6 ms·

I thought the non-adjusted prices were interesting. No idea what story it tells if you adjust it, but non adjusted, the prices were essentially the same from 18

I thought the non-adjusted prices were interesting. No idea what story it tells if you adjust it, but non adjusted, the prices were essentially the same from 1840-1925.

choeger 5y ago
Yes. That's interesting. Your grandfather could tell you what a dinner should cost by his experience. How did that happen? Did wages not increase?
- dsr_ 5y ago
  The data's not available before 1947, but the trend is clear: you're looking at the early part of a compound growth formula (with large annual variability). https://fred.stlouisfed.org/series/A939RX0Q048SBEA/ https://fred.stlouisfed.org/series/A939RX0Q048SBEA/ US GDP per person has grown about 1% per year on average. Wages stopped increasing to match productivity in the early 1980s, and that trend continues.
  - guerrilla 5y ago
    > Wages stopped increasing to match productivity in the early 1980s 1970s not 1980s: https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/
  - mensetmanusman 5y ago
    https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- bluGill 5y ago
  The gold standard made inflation nearly impossible. Thus prices stayed the same long term.
  - martincmartin 5y ago
    There was huge inflation during WWI, as the government sold war bonds. "The World War I era and its aftermath, 1917–1920, then produced sustained inflation unmatched in the nation anytime since. Prices rose at an 18.5-percent annualized rate from December 1916 to June 1920, increasing more than 80 percent during that period." [1] https://www.bls.gov/opub/mlr/2014/article/one-hundred-years-of-price-change-the-consumer-price-index-and-the-american-inflation-experience.htm#:~:text=Prices%20in%20the%20World%20War%20I%20era&text=The%20World%20War%20I%20era%20and%20its%20aftermath%2C%201917%E2%80%931920,80%20percent%20during%20that%20period https://www.bls.gov/opub/mlr/2014/article/one-hundred-years-....
    - agency 5y ago
      Also during the Civil War I think. I was just listening to a podcast and they were talking about this. I think it took a couple of decades to get back to the gold standard after.
      - Spooky23 5y ago
        Also when people found gold deposits.
    - RobertoG 5y ago
      >>"There was huge inflation during WWI, as the government sold war bonds." I'm not sure of what you are saying there, but it can be interpreted like war bonds is the cause of inflation. It's exactly the opposite. At war, a government have to use all the available resources for the war effort. That will produce inflation, because the war spending is competing with the private spending for the same resources. A way to avoid it, is for the government to retire money from the private sector. A way to retire money from the private sector is to sell war bonds to the population. If you buy a war bond, basically what you are doing is promising that you will not spend your money until after the end of the war. Normally you will get some interest for your patriotic sacrifice. Also, for the gold standard fans out there, imagine what would happen if a government can not mobilize all the available resources of the country because it has not enough gold. That would be the most ridiculous way to loss a war.
- geogra4 5y ago
  The Gold standard
- vmception 5y ago
  The idea of your money purchasing less is just a creature of the last 100 years. It doesn't have to be that way, but basically there has been annual share dilution from the US currency corporation for 100 years, it was chartered by Congress in 1913. In currency contexts this is called inflation. In all other asset classes it is called dilution.
