ripvanwinkle
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All that is necessary for evil to succeed is that good men do nothing - Edmund Burke 1729 -1797
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Post by ripvanwinkle on Dec 29, 2022 1:13:41 GMT -5
30+ yrs ago in a previous life I was a college student and one of my classes was economics. I hardly remember any of it so I need a refresher course. My 11yr old granddaughter for some reason asked me about inflation. I vaguely remember the professor explaining inflation. About the only thing I remember is him saying the Feds monetary policy of keeping rates low and the CPI index.
All I could say was inflation happens when the supply of money goes up, the value of money goes down, and prices go up. I blame Biden and his crazy spending policies. I know that's too simple but you have to blame somebody.
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Opti
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Post by Opti on Dec 29, 2022 8:14:21 GMT -5
Too simplistic. Inflation often happens based on demand for goods that cannot be easily met. Think of all the real estate bubbles in recent years and car prices based on the lack of chips. I blame corporate greed and individual greed more than Biden, as Biden did not create supply issues, Covid and other things did that.
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billisonboard
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Post by billisonboard on Dec 29, 2022 9:18:25 GMT -5
I think this thread should be on the Healthy Living board. That is where it is appropriate to discuss the need to "blame somebody" when we are impacted by things out of our control.
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Post by minnesotapaintlady on Dec 29, 2022 9:58:39 GMT -5
Headed off to check out the Healthy Living board...
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Bonny
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Post by Bonny on Dec 29, 2022 11:08:49 GMT -5
30+ yrs ago in a previous life I was a college student and one of my classes was economics. I hardly remember any of it so I need a refresher course. My 11yr old granddaughter for some reason asked me about inflation. I vaguely remember the professor explaining inflation. About the only thing I remember is him saying the Feds monetary policy of keeping rates low and the CPI index.
All I could say was inflation happens when the supply of money goes up, the value of money goes down, and prices go up. I blame Biden and his crazy spending policies. I know that's too simple but you have to blame somebody.
Meh, these things are generally a cluster F as usual with consumers being part of the problem too. We panic, we hoard, we buy stuff we really don't need et cetera because we're afraid of missing out. If there's silver lining here it's having us step back and examine our behavior which is probably a good thing. I do feel sorry for those who were already living on the edge before the pandemic and struggling with childcare.
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Tennesseer
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Post by Tennesseer on Dec 29, 2022 11:27:04 GMT -5
30+ yrs ago in a previous life I was a college student and one of my classes was economics. I hardly remember any of it so I need a refresher course. My 11yr old granddaughter for some reason asked me about inflation. I vaguely remember the professor explaining inflation. About the only thing I remember is him saying the Feds monetary policy of keeping rates low and the CPI index.
All I could say was inflation happens when the supply of money goes up, the value of money goes down, and prices go up. I blame Biden and his crazy spending policies. I know that's too simple but you have to blame somebody.
Here's a start for you, son. One question for you though: growing up, did your parents do your homework for you too? What is inflation?Inflation is when prices go up. Usually, when we talk about inflation we’re talking about general inflation—when the prices for just about everything go up at the same time. The prices of things can also go down; that’s called deflation. Inflation is calculated by adding up the prices of thousands of different things and comparing them to the prices for the same goods a month ago. This means there is a list somewhere of the specific things that count towards inflation in your country, and each month someone has to go out and check the prices of all these things. Rest of article is here: What is inflation?
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MN-Investor
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Post by MN-Investor on Dec 29, 2022 12:57:23 GMT -5
The current inflation issue is a worldwide problem, certainly worse in other countries than here in the U.S. So no, this is not a Biden created problem.
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busymom
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Post by busymom on Dec 29, 2022 15:20:27 GMT -5
Oh dear, now you're making me remember my old college classes. (That's just mean, you know...) (I'm trying to think of the easiest way to explain it for anyone who never took economics classes, so bear with me.) There are a LOT of issues that play into inflation. The most basic, and the beginning of all economics is SUPPLY and DEMAND. If anything disrupts those two things, it's going to mess with pricing. If there is not enough supply of a specific item, the price will go up. If the demand for a specific item goes up, (for example people who were hoarding toilet paper) the price goes up. Money supply also plays a role in this. And, with the pandemic, which caused disruptions in the supply chain, as well as the current guy in charge of the post office, who is cutting services, you can't get goods moved as quickly as in the past, so prices go up. (If anyone else here can explain inflation in simpler terms, go at it.)
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susana1954
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Post by susana1954 on Dec 29, 2022 18:43:03 GMT -5
Simpler terms: when what you bought today will cost more tomorrow. And the money to pay for it will be worth less as well.
I lived through it in the 1980s. Try a 13.9% car loan!
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tallguy
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Post by tallguy on Dec 29, 2022 20:19:37 GMT -5
Simplistic solutions for simpletons? As others have noted, Biden has virtually nothing to do with this. The OP also messed up a bit by using the phrase "Dollar value" in his title. I am guessing he is using a general thought of how much a dollar will buy, rather than the economic concept of a strong or weak dollar. The fact is the U.S. dollar is strong right now. It is up significantly against many other currencies around the world, indicating that the U.S. is doing better economically than those other countries. The strong dollar is also helping keep domestic inflation lower than it would otherwise be. More likely the OP should be thanking Biden that inflation is not worse here as in some other countries.
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TheOtherMe
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Post by TheOtherMe on Dec 29, 2022 21:44:41 GMT -5
DN1 lives in Toronto. The Canadian $ vs the US $ has made visiting the US expensive.
Inflation there is much higher than in the US.
I took Econ in high school and 4 courses in college, but I'm old.
