5 ms·

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.
    - martincmartin 5y ago
      Good point.
- wonnage 5y ago
  You can still get inflation if demand broadly outpaces supply, the money supply is only one factor
- throwawayboise 5y ago
  Also no minimum wage for the staff.
- canadianfella 5y ago
  That’s just not true.
- ProjectArcturis 5y ago
  It's not that inflation was impossible. It's that periods of inflation were offset by periods of grinding deflation depressions.
  - runeks 5y ago
    There’s no connection between falling prices and depression. At least that’s what Milton Friedman concluded in A Monetary History of the United States, even though he initially assumed there would be.
    - ProjectArcturis 5y ago
      Well, Friedman says inflation is driven by the money supply, which is partly true. But it's also true that a shrinking money supply is associated with both deflation and recession/depression.
- Spooky23 5y ago
  Not really. I’d start by studying Bryan’s “Cross of Gold” speech to get some perspective away from people writing about their pet economic theories. https://en.m.wikipedia.org/wiki/Cross_of_Gold_speech https://en.m.wikipedia.org/wiki/Cross_of_Gold_speech
  - gruez 5y ago
    Political speech is only slightly more reputable than "pet economic theories", imo. What does the academic literature say about this?
    - Spooky23 5y ago
      Quite a bit. I’d suggest again to check it out. It’s an interesting period of history with many parallels to our current state of affairs.
      - concordDance 5y ago
        > Quite a bit. I’d suggest again to check it out. What a useless response. Suggest instead how to check it out! What books should be looked up or terms googled?
        Spooky23 5y ago
        The linked Wikipedia article references several good books.
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.

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.
  - martincmartin 5y ago
    Good point.
wonnage 5y ago
You can still get inflation if demand broadly outpaces supply, the money supply is only one factor
throwawayboise 5y ago
Also no minimum wage for the staff.
canadianfella 5y ago
That’s just not true.
ProjectArcturis 5y ago
It's not that inflation was impossible. It's that periods of inflation were offset by periods of grinding deflation depressions.
- runeks 5y ago
  There’s no connection between falling prices and depression. At least that’s what Milton Friedman concluded in A Monetary History of the United States, even though he initially assumed there would be.
  - ProjectArcturis 5y ago
    Well, Friedman says inflation is driven by the money supply, which is partly true. But it's also true that a shrinking money supply is associated with both deflation and recession/depression.
Spooky23 5y ago
Not really. I’d start by studying Bryan’s “Cross of Gold” speech to get some perspective away from people writing about their pet economic theories. https://en.m.wikipedia.org/wiki/Cross_of_Gold_speech https://en.m.wikipedia.org/wiki/Cross_of_Gold_speech
- gruez 5y ago
  Political speech is only slightly more reputable than "pet economic theories", imo. What does the academic literature say about this?
  - Spooky23 5y ago
    Quite a bit. I’d suggest again to check it out. It’s an interesting period of history with many parallels to our current state of affairs.
    - concordDance 5y ago
      > Quite a bit. I’d suggest again to check it out. What a useless response. Suggest instead how to check it out! What books should be looked up or terms googled?
      - Spooky23 5y ago
        The linked Wikipedia article references several good books.

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.