Interesting take on Inflation "Prices Never Go Up"

[mbailey1234]

Ran across this on the web tonight.

It drives me crazy everytime I hear a newscaster, financial analyst, or even an average consumer complain about how prices of food, gas, appliances, etc., are going up. Especially when they then launch into an ill-considered rage at the "fat-cat oil barrons" or the "greedy corporations" or the evil 1%". As a result, I'm going to say this one time only. Prices NEVER go up! The real prices on the everyday items your grandmother and father bought cost the same as they did back in the day. After all, how could prices increase? I mean, an orange in 1963 is an orange today, why would you pay more for it now then you did back then? So, if prices haven't gone up, then what has changed? The value of your money has GONE DOWN.

In 1964 President Johnson announced that starting in 1965 US coins (dimes, quarters, and halves) would no longer be minted from 90% silver, but would be switching to a nickel copper composition. The only exception was to be the 1965 - 1970 Kennedy half which would be lowered to 40% silver. FDR had previously taken gold money out of the hands of US citizens in 1933. Nixon terminated the last connection the US Dollar had to Gold (and sound money) when he terminated the Bretton Woods arrangement in 1971. Now the US was free to print money to its hearts content without the necessity of having something concrete backing the paper money. As the money supply began to increase inflation took off in the late 60's and never looked back. Today you would need over $7.50 to buy what $1.00 would've bought you in 1964!

But wait, doesn't my last sentence above contradict my premise about unchanging real product pricing? If you need $7.50 to buy in 2011 what $1.00 purchased in 1964, doesn't that mean prices did indeed rise? The short answer is basically, yes and no. Yes, prices increased because we use paper funny money and coin slugs today instead of real silver and gold money. However, in silver and gold money prices have remained remarkably steady since the early 1960's! See below:

1964 - One loaf of white bread could be bought for a silver 1964 dime.
2011 - You can buy a loaf of white bread today with that exact same silver dime.

1964 - One nicely tailored men's suit $50.00
2011 - If you saved your money in silver coins you'd have $1250 to buy that suit!

1964 - One gallon of gas cost $0.30
2011 - Three silver dimes would give you $7.50 towards that gallon gas! Wow, change too!

1964 - The cost of $10 worth of 90% silver quarters was...well...$10.
2011 - Go on eBay and see for yourself. Right now you'd have to pony up $250 in funny money to get ten bucks of real silvery money!

So you see, assuming you saved the last real money (90% silver coins) we had in 1964 you'd find that either your buying power would be the same, or that it actually improved!

Hmm, maybe I am wrong. Prices aren't just stable over the last 5 decades, they've gone down!

Bottom Line: Politicians and Big Banking interests are expanding our money supply recklessly to serve their own agendas and enrich themselves. Eventually, the average Joe America will lose everything as the US Dollar inflates to worthlessness. Be aware of their duplicity! Don't complain to the store clerk or the check out worker like a drone about rising prices. Instead, rebel (legally) against a tyrannical government that is debasing the once mighty and sound US dollar and ruining the savings and buying power of a Nation.

[nero12345]

I was gonna say that the price of something doesn't usually go up much, but the amount you get in return goes down. But your analogy it quite a bit better.

[inflationhawk]

It's supply and demand on BOTH the product being sold and the money being used to exchange for the product. It's not one or the other. It's wrong to say prices of products never change and it's just as wrong to say all changes in price are due to the value of money changing. They both change over time due to supply and demand. You could take 3 loaves of bread and exchange it for 1 gallon of gas in 1964, but you'd get more gas today in that exchange. Obviously, the price of one has changed regardless of the value of money.

[68Camaro]

Time to sidetrack this even further... I think two loaves per gallon, more or less, is about right, in both time frames. 10 cent loaves then, $2 loaves now. 20 cent gas then, $4 gas now. I know prices aren't exact, but they are close - rough order of magnitude. Of course it depends a lot on what type of bread, and size, etc. so maybe a bread/gas comparisoin is not the best analogy. The price of bread is all over the map, even now. I can pay $5 or more for a large premium loaf, or I can pay a buck (per pound) for cheap bread of questionable nutritional value. Or anything in between.