A lot of it is supply and demand and the Fed tries to help by increasing interest rates.
I remember buying a house at over 12% interest. That got fixed when the rates when down.
I remember when the IRS was charging 18% interest.
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Tiny
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Post by Tiny on Dec 29, 2022 21:59:37 GMT -5
About the only thing I remember is him saying the Feds monetary policy of keeping rates low... Keeping the interest rates low - can raise inflation. Low lending rates pumps money into the economy. I vaguely remember trump wanting negative interest rates, because the rates were getting to zero and the fear was the economy would slow down and cause a recession - more money in the economy would keep our consumer economy going. Lower taxes can also pump money into the economy. Low unemployment rates can also lead to inflation - workers can demand more compensation which may lead to an increase in the cost of whatever it is they are producing which mean costs to consumers goes up. The crazy housing market seems to be a good example of inflation: The low lending rates plus an increase in demand plus people having more "cash" to spend on housing led to the crazy run up in housing prices - people were able to easily pay MORE than the sellers asking price AND they did so - which encouraged new sellers to ask an even HIGHER selling price (which was quickly and easily met by buyers). rinse and repeat until housing prices reached levels that typical people could no longer afford. FWIW: The Fed is trying to 'tame' inflation by decreasing the amount of money available by raising rates. I'm sure the Fed would also like to see unemployment go up as well (as that would cool the demands for goods and services).
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Tiny
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Post by Tiny on Dec 29, 2022 22:12:58 GMT -5
All I could say was inflation happens when the supply of money goes up, the value of money goes down, and prices go up. I feel like somethings not right there... As the supply of money goes up - prices often go up. That's where the "value" of money goes down - it's not in the middle there. Instead of paying $1 for a candy bar - the price goes up to $1.50 - hopefully the buyer is earning more (has more income) - so paying the extra .50 isn't a deal breaker. But basically the value of money went down - because a $1.00 buys less. That's how we went from paying .02 for a loaf of bread back in the Good Old Days - to paying $1.99 for the same loaf of bread today. Of course back in the Good O' Days the median household income in America wasn't 70K per year.
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tallguy
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Post by tallguy on Dec 29, 2022 22:27:10 GMT -5
All I could say was inflation happens when the supply of money goes up, the value of money goes down, and prices go up. I feel like somethings not right there... As the supply of money goes up - prices often go up. That's where the "value" of money goes down - it's not in the middle there. Instead of paying $1 for a candy bar - the price goes up to $1.50 - hopefully the buyer is earning more (has more income) - so paying the extra .50 isn't a deal breaker. But basically the value of money went down - because a $1.00 buys less. That's how we went from paying .02 for a loaf of bread back in the Good Old Days - to paying $1.99 for the same loaf of bread today. Of course back in the Good O' Days the median household income in America wasn't 70K per year. Or conversely, companies will try to maintain the price point as long as possible, but will shrink the packaging size instead. That candy bar may have stayed $1.00 but shrunk from 2.8 oz. to 2.5 oz. to 2.3 to 2.1 oz. to 1.9 oz. over time. Same result, in that the price effectively goes up, but it is psychologically easier for consumers to handle. Or they are more easily fooled.
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resolution
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Post by resolution on Dec 30, 2022 11:27:35 GMT -5
I believe that the increasing consolidation of markets also influences inflation. As companies buy up other companies and dominate the markets, there is less competition to drive down prices.
For example only three companies produce insulin in the United States, so it is easy for them to raise prices. Four companies control 60% of the chicken market. In most areas, there is a single cable internet provider and one DSL provider. In my area, there are just two large medical services companies, if you want to go to the doctor, its either going to be a Meritus doctor or a Wellspan doctor.
We have allowed a handful of companies to completely dominate their markets, and in some cases (like internet) the government has signed contracts that prevent any competition from moving into the area.
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Tiny
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Post by Tiny on Dec 30, 2022 13:33:36 GMT -5
I feel like somethings not right there... As the supply of money goes up - prices often go up. That's where the "value" of money goes down - it's not in the middle there. Instead of paying $1 for a candy bar - the price goes up to $1.50 - hopefully the buyer is earning more (has more income) - so paying the extra .50 isn't a deal breaker. But basically the value of money went down - because a $1.00 buys less. That's how we went from paying .02 for a loaf of bread back in the Good Old Days - to paying $1.99 for the same loaf of bread today. Of course back in the Good O' Days the median household income in America wasn't 70K per year. Or conversely, companies will try to maintain the price point as long as possible, but will shrink the packaging size instead. That candy bar may have stayed $1.00 but shrunk from 2.8 oz. to 2.5 oz. to 2.3 to 2.1 oz. to 1.9 oz. over time. Same result, in that the price effectively goes up, but it is psychologically easier for consumers to handle. Or they are more easily fooled. I think it really comes down to the speed at which the changes take place. If it takes 24 months for the candy bar to go from 2.8oz to 1.9oz - it might be a little harder for a consumer to really register the AMOUNT of the shrinkflation - they may have noticed the small changes in size - but the change was gradual enough to make each new downsizing not see so bad. Especially if they are buying candy bars regularly - and not just once or twice a year. Same goes with prices... a slow creep up in prices say .05 every two or three months on the price of your favorite donut will register as "ok, the price went up" followed by a shrug and handing over money (or CC). If the price jumped up .30 (.20) and then held steady for a few months - the consumer might yelp in dismay and might consider not making the purchase or cutting back. yeah, the cost of daily breakfast going up .30 a weekday over the course of a year isn't that big a deal. But it's easy to see how a bunch of little increases in a lot of products/services we buy -- over time can add up to a lot.
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