6 ms·

This is the annual inflation rate. Annualized inflation of 2-3% is generally considered a modest, stable rate by economists.

ajross 2y ago
The hundred year aggregate number is like 2.8% I believe
- deleted 2y ago
  [deleted]
wesammikhail 2y ago
Well I'm happy they consider it modest and stable because most people I know consider economists insane and unstable. > $1 in 1924 is equivalent in purchasing power to about $18.37 today, an increase of $17.37 over 100 years. The dollar had an average inflation rate of 2.95% per year between 1924 and today, producing a cumulative price increase of 1,737.28%. > This means that today's prices are 18.37 times as high as average prices since 1924, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.444% of what it could buy back then. This is at a time where technology is making everything cheaper mind you...
- hyperpape 2y ago
  > This is at a time where technology is making everything cheaper mind you... If this were true, then there would be no inflation.
  - wesammikhail 2y ago
    Are you seriously trying to argue that technology is adding to inflation? I'm not following...
    - stetrain 2y ago
      It doesn't make everything cheaper. The price of housing is one of the biggest drivers of cost of living in the US. The constraint on housing supply is primarily political (codes and zoning) not technological.
      - LargeWu 2y ago
        Also, financial. Interest rates play a huge part in both the supply and demand for housing.
    - hyperpape 2y ago
      No. I'm saying technology makes some things cheaper, but not all things.
  - gruez 2y ago
    For certain classes of goods that's arguably true. If you check the inflation categories you'd see that mass produced goods have actually gotten cheaper, but services involving people (eg. tuition or healthcare) has gotten more expensive. https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-3.png?x85095 https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-...
- IanCal 2y ago
  Well you don't get paid in 1924 dollars do you?
  - wesammikhail 2y ago
    No, I get paid in 2024 dollars that are unadjusted for inflation (see mostly static wage growth since the 70s). But.. That's fine and all. As long as those that got paid in 1960s dollars got to have a society in where they can accomplish so much with those dollars at my generation's expense. I'm happy we're looking at dollars as cars. "This is a 1924's dollar model and that is 1960s one". Makes you really wonder how crazy we are as a society to view our output denomination like that.
    - gruez 2y ago
      >No, I get paid in 2024 dollars that are unadjusted for inflation (see mostly static wage growth since the 70s) This implies that if inflation wasn't a thing, you'd somehow be able to keep your pay raises (including any inflation adjustment), which seems doubtful.
- lotsofpulp 2y ago
  > This is at a time where technology is making everything cheaper mind you... Automation is just one factor of supply and demand curve movements. Supply (and demand) of labor, money, energy, good weather, etc are others.
- bla3 2y ago
  That's intentional, to incentive people investing their money instead of stuffing it in their mattress, where it doesn't help anyone. As long as wages raise as well, it's not a problem. You shouldn't compare prices to prices 100 years ago, but purchasing power 100 years ago to purchasing power now.
  - Mistletoe 2y ago
    Wages don’t seem to have raised at the same rate at all. https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/ Weirdly, most graphs start getting off in the 1970s when the US left the gold standard. This is to be expected due to the Cantillon Effect. https://river.com/learn/terms/c/cantillon-effect/ https://river.com/learn/terms/c/cantillon-effect/
    - gruez 2y ago
