While I agree with what you just posted. Assuming inflation was kept top exactly 2% each year for the next 10 years, and you were to take out a loan of $10,000 at 3.5% for a period of 10 years. The actual payments would total $11,866.30 while the depreciated value of the money you repaid with would be $10,659.01 so there is still a cost. I assume that you already know that, but I have encountered others who seem to believe that inflation results in you or government paying back less than what was borrowed. In addition, inflation has the effect of increasing the value of some things which are taxed, resulting in a higher tax based on the inflated value. Wouldn't it be nice if your property tax was based on the purchase price of your house and could only be taxed on a higher/lower value as a result of selling it to someone else who would then pay taxes on their purchase price until they sold it? Elderly, retired people living on a fixed income could then live out their lives without having to sell their house as many I know, including my Grandparents and parents have had to do.
In your example. 10k Deprecitation. $10,000 off my bill advantages me. That's a free $10,000. One free year of my life. One years holiday, due to the effects of inflation on my debt. Every 11 years, I get a year off. Free. In exchange for cooking the books and not producing anything at all. This is significant number in my opinion. Inflation rates can and do go above the rate of interest. My government for example borrows at the rate of 0.76% on a ten year loan. Considerably less than 2% rate of inflation they target.
If I remember correctly, that was confirmed by telling us the new Ipad or Iphone cost the same as the previous model. I'm sure someone here can provide us with a statistical graph claiming undeniable proof that the line is flat.
Government inflation rates must be total BS because every single bill I pay has easily increased 5% over the past 12 months...
And probably there are others who have seen increases much greater than 5%. I learned early in life how to budget my spending, live a conservative and comfortable life and avoid debt. The only recurring monthly bill that requires any attention is my electric bill, and the first bill of my budget is a payment to myself, followed by the electric bill, which then results in all other spending based on what remains. Whatever the government presents as the inflation rate tells me the minimum rate my savings must be increased, which has effect on what I do with my savings investments. Government actions, regardless of party in power, results in my reacting in ways that I find most beneficial to me. It's a lot like playing in the stock market, rising or falling there's ways to make a profit.
Inflation is the cost of 1 or several bills, rather it's measured over a large basket of goods. Particularly volatile thing's, like energy and housing, were removed from that basket, so in this sense, it can feel like real inflation and measured inflation aren't always the same.
Inflation is a decrease in the price of money, which manifests as the prices of other goods rising in terms of that money.
I agree...I just dislike how the government plays with numbers to benefit government...when government is supposed to be representing the people...
Gas, food, restaurants, TV service, electricity, general supplies, taxation, contract labor, etc. etc. have all increased during the past year yet SS recipients are told they get 0% increase?
So, basically, price controls in response to a problem (inflation) created by government. Most states that try that create huge problems, Venezuela being the most recent.
I wonder to what degree does the consumption of the 'haves' and the inflation this creates...effect the 'have-nots'?? Consumption and subsequent inflation must be much higher in the high-density employment centers across the USA than it might be in rural areas. Like in the SF Bay area, the horrific cost of living in SF extends 40-50 miles out into the bedroom communities, yet those actually living in SF have higher incomes while many in the bedroom communities are low to middle class incomes. It's no wonder to me that lower and middle class job compensation never keeps up with inflation...
I recently read the average price for an automobile in the USA is just shy of $35K! My first home was $17,200 and I think my payments were $142/month. Today people are spending $300-$750 a month for their car with many of them leasing. It's crazy!!
the problem with claiming 'inflation is low now' is that claim ignores the compounding effects, which are the same as the effects of compound interest in reverse. People in the top .1% aren't going to the affected by a 5% increase in the cost of a loaf of bread, while that increase may be significant for someone trying to survive in the Wal-Mart economy. Both ends of the income spectrum have entirely different percentages of income devoted to food, utilities, whatever.
It's interesting when you use other prices to compare. For instance, the oil price of gold. Or the gold price of bread. Those things are remarkably stable over time. http://www.macrotrends.net/1334/gold-prices-vs-oil-prices-historical-correlation It's the money that loses value, and it's always because there is so much of it being created.
its not really crazy as long as your pay check gets bigger to pay for it. Still, in the interest of economic stability it would be a good idea to make inflation illegal but liberals would be 100% opposed.
It's not rocket science...either stuff in the aggregate increased in price or it did not? And of course an aggregate national inflation rate will not be very accurate across regional and local areas of the US...
So...if Americans stop 'consuming' for a couple of months, this will have no effect on inflation/deflation?
News flash; liberals have no more to do with inflation than conservatives?? So...the average wage in the US is about $35K yet the average price of a new car in the US is $35K...you don't see anything wrong with this picture?