Posted by jrd_x on 6/20/2012 11:14:00 AM (view original):
Posted by tecwrg on 6/20/2012 6:12:00 AM (view original):
Posted by jrd_x on 6/19/2012 11:37:00 PM (view original):
If the price of bread goes up but the price of everything else stays the same, bread is more expensive. Your dollar isn't worth less.
Let's say I buy a loaf of bread, a gallon of milk, and a jar of peanut butter every week because that's all I can afford to eat.
If the price of bread goes up tomorrow, will I still be paying the same amount of money for my loaf of bread, gallon of milk, and jar of peanut butter next week?
No, the bread is more expensive. That in itself isn't necessarily inflation.
I'm a baker and I sold bread in my shop for $3 a loaf last week and every day people lined up around the block to buy my bread and they bought all the bread I had time to make and I ended up turning people away at the end of the day. So this week I raised the price of my bread to $5 a loaf. Has the value of the dollar changed? No. It hasn't. The demand for my bread was high enough to cause the value of my bread to go up. Yes, one dollar buys less bread this week, but that has everything to do with the value of my bread and nothing to do with the value of the dollar.
So rising prices on the goods that consumers buy "isn't necessarily inflation"?
I'll ask again: is there some magic button that needs to be pushed or some secret code word that needs to be spoken before rising prices of the goods that consumers buy are considered inflation?
Or, to put it another way, what exactly, in jrd-land, drives inflation?