Question by Quadrillian: What is the large picture interpretation of inflation?
I know it means increase in costs and pay, and that the dollor becomes less valuable over time, but in a wider sense what does it imply.My suggestion is that it implies a devaluation of expended effort over time. For example I put effort into work years ago to earn $ 100. That money could buy a lot when I earned it, but now if I had saved that $ 100 (without interest) it buys a lot less. So the value of the work I did in the past has now now been eroded. Is this correct and are there other interpretations?
Answer by Tim B
The biggest factor is like you said.. loaned money gets repaid with devalued dollars.But the price of living is the next thing to consider.Some people search for jobs and don’t get any. Some people do not qualify for assistence.There was a time anyone could buy 4 big loaves of bread for $ 1.00 How much is a common loaf of bread now at the local grocer?Kroger had a special not to long ago.. 10 small loaves of bread for $ 10.00 Uh-oh? How long will it be before 1 loaf is $ 10.00? The preconditioning has already started.======================Change of thought-The fed can inflate the money supply so the average house is worth 2 million dollars in stead of say $ 200,000. But if a gallon of gasoline is say $ 30.00, and a loaf of bread $ 25.00, maybe milk $ 40.00 a gallon.. what is the use? where does it end?Gold has escalated @400% from July 1999 until now. [@$ 250-$ 1000 per ounce]Yet the reporting CPI is saying @3% a year average.. well 3% x 9 years only equates to @27% which is way away track and out of touch with reality.Does this help any?
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