  - zarzavat 5y ago
    Inflation is not the same as an increase in the money supply ("dilution" as you call it). Inflation defined as an increase in consumer prices. Consumer prices are affected by many factors other than the money supply, for example if oil prices rise then it tends to push up consumer prices and therefore inflation even if the money supply were static.
  - imtringued 5y ago
    > It doesn't have to be that way, but basically there has been annual share dilution from the US currency corporation for 100 years, it was chartered by Congress in 1913. Sure, you can build a money system without inflation but that doesn't change that you still have to represent the loss of value via unemployment caused by saving money. i.e. you will need money with an expiration date, negative interest rate or wealth tax.
    - vmception 5y ago
      I don't have a problem with the current reality. I am only pointing out that the current reality isn't fundamentally an absolute reality, just the features of the current epoch of currency which is only 100 years old. This thread was only about why the prices for a long time in the 19th century were not changing much across those 100 years, when in the 20th century things increase. I'm not here to opine about a future alternate system.
arminiusreturns 5y ago
Youve found one of the secrets that LSE and Chicago school types don't want Americans to know about. A good analysis of the big picture reasons behind this would turn anyone into a conspiracy theorist.
- HanShotFirst 5y ago
  Could you elaborate on this for someone with no prior knowledge of what you're referring to?
  - fastball 5y ago
    Presumably GC is talking about how modern economists frequently say that inflation is necessary for growth, but restaurant prices staying the same from 1840-1925 (which certainly could not be described as a period of stagnation) seems to be a counterpoint to that claim. And then extending that, one could make the argument (and cryptocurrency maxis frequently do) that inflation is really only good for the existing upper class, who like it because it makes it easier to pay off their debt (of the "building a factory" variety, not credit cards) and because the wealthy own most real assets (e.g. property) that don't get devalued by inflation. I haven't done enough analysis myself to say whether I think this argument holds water, but that is the argument I assume GC would make and I've done my best to steelman.
    - zozbot234 5y ago
      > 1840-1925 (which certainly could not be described as a period of stagnation) There were plenty of "periods of stagnation" in that time interval, though. In general, stable money income flows promote economic resiliency far more than stable prices do. This means a rising price level (inflation) when the economy is hit by real-world constraints such as war or disasters, and stable or even falling prices when there is a lot of real growth. Pegging the value of the US dollar to gold led to an economic disaster in the late 1920s as the Banque of France was hoarding a lot of gold in a futile attempt to re-establish "sound" money after WWI. Widespread devaluation in the 1930s made it possible to stabilize nominal income flows again, which had beneficial effects even though it came with some mild price rises.
TMWNN 5y ago
>I thought the non-adjusted prices were interesting. No idea what story it tells if you adjust it, but non adjusted, the prices were essentially the same from 1840-1925. I'd heard that there was no inflation in England in 1914 versus 1614. That's not quite right, but there was a remarkably stable period (for some value of "stable") between c. 1650 and c. 1750, and another from 1820 to 1914.

