3 ms·
Computers have decreased their prices in real terms, not nominally. An Apple II was originally priced at $1300. Do computers now cost $13? They would if you had
by dimitar 12y ago
Computers have decreased their prices in real terms, not nominally. An Apple II was originally priced at $1300. Do computers now cost $13? They would if you had deflation or if they had been cheaper in nominal terms.
Computers haven't become cheaper in terms of their price-tag, but more affordable thanks to your increased nominal income (inflation!) and because they have become cheaper relative to other other goods whose prices have increased more.
Of course computers do a lot more today than 30 years ago, but I'm sure that more suitable examples can be found (digital watches anyone?). And think of the debt the computer manufacturers could pay more easily thanks to all that inflation!
- carsongross 12y ago(lol) The price of an apple 2 computer, with no monitor, was $1300. You can get a 21 inch imac for $1100 today. 18% nominal deflation! Apple must be absolutely broke! Look, I know. I went to the same "inflation is necessary" schools you did, and listened to Cal Econ professors patiently explain to me how without it we'd all be rooting around in the dirt, eating grubs. At some point I just stopped believing that.
- hga 12y agoThat's with only 4KiB of DRAM; per Wikipedia, $2,638 for 48KiB (and it was indeed very expensive back then). And using tape cassette for storage like other computers of that era. Add quite a bit for 1 or 2 floppies, and I found a reference to a 10 MiB (true MiB! :-) Covrus hard disk that went for $5,350 in apparently 1980.
- brc 12y agoI stopped believing when nobody could provide me with an economy that collapsed due to deflationary spiral, but dead economies from inflationary spirals happen several times per century, right up until the current day. There is, however, evidence of periods in the Roman Empire where price stability lasted for spans of several emperors (the ones that didn't debase the currency). But when emperors decided to debase the currency, those long periods of price stability were destroyed in the blink of an eye. Many economists tie themselves in knots trying to explain how inflation has complex causes, but it is 'always and everywhere a monetary phenomonen'
- altcognito 12y agoDeflationary economies are far more rare, and relatively difficult to achieve. Deflation isn't achieved by a lack of confidence in a market, and that's the key distinction and why you'll never find a "deflationary spiral" that leads to the collapse of a country. All you'll find is stunted growth and unemployment.
- restalis 12y ago"An Apple II was originally priced at $1300. Do computers now cost $13?" There is a hard limit in price set by a few things such as the cost of raw materials that go into any piece of tech, but other than that, you may consider that we have "computers" (well, devices actually) priced around $13 at par with or surpassing many capabilities of Apple II.
- nvader 12y agoA raspberry pi model A costs around 25 dollars, doesn't it?
- sacado2 12y agoAnd is hundreds of times more efficient than my good old apple II.