Many people take inflation as an immutable law of nature, but that has not always been so. Food for example, for a long time, became cheaper. Computers and technology as well. Think how nuts it would be if you could get a better house for less money every few years.
food became cheaper because it became cheaper to produce. Inflation is a very natural consequence of the fact that If I have money now, I can also very easily have that same money later, but the same cannot be said of having money later. Strategically, having money now dominates having money later, so money now is worth more than money later. How much? Who can say, but some.
> food became cheaper because it became cheaper to produce.
Which was caused by technological progress which is the key source of deflation (being able to buy more with the same amount of money). It is deflation is happening regularly:
> But Inflation is not inevitable. There are numerous countervailing forces that have been at work for much of the past 50 years. The three big Deflation drivers: 1) Technology, which creates massive economies of scale, especially in digital products (e.g., Software); 2) Robotics/Automation, which efficiently create more physical goods at lower prices; and 3) Globalization and Labor Arbitrage, which sends work to lower cost regions, making goods and services less expensive.
> Put into this context, Inflation is periodic, driven by specific events; Deflation is consistent, the background state of the modern economy. To fully understand this requires grasping how scarcity and abundance act as the drivers of the price of labor and goods. My suspicion is many economists who came of age during earlier eras of inflation fail to discern how the world has changed since.
This 1991 Radio Shack add illustrates the point quite well IMHO:
There are 15 electronic gimzo type items on this page, being sold from America’s Technology Store. 13 of the 15 you now always have in your pocket.
So here’s the list of what I’ve replaced with my iPhone.
* All weather personal stereo, [US]$11.88. I now use my iPhone with an Otter Box.
* AM/FM clock radio, $13.88. iPhone.
* In-Ear Stereo Phones, $7.88. Came with iPhone.
* Microthin calculator, $4.88. Swipe up on iPhone.
* Tandy 1000 TL/3, $1599. I actually owned a Tandy 1000, and I used it for games and word processing. I now do most of both of those things on my phone.
* VHS Camcorder, $799. iPhone.
* Mobile Cellular Telephone, $199. Obvs.
* Mobile CB, $49.95. Ad says “You’ll never drive ‘alone’ again!” iPhone.
* 20-Memory Speed-Dial phone, $29.95.
* Deluxe Portable CD Player, $159.95. 80 minutes of music, or 80 hours of music? iPhone.
* 10-Channel Desktop Scanner, $99.55. I still have a scanner, but I have a scanner app, too. iPhone.
* Easiest-to-Use Phone Answerer, $49.95. iPhone voicemail.
* Handheld Cassette Tape Recorder, $29.95. I use the Voice Memo app almost daily.
* BONUS REPLACEMENT: It’s not an item for sale, but at the bottom of the ad, you’re instructed to ‘check your phone book for the Radio Shack Store nearest you.’ Do you even know how to use a phone book?
You’d have spent [US]$3,054.82 in 1991 to buy all the stuff in this ad that you can now do with your phone.
This is an interesting point. I wonder if a source of inflation you are not taking into account is population growth. If inflation happens when you have the same money chasing fewer goods, it stands to me that given the same money, and the same amount of goods, but more people chasing those limited goods, that you'd have an inflationary effect.
That being said, the person should also be generating more goods if they are a productive member of society which should cancel out their new demand on the base of goods.
This makes me wonder, are we adding many more people who are not making as much stuff as they are consuming? Or potentially is the huge increase in size of organizations causing each individual to be much less productive? I've never heard anyone discuss this side of the equation.
This is a (possibly) intentional (not by you) abuse of language in order to to rip people off.
Inflation/deflation is decrease/increase in the value of money, separate from technological progress or supply and demand of real products.
It's impossible to measure this directly, so dishonest people pushed to simply measure price increases/decreased, ignoring technologocal progress, so that powerful interests good steal from the public good.
> Inflation/deflation is decrease/increase in the value of money, separate from technological progress or supply and demand of real products.
If $1 gets you X capabilities, but the same $1 gets you X-1 capabilities later, is that not inflation? The same $1 gets you less. Whereas getting X+1 for $1 is deflation: the $1 gets you more.
The capability is how many calories you can get (Food), how much space you have to live (Shelter), how far you can go (Transportation: $y gets you z litres).
In the Radio Shack example, $1600 got me some capabilities in 1991, and some other capabilities in 2024: am I getting more, or fewer, capabilities? Further, how many hours would I have had to work in 1991 (e.g., minimum wage) to make that $1600 versus the hours I have to work in 2024?
I'm not sure it's a meaningful question... for $1600 I can get an iPhone which is more capable than anything you could buy for any price in 1991. Is the argument that this means there's been deflation? To me its a category difference and you can't compare because prices aren't set entirely by capability conferred but also by cost of production and demand.
This is not the same effect. You'd still rather have money prior to the industrial revolution than the same amount of money after. The money itself is worth more earlier. The phenomenon I described is mathematical fact.
Inflation/deflation is not the same as a specific product flucuating in price.
Yes, there have been times in the past where inflation rate was much different (in either direction), but computers getting cheaper is not an example of that.
You’d think that housing would be the priority, all this other shit getting cheaper while basic necessities turn into investments.
I wonder if someone from 1950 or so would believe an average person from the future that told them almost all the work they do at a ridiculous productivity level would go to a house to live in.
Think of all the wasted opportunity of most people not being able to spend their work on other things besides basic necessities.
(I have a Canadian bias, up here we can see the world in a decade already)
> Food for example, for a long time, became cheaper
Which certainly wasn't great if you were a farmer with a mortgage back in the 1800s and 1900s (it was grender if you were a lender, rentier or a British aristocrat). Governments back then kept increasing money supply at slower (sometimes by a lot) rate than the GDP was growing. That didn't really work that well (basically the economy was stuck in a permanent boom and bust cycle with pretty severe depressions by modern standards).
