will the value of a dollar ever quit inflating?

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Some things have stayed roughly the same. I remember paying $20,500 for a fully loaded 2000 Civic brand new. If you price out a 2016 Civic here in Canada that is equivalent to that one, it's not that far off that price, even 16 years later. A new Corvette is $65,000 here, that's what the starting price on a 2000 Corvette was also. And as mentioned above, TVs cost less. I remember paying $1200 for a 50 inch plasma TV about 10 years ago. I could get a 55" LED 4k TV now for $500.
 
Man, I wish there was inflation!!!

So the Fed can raise interest rates and you can actually keep money in a savings account with decent interest!!!!
 
Originally Posted By: Vern_in_IL
Man, I wish there was inflation!!!

So the Fed can raise interest rates and you can actually keep money in a savings account with decent interest!!!!

Inflation means cost of goods and services is going up, too. So, whatever interest you would make in a savings account would be eaten up (and then some) by you having to pay more for goods and services.
 
Inflation is an important component of the modern economic structure. It's part of the macro-economic theory and there are a few reasons behind it. The key for a stable economy is to have the inflation within a reasonable range -- 2% to 3% annually.
 
Originally Posted By: Alfred_B
Inflation is an important component of the modern economic structure. It's part of the macro-economic theory and there are a few reasons behind it. The key for a stable economy is to have the inflation within a reasonable range -- 2% to 3% annually.


Inflation destroys wealth....it is not an important component.

https://campus.aynrand.org/works/1974/01/01/egalitarianism-and-inflation
 
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If you are in debt, you want inflation so you can repay with currency that is less valuable. Since debt fuels the US economy, those pulling the levers want inflation.
 
Inflation doesn't destroy wealth. Anyone with "wealth" should be investing it and will easily return more money, even after inflation is taken into account. Wealthy stay wealthy. Inflation won't make them poor.

Regarding long-term debt - yes inflation helps too. Imagine a 30 year mortgage. Your payment stays the same, but your take home pay is (hopefully) increasing each year. Becomes "cheaper" over time. The people selling real estate and mortgages love to tell you about this.
 
As long as paper tickets (dollar bills/federal reserve notes) or bank credit are established as money, specifically equivalent to gold grams or ounces, then inflation will continue to live on as it becomes free to create money costlessly and at will.
 
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Originally Posted By: Doog
Originally Posted By: Alfred_B
Inflation is an important component of the modern economic structure. It's part of the macro-economic theory and there are a few reasons behind it. The key for a stable economy is to have the inflation within a reasonable range -- 2% to 3% annually.


Inflation destroys wealth....it is not an important component.


On a debt based system, inflation is entirely necessary.
 
I tend to agree that 2 - 3% inflation is good. It's a mixed bag though ... it really seems to come down to how your wage keeps up.

For instance, when I began driving in 1974, gasoline was C$0.55/Imperial gallon, or about C$0.125/litre. I worked part-time in high school, and earned about C$3/hr (great money back then, when minimum wage for < 18 was C$1.65/hr). So, one hour of work bought me about 24 l of gas.

So of late we pay about C$1/litre for gas, but my wage has outstripped inflation, so gas is relatively cheaper for me. (Of course I'm no longer bussing tables in a steak restaurant, either.)

In general, low-to-moderate inflation's fine as long as your wage is keeping up and you can control your expenses.
 
Could you imagine a situation where some old Ebeneezer type puts all their money under the mattress "because I got mine" and withdrew from society?

Money is a venue for trade-- trading my labors for yours. If it's a store of value that's only accidental. We can't store labor for 30 years, and we'll discover this when all the baby boomers retire and need nursing care. There just won't be enough to go around, and if the government declared it a "benefit", there would still be those on the bottom who wouldn't be able to get it even if everyone got it "equally."
 
Originally Posted By: Quattro Pete
Originally Posted By: Vern_in_IL
Man, I wish there was inflation!!!

So the Fed can raise interest rates and you can actually keep money in a savings account with decent interest!!!!

Inflation means cost of goods and services is going up, too. So, whatever interest you would make in a savings account would be eaten up (and then some) by you having to pay more for goods and services.

These reasons are why a good portion of a portfolio should be dividend funds.
They pay better and are generally Blue Chip.
 
There are various reasons for price increases and currency inflation is but one.
Some products may see price increases as a consequence of increased demand for them or higher input costs in producing and distributing them. This is a change in relative price and is not inflation.
As Milton Freidman wrote years ago, inflation is always and everywhere a monetary phenomenon. By this he meant that inflation, defined as a general rise in the wage/price level is always a function of the supply of currency and reserves a central bank makes available.
A rate of inflation of 2% is generally regarded as a good target. Any less than that and you'd see actual deflation in the value of some products and assets. We saw actual asset value deflation in the last recession and it wasn't pretty. Deflation is considered dangerous in that it sends exactly the wrong message to producers. If the market value of a good is increasing in currency units, a producer makes more of that good.
Guess what the same producer does when the selling price of the same good declines?
As the producer reduces output, he also reduces employee numbers, and the knock on effects for his suppliers, who also have employees, are obvious. Note that the real value received by the producer hasn't changed, only the nominal value of the currency units received, but all the producer sees on his income statements is less currency earned.
This is the danger of deflation and this is why every competent central bank targets a modest rate of inflation.
 
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