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Understanding Inflation - A Short Explanation

You need to understand the rate of inflation alone is not enough. That lower inflation rates doesn't equal prices going down at all, even a little bit.

Year one, inflation at 8%, a 1 dollar item is now 1.08

Year two, inflation at 12%, a one dollar item from year one, is now 1.21

Year three, inflation at 14%, a one dollar item from year one, is now 1.38

Year four, inflation goes "down" to only 3%, yay we win right?, A one dollar item from year one, is now 1.42.

Inflation is now "low" but the price is cumulative as is the true inflation. The true inflation rate here over 4 years is 42%.

The TV will say "inflation is going down", it isn't a lie, it also isn't the truth. Not to mention what happens if you get a "bad year" next, say just going back to 8% in the next year.

1.42 x 1.08 = 1.53

In year one 8% was 8 cents on the dollar, in year 5 it is 11 cents on the dollar of the previous year. And a total of 53% over 5 years.

Now do it on everything you buy and have to pay for, food, energy, housing, clothing.

Inflation is an at will unregulated tax on every thing you own, buy, sell, etc. It makes the income tax seem benevolent.

If you read this far you now understand the problem more than most so called "economic experts". Those who didn't read this far are likely wondering why things are so bad if the TV people say inflation is down.

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Discussion

nobody 1y ago

You’ve just done more math than most people care to do in the ten years following their exit from the indoctrination centre.

Des Imoto マキシ 1y ago

Couple of additions. “They” change the meaning of words, ala “1984,” to confuse us.

Newspeak was a language favored by the minions of Big Brother and, in Orwell's words, "designed to diminish the range of thought." Newspeak was characterized by the elimination or alteration of certain words, the substitution of one word for another, the interchangeability of parts of speech, and the creation of words for political purposes. The word has caught on in general use to refer to confusing or deceptive bureaucratic jargon.

Inflation is the increase in money supply, not the subsequent nominal price increase. That’s why, albeit manipulated, the CPI is actually the Consumer Price Index.

Inflation in a debt based system is simply increase in total debt. Government, State and Local, business and private. Currently $80 trillion in the US. So, rate of inflation would technically be the rate of increase in debt. Looking at their own data (see below) debt has doubled over the last 15 years.

Now, we also have productivity increases due to innovation and technological advances. Let’s say you go to McDonalds, there used to be three employees taking orders. Now there are three iPads. So the price of your burger should go down. Some literature estimates the productivity increases at 6-8% per year since ww2.

So “they” are really stealing your tax rate, let’s say 29%, plus productivity, 7%, plus real inflation, 7%. And yes, compound that every year. Crazy.

The CPI is meaningless, as it swaps out good quality goods for bad ones, reflects only delayed trickle down price effects of inflation and doesn’t include productivity increases.

It’s far worse than you describe. And believe it, “them” using the term inflation for everything confuses everyone on purpose.

That’s why everything has gone to 💩. See pics :)

John Christensen 1y ago

It's scary how much they twist words and numbers to keep us confused. The part about productivity really hit home—when you see how much more efficient things have gotten, but prices keep rising, it makes you realize how deep this goes. Thanks for shedding light on how it's all connected. People need to understand this better, and you explained it in a way that’s easy to get. Appreciate you sharing!

John Christensen 1y ago

Great breakdown! It’s wild how the numbers add up over time, even when inflation "seems" low. This really helps put things into perspective. People often miss the bigger picture when they just hear that inflation is going down. Thanks for explaining it in a way that’s easy to grasp!