      >>As long as wages raise as well, it's not a problem. You shouldn't compare prices to prices 100 years ago, but purchasing power 100 years ago to purchasing power now. >Wages don’t seem to have raised at the same rate at all. >https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/ Figure 1 from that link is compares actual income with "projected assuming no growth in inequality"... whatever that means, not inflation. Figure 2 compares hourly compensation with productivity, not inflation and on and on... Real wages (ie. inflation adjusted) has gone up, albeit slowly[1]. Even your link suggests this. "Stagnation" implies staying in the same place, not falling behind. [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
    - WithinReason 2y ago
      A good website on this: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
  - wesammikhail 2y ago
    yea yea we've all heard it. your spending is my income therefor I get to steal your wage from you if you don't spend it. "we'll encourage consumerism by taking the money from them if they don't spend it" Sometimes I wonder how people have come to accept this line of thinking as anything but malicious. As to your second point, yes. PP is more important, so let's use that. I'm sure the picture will look a whole lot better... /s
- stetrain 2y ago
  Why does the price of things today vs 1924 matter? Do you have a store of cash from 1924? Is there actually a downside of this steady long-term inflation?
  - wesammikhail 2y ago
    If the immorality of theft is of no concern to you then perhaps any of the following reasons may jive a little bit better with your ethos: 1. Destruction of savings 2. Distortion of price signals in markets 3. Impoverish those on long term fixed/low income 4. Creates massive inequality especially inter-generationally In my estimation however, if you really have to ask about the benefits or downsides of theft then you've already started at the wrong end of things.
    - LargeWu 2y ago
      Are you equating inflation with theft? Low, stable inflation is a natural phenomenon in a growing economy, largely a function of market forces.
      - zo1 2y ago
        So we all came together, agreed on a shared store of value, then said no one can "poof it" into existence, and then gave said power to only a single entity that now makes more of it without doing anything and we're all supposed to think "that's normal". It's not theft, but it's not that far off from it. But at this point, we've normalized things like "taxes" anyways, so peoples' definition of theft doesn't align with reality, so why would it be different when it comes to printing of money. Everyone is just post-rationalizing about this because they can't cope with the logical inconsistency of the world they live in.
- troyvit 2y ago
  I think an (insane and unstable) economist would say that technology is indeed making everything cheaper, and as a result the average person's buying power is increased. Since buying power has increased, demand has gone up for all goods and services, and since demand has gone up prices have risen.
yuvadam 2y ago
Do you consider loosing half your long term savings within 24-36 years modest and stable?
- lotsofpulp 2y ago
  Long term savings shouldn’t be in cash. Throw it in VT, VTI, VOO, or even a target date fund, and you’ll keep up with inflation.
  - lurking15 2y ago
    they shouldn't be in the market either, they should be on a non-productive store of wealth that people could depend on and isn't hitched to Congress's penchant for debasing money and arbitrarily manipulating the economy through fueling consumerism
- toomuchtodo 2y ago
  I don't lose it because I invest my savings in assets that grow at a rate faster than inflation. Inflation encourages investment, vs hoarding cash with an expectation that paper is going to hold value into the future. It's just paper, it has no productive value. Currency transfers value, assets hold value. TLDR Accumulate assets at favorable prices to invest for your future. https://academic.oup.com/qje/article/134/3/1225/5435538 https://academic.oup.com/qje/article/134/3/1225/5435538
- dsr_ 2y ago
  What interest rate are you assuming on savings and investments, and why is it less than the historical average?
- deleted 2y ago
  [deleted]
- ajross 2y ago
  Your "long term" savings is in cash? Because if it's not, it's in assets of some form or another, and assets inflate along with the rest of the economy.

