I hear you, and that's a fair point. I just can't reconcile how trillions of dollars came into the economy and over the past few years there were mostly massive layoffs, poor-to-mediocre hiring, stagnant wages, and massive inflation. Where is all that money?
I really think this is a huge elephant in the room that seems to be ignored.
To get consistent inflation you need to consistently create money. The inflation rate fell all the way down to 3% at the end of 2024. All that created money had already been sucked up by prior inflation and current higher prices.
The velocity of money is informative here, basically a dollar can only be part of so many transactions over a year. If rent is 1000$ and you get paid 4 days before rent is due you need to set aside 1000$. Bump that by 30% and now you need to set aside 1300$ and for those 4 days + however long it takes for the transaction to finish that extra 300$ isn’t part of the economy. Bank lending is a multiplier, but that runs into similar issues.
Past inflation, wealth inequality, and/or economic collapse depending on what you’re talking about?
It doesn’t really make sense to say that “nobody has it left” overall because money gets transferred in a transaction. So most people “not having money” could mean it’s someone else’s not gone.
However, money is only a signifier. It you mean the overall economy is declining long term, which is hasn’t been, that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant but the their income declines alongside their spending.
As to what you’re experiencing, in 2024 people where still a shock even if prices weren’t increasing people seem to expect them to fall. Falling prices would be deflation which is a negative outside commodities.
Prices going up when the money in peoples' pockets is not.
>money is only a signifier.
I agree, signifies how rich or poor you are, as an individual or a nation.
Not the numeric amount, but what it will buy instead.
>that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant
That would be true sooner or later even for those who rapidly decline to zero, think about those to which it would not have happened otherwise. Not to mention so many citizens not having a viable bank account to begin with these days.
By that definition those unfortunates would be suffering much worse than an "economic collapse", and there is great likelihood they would be overlooked until it is too late because everyone else has it so much worse-than-before themselves. Trump is not even as honest as Nixon, there's going to be a lot more businesses and families ruined before this is over. In times of triage for survival, only so many can be saved, and it can be kind of a crap shoot.
>Falling prices would be deflation
Got it. So rising prices are inflation.
IOW whatever it is beyond your control that makes it more difficult or impossible to afford what you once could. Or what was once almost within reach but can no longer be sure it's even on the horizon any more.
Got it. Not really the amount of money in "circulation", but what people are actually able to buy with it. Especially compared to what it was "before inflation".
People generally always figured this anyway, lots of them are not easy to fool.
> whatever it is beyond your control that makes it more difficult or impossible o afford what you once could.
For the US you are really describing income inequality. Most individuals got fucked over a few are doing wildly better than ever. On net the overall economic output has been going up overall and per person since the country was founded, it’s simply not ending up in regular people’s hands.
Don’t forget the inherent march of technology where indoor plumbing > radio > TV > AC > cable > internet > cellphones > smartphones have all slowly been assumed to be something most people can afford. Similarly the standards for education, healthcare, homes, etc are rising faster than inflation because the standards keep rising. People aren’t buying modest 1bathroom 2 bedroom homes like they used to so yes those mini mansions cost more.
> deflation
Inflation becomes the new nominal.
If everyone has 2x as much money and things cost 2x as much forever that’s not deflation that’s just the new normal. For prices to fall you’d either need more economic output or less money in the economy.
Of course the extra money wasn’t evenly distributed, but again that’s income inequality…
I really think this is a huge elephant in the room that seems to be ignored.