Economics lesson (skip if you don’t care): This cartoon illustrates just one of the damaging effects of inflation: It makes people think they have money when they really don’t. The classic case is the worker who gets a big inflation-stimulated raise, incorrectly assumes he really is richer, goes out and buys a big new house, and then is surprised when he can’t make his mortgage payments because he has to spend the raise on all the other things in his life that are getting more expensive.
Just remember, inflationary prices are only an effect of the REAL inflation–the increase in the money supply beyond growth of productivity. In other words, there is more money than “stuff”, so the prices for “stuff” go up.
Who causes this? The ones who decide how much money there should be–ultimately, the federal government. Why do they create too much money? Because it is a sneaky way for government to take your money (actually, your purchasing power) than just to openly tax you. How do they get away with it? We let them. But maybe the Tea Parties can change that.
pschearer Premium Member over 14 years ago
Economics lesson (skip if you don’t care): This cartoon illustrates just one of the damaging effects of inflation: It makes people think they have money when they really don’t. The classic case is the worker who gets a big inflation-stimulated raise, incorrectly assumes he really is richer, goes out and buys a big new house, and then is surprised when he can’t make his mortgage payments because he has to spend the raise on all the other things in his life that are getting more expensive.
Just remember, inflationary prices are only an effect of the REAL inflation–the increase in the money supply beyond growth of productivity. In other words, there is more money than “stuff”, so the prices for “stuff” go up.
Who causes this? The ones who decide how much money there should be–ultimately, the federal government. Why do they create too much money? Because it is a sneaky way for government to take your money (actually, your purchasing power) than just to openly tax you. How do they get away with it? We let them. But maybe the Tea Parties can change that.
celeconecca over 14 years ago
ANytime I feel low about our finances, I have to remind myself that we would have been considered well-to-do …in the 1900’s!
bald over 14 years ago
sad but true FishStix