ajross 2y ago

The hundred year aggregate number is like 2.8% I believe

deleted 2y ago
[deleted]

wesammikhail 2y ago

Well I'm happy they consider it modest and stable because most people I know consider economists insane and unstable. > $1 in 1924 is equivalent in purchasing power to about $18.37 today, an increase of $17.37 over 100 years. The dollar had an average inflation rate of 2.95% per year between 1924 and today, producing a cumulative price increase of 1,737.28%. > This means that today's prices are 18.37 times as high as average prices since 1924, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.444% of what it could buy back then. This is at a time where technology is making everything cheaper mind you...

hyperpape 2y ago
> This is at a time where technology is making everything cheaper mind you... If this were true, then there would be no inflation.
- wesammikhail 2y ago
  Are you seriously trying to argue that technology is adding to inflation? I'm not following...
  - stetrain 2y ago
    It doesn't make everything cheaper. The price of housing is one of the biggest drivers of cost of living in the US. The constraint on housing supply is primarily political (codes and zoning) not technological.
    - LargeWu 2y ago
      Also, financial. Interest rates play a huge part in both the supply and demand for housing.
  - hyperpape 2y ago
    No. I'm saying technology makes some things cheaper, but not all things.
- gruez 2y ago
  For certain classes of goods that's arguably true. If you check the inflation categories you'd see that mass produced goods have actually gotten cheaper, but services involving people (eg. tuition or healthcare) has gotten more expensive. https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-3.png?x85095 https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-...
IanCal 2y ago
Well you don't get paid in 1924 dollars do you?
- wesammikhail 2y ago
  No, I get paid in 2024 dollars that are unadjusted for inflation (see mostly static wage growth since the 70s). But.. That's fine and all. As long as those that got paid in 1960s dollars got to have a society in where they can accomplish so much with those dollars at my generation's expense. I'm happy we're looking at dollars as cars. "This is a 1924's dollar model and that is 1960s one". Makes you really wonder how crazy we are as a society to view our output denomination like that.
  - gruez 2y ago
    >No, I get paid in 2024 dollars that are unadjusted for inflation (see mostly static wage growth since the 70s) This implies that if inflation wasn't a thing, you'd somehow be able to keep your pay raises (including any inflation adjustment), which seems doubtful.
lotsofpulp 2y ago
> This is at a time where technology is making everything cheaper mind you... Automation is just one factor of supply and demand curve movements. Supply (and demand) of labor, money, energy, good weather, etc are others.
bla3 2y ago
That's intentional, to incentive people investing their money instead of stuffing it in their mattress, where it doesn't help anyone. As long as wages raise as well, it's not a problem. You shouldn't compare prices to prices 100 years ago, but purchasing power 100 years ago to purchasing power now.
- Mistletoe 2y ago
  Wages don’t seem to have raised at the same rate at all. https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/ Weirdly, most graphs start getting off in the 1970s when the US left the gold standard. This is to be expected due to the Cantillon Effect. https://river.com/learn/terms/c/cantillon-effect/ https://river.com/learn/terms/c/cantillon-effect/
  - gruez 2y ago
    >>As long as wages raise as well, it's not a problem. You shouldn't compare prices to prices 100 years ago, but purchasing power 100 years ago to purchasing power now. >Wages don’t seem to have raised at the same rate at all. >https://www.epi.org/publication/charting-wage-stagnation/ https://www.epi.org/publication/charting-wage-stagnation/ Figure 1 from that link is compares actual income with "projected assuming no growth in inequality"... whatever that means, not inflation. Figure 2 compares hourly compensation with productivity, not inflation and on and on... Real wages (ie. inflation adjusted) has gone up, albeit slowly[1]. Even your link suggests this. "Stagnation" implies staying in the same place, not falling behind. [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
  - WithinReason 2y ago
    A good website on this: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- wesammikhail 2y ago
  yea yea we've all heard it. your spending is my income therefor I get to steal your wage from you if you don't spend it. "we'll encourage consumerism by taking the money from them if they don't spend it" Sometimes I wonder how people have come to accept this line of thinking as anything but malicious. As to your second point, yes. PP is more important, so let's use that. I'm sure the picture will look a whole lot better... /s
stetrain 2y ago
Why does the price of things today vs 1924 matter? Do you have a store of cash from 1924? Is there actually a downside of this steady long-term inflation?
- wesammikhail 2y ago
  If the immorality of theft is of no concern to you then perhaps any of the following reasons may jive a little bit better with your ethos: 1. Destruction of savings 2. Distortion of price signals in markets 3. Impoverish those on long term fixed/low income 4. Creates massive inequality especially inter-generationally In my estimation however, if you really have to ask about the benefits or downsides of theft then you've already started at the wrong end of things.
  - LargeWu 2y ago
    Are you equating inflation with theft? Low, stable inflation is a natural phenomenon in a growing economy, largely a function of market forces.
    - zo1 2y ago
      So we all came together, agreed on a shared store of value, then said no one can "poof it" into existence, and then gave said power to only a single entity that now makes more of it without doing anything and we're all supposed to think "that's normal". It's not theft, but it's not that far off from it. But at this point, we've normalized things like "taxes" anyways, so peoples' definition of theft doesn't align with reality, so why would it be different when it comes to printing of money. Everyone is just post-rationalizing about this because they can't cope with the logical inconsistency of the world they live in.
troyvit 2y ago
I think an (insane and unstable) economist would say that technology is indeed making everything cheaper, and as a result the average person's buying power is increased. Since buying power has increased, demand has gone up for all goods and services, and since demand has gone up prices have risen.

yuvadam 2y ago

Do you consider loosing half your long term savings within 24-36 years modest and stable?

lotsofpulp 2y ago
Long term savings shouldn’t be in cash. Throw it in VT, VTI, VOO, or even a target date fund, and you’ll keep up with inflation.
- lurking15 2y ago
  they shouldn't be in the market either, they should be on a non-productive store of wealth that people could depend on and isn't hitched to Congress's penchant for debasing money and arbitrarily manipulating the economy through fueling consumerism
toomuchtodo 2y ago
I don't lose it because I invest my savings in assets that grow at a rate faster than inflation. Inflation encourages investment, vs hoarding cash with an expectation that paper is going to hold value into the future. It's just paper, it has no productive value. Currency transfers value, assets hold value. TLDR Accumulate assets at favorable prices to invest for your future. https://academic.oup.com/qje/article/134/3/1225/5435538 https://academic.oup.com/qje/article/134/3/1225/5435538
dsr_ 2y ago
What interest rate are you assuming on savings and investments, and why is it less than the historical average?
deleted 2y ago
[deleted]
ajross 2y ago
Your "long term" savings is in cash? Because if it's not, it's in assets of some form or another, and assets inflate along with the rest of the economy.