tea 75 cents to $2.25 a pound. Shoes ran $2.50 a pair. Clothing expenses for a family of six cost $148 a year, though the record does not indicate the quality of the clothes."

the Fed and Central Banks are the largest creators of inflation ever invented.

Not this silliness again, surely...

 

[zdreg]

Not this silliness again, surely...

your reply doesn't reflect any insight.

 

[piezoe]

But my "like" does.

 

[JackRab]

Inflation is a necessity IMO.

Look at the opposite... deflation... if there's constant deflation, why would you buy goods now, except for the necessary goods like food etc? You want a new pc/laptop... but you could still do with this one... and you know that waiting 1 more year will mean it's cheaper.

That's why deflation is usually worse than inflation. And the worse is deflation in a stagnating economy.... staglation.

Not saying that you want rampant inflation, but 2-4% is quite normal and seen as good for the economy. Usually your wage growth covers that as well, so purchasing power stays equal...

If you want to look at inflation in a proper way, you have to look at purchasing power. Someone in 1818 wasn't making a lot, maybe 5 dollars a month? But that might have been fine for a middle income at the time...

Someone with 10k in his account was probably seen as a gazillionaire..

 

[Martinghoul]

your reply doesn't reflect any insight.

That's ok...

TBH, over the years here, I think I've had this very discussion, I dunno, but it feels like, 1000 times. So it's kinda hard to muster the enthusiasm necessary to provide insight. Sorry about that.

 

[Lee-]

Inflation is a necessity IMO.

Look at the opposite... deflation... if there's constant deflation, why would you buy goods now, except for the necessary goods like food etc? You want a new pc/laptop... but you could still do with this one... and you know that waiting 1 more year will mean it's cheaper.

In simple terms, deflation is when your dollar will get you more later than it does now -- that the value of the dollar effectively goes up with respect to the good or service you're purchasing.

Computing technology (desktops, servers, laptops, tablets, phones) gets cheaper for the same computing resources over time. So $1000 spent today gets you less than $1000 spent 5 years from now. Technology is a market in which what you get per dollar is effectively deflationary, so by your logic, why would anyone ever purchase technology?

I'm not going to wait 5 years to buy a new cell phone even though the one I have is fine. Why? Because I want a better one and even if I wait 5 years, I could wait another 5 and get something better? When does it stop? It doesn't, so no matter when you buy, you could have waited and get more for your money, but plenty of people still buy new cell phones regularly.

Part of the answer is that those goods or services provide a ROI, so the sooner you purchase, the sooner you get benefit. For items that don't provide a ROI, there's the desire for instant gratification.

This line of reasoning that with deflation, no one would purchase is silly. If food is cheaper 5 years from now, I'm still going to buy it today. If shoes are cheaper 5 years from now. If a vacation is cheaper 5 years from now, etc, etc.

This desire (or in some cases, necessity) to have things now despite them being cheaper in the future does not eliminate people's desire to pay more for them now. It's the same reason people pay more for faster shipping or that people buy things on credit (ignoring those cash strapped buying true necessities). Deflation does not spell the end of the economy, despite what pro-inflationary people would have you believe.