I thought the non-adjusted prices were interesting. No idea what story it tells if you adjust it, but non adjusted, the prices were essentially the same from 1840-1925.

choeger 5y ago

Yes. That's interesting. Your grandfather could tell you what a dinner should cost by his experience. How did that happen? Did wages not increase?

dsr_ 5y ago
The data's not available before 1947, but the trend is clear: you're looking at the early part of a compound growth formula (with large annual variability). https://fred.stlouisfed.org/series/A939RX0Q048SBEA/ https://fred.stlouisfed.org/series/A939RX0Q048SBEA/ US GDP per person has grown about 1% per year on average. Wages stopped increasing to match productivity in the early 1980s, and that trend continues.
- guerrilla 5y ago
  > Wages stopped increasing to match productivity in the early 1980s 1970s not 1980s: https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/
- mensetmanusman 5y ago
  https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
bluGill 5y ago
The gold standard made inflation nearly impossible. Thus prices stayed the same long term.
- martincmartin 5y ago
  There was huge inflation during WWI, as the government sold war bonds. "The World War I era and its aftermath, 1917–1920, then produced sustained inflation unmatched in the nation anytime since. Prices rose at an 18.5-percent annualized rate from December 1916 to June 1920, increasing more than 80 percent during that period." [1] https://www.bls.gov/opub/mlr/2014/article/one-hundred-years-of-price-change-the-consumer-price-index-and-the-american-inflation-experience.htm#:~:text=Prices%20in%20the%20World%20War%20I%20era&text=The%20World%20War%20I%20era%20and%20its%20aftermath%2C%201917%E2%80%931920,80%20percent%20during%20that%20period https://www.bls.gov/opub/mlr/2014/article/one-hundred-years-....
  - agency 5y ago
    Also during the Civil War I think. I was just listening to a podcast and they were talking about this. I think it took a couple of decades to get back to the gold standard after.
    - Spooky23 5y ago
      Also when people found gold deposits.
  - RobertoG 5y ago
    >>"There was huge inflation during WWI, as the government sold war bonds." I'm not sure of what you are saying there, but it can be interpreted like war bonds is the cause of inflation. It's exactly the opposite. At war, a government have to use all the available resources for the war effort. That will produce inflation, because the war spending is competing with the private spending for the same resources. A way to avoid it, is for the government to retire money from the private sector. A way to retire money from the private sector is to sell war bonds to the population. If you buy a war bond, basically what you are doing is promising that you will not spend your money until after the end of the war. Normally you will get some interest for your patriotic sacrifice. Also, for the gold standard fans out there, imagine what would happen if a government can not mobilize all the available resources of the country because it has not enough gold. That would be the most ridiculous way to loss a war.
geogra4 5y ago
The Gold standard
vmception 5y ago
The idea of your money purchasing less is just a creature of the last 100 years. It doesn't have to be that way, but basically there has been annual share dilution from the US currency corporation for 100 years, it was chartered by Congress in 1913. In currency contexts this is called inflation. In all other asset classes it is called dilution.
- zarzavat 5y ago
  Inflation is not the same as an increase in the money supply ("dilution" as you call it). Inflation defined as an increase in consumer prices. Consumer prices are affected by many factors other than the money supply, for example if oil prices rise then it tends to push up consumer prices and therefore inflation even if the money supply were static.
- imtringued 5y ago
  > It doesn't have to be that way, but basically there has been annual share dilution from the US currency corporation for 100 years, it was chartered by Congress in 1913. Sure, you can build a money system without inflation but that doesn't change that you still have to represent the loss of value via unemployment caused by saving money. i.e. you will need money with an expiration date, negative interest rate or wealth tax.
  - vmception 5y ago
    I don't have a problem with the current reality. I am only pointing out that the current reality isn't fundamentally an absolute reality, just the features of the current epoch of currency which is only 100 years old. This thread was only about why the prices for a long time in the 19th century were not changing much across those 100 years, when in the 20th century things increase. I'm not here to opine about a future alternate system.

arminiusreturns 5y ago

Youve found one of the secrets that LSE and Chicago school types don't want Americans to know about. A good analysis of the big picture reasons behind this would turn anyone into a conspiracy theorist.

HanShotFirst 5y ago
Could you elaborate on this for someone with no prior knowledge of what you're referring to?
- fastball 5y ago
  Presumably GC is talking about how modern economists frequently say that inflation is necessary for growth, but restaurant prices staying the same from 1840-1925 (which certainly could not be described as a period of stagnation) seems to be a counterpoint to that claim. And then extending that, one could make the argument (and cryptocurrency maxis frequently do) that inflation is really only good for the existing upper class, who like it because it makes it easier to pay off their debt (of the "building a factory" variety, not credit cards) and because the wealthy own most real assets (e.g. property) that don't get devalued by inflation. I haven't done enough analysis myself to say whether I think this argument holds water, but that is the argument I assume GC would make and I've done my best to steelman.
  - zozbot234 5y ago
    > 1840-1925 (which certainly could not be described as a period of stagnation) There were plenty of "periods of stagnation" in that time interval, though. In general, stable money income flows promote economic resiliency far more than stable prices do. This means a rising price level (inflation) when the economy is hit by real-world constraints such as war or disasters, and stable or even falling prices when there is a lot of real growth. Pegging the value of the US dollar to gold led to an economic disaster in the late 1920s as the Banque of France was hoarding a lot of gold in a futile attempt to re-establish "sound" money after WWI. Widespread devaluation in the 1930s made it possible to stabilize nominal income flows again, which had beneficial effects even though it came with some mild price rises.

TMWNN 5y ago

>I thought the non-adjusted prices were interesting. No idea what story it tells if you adjust it, but non adjusted, the prices were essentially the same from 1840-1925. I'd heard that there was no inflation in England in 1914 versus 1614. That's not quite right, but there was a remarkably stable period (for some value of "stable") between c. 1650 and c. 1750, and another from 1820 to 1914.