what is the point of inflation?

jfall

Diamond Member
Oct 31, 2000
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If prices of a certain item go up and wages are suppose to go up equally to match it than why bother raising the price in the first place? Why not just leave prices as they are? If anything, stuff should be getting cheaper because we have found more efficient ways to produce it.
 

J Heartless Slick

Golden Member
Nov 11, 1999
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Originally posted by: jfall
If prices of a certain item go up and wages are suppose to go up equally to match it than why bother raising the price in the first place? Why not just leave prices as they are? If anything, stuff should be getting cheaper because we have found more efficient ways to produce it.

Prices go up in response to increase in costs of labor, materials, or operating costs. Also prices can adjust to supply.
 

GasX

Lifer
Feb 8, 2001
29,033
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This thread is proof that a little knowledge is a dangerous thing.
 

kitkat22

Golden Member
Feb 10, 2005
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I believe part of it is to offset the ever increasing rise in interest of the national debt. The gov't is basically the one who controls inflation by either printing too much money or not printing enough. Printing too much causes inflation, deflation is just the reverse.
 

jfall

Diamond Member
Oct 31, 2000
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All I know is that every year things seem to get more espensive but I always make around the same amount of money. It's getting to the point where people can't even afford basic essentials. However the system is setup doesn't appear to be working very well
 

xrax

Senior member
Sep 17, 2005
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inflation only affected when the government prints money.
Market forces affect price of goods and wages.
 

FoBoT

No Lifer
Apr 30, 2001
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fobot.com
Originally posted by: jfall
All I know is that every year things seem to get more espensive but I always make around the same amount of money. It's getting to the point where people can't even afford basic essentials. However the system is setup doesn't appear to be working very well

inflation has been fairly low since the early 80's (in the US)
 

imported_Tick

Diamond Member
Feb 17, 2005
4,682
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Rossman needs to get in here and explain this, but basically it has to do with the federal reserve bank creating money, as well as the mint printing a little extra, to keep the US treasury solvent. Basically it prevents the interest on the debt that the US inccurs from increasing with time, because they owe the same amount of money, but the money is worth less.
 

Cristatus

Diamond Member
Oct 13, 2004
3,908
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LOL @ most of you. You say that he doesn't know enough, implying that you guys know about this topic more than, him. How's about you enlighten him with your knowledge of what you know about the topic? If you can't be bothered to type a response to his question (which was: what is the point of inflation), then why bother posting a stupid [bandwidth wasting] remark?

I don't know what the point of inflation is, but I guess the bandwidth had to be wasted to tell you guys off.
 

DaShen

Lifer
Dec 1, 2000
10,710
1
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Originally posted by: J Heartless Slick
Originally posted by: jfall
If prices of a certain item go up and wages are suppose to go up equally to match it than why bother raising the price in the first place? Why not just leave prices as they are? If anything, stuff should be getting cheaper because we have found more efficient ways to produce it.

Prices go up in response to increase in costs of labor, materials, or operating costs. Also prices can adjust to supply.

Yup. As suppliers and sellers raise prices to gain more profit and alleviate increased cost in a capitalist society, the government must inflate the money a bit to cover this.
 

Syrch

Diamond Member
May 21, 2004
3,382
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Originally posted by: DaShen
Originally posted by: J Heartless Slick
Originally posted by: jfall
If prices of a certain item go up and wages are suppose to go up equally to match it than why bother raising the price in the first place? Why not just leave prices as they are? If anything, stuff should be getting cheaper because we have found more efficient ways to produce it.

Prices go up in response to increase in costs of labor, materials, or operating costs. Also prices can adjust to supply.

Yup. As suppliers and sellers raise prices to gain more profit and alleviate increased cost in a capitalist society, the government must inflate the money a bit to cover this.

 

Scarpozzi

Lifer
Jun 13, 2000
26,389
1,778
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Why do you think we're so rich compared to the general population 100 years ago. Inflation and interest rates are regulated as much as possible by the fed to compensate for market trends. This ends up resulting in those profits slowly rising and the general population making more money over time, even though the cost of goods rise before and after the curve. Basically though, if you don't fall within the two breakeven points and you're on the low end, your screwed. That's why the rich get richer, the poor get poorer and the rest of us remain in the middle class without a chance in hell.
 

LuNoTiCK

Diamond Member
Jan 7, 2001
4,698
0
71
Inflation is artificial, and created by the government. I really don't agree with inflation, but it is created since the Government prints money. If the government never printed money, there would be no inflation.