Inflation, is the simple answer. But what causes this? Why couldn’t society just keep on keeping on with prices? Examples, a $0.25 for a candy bar, $0.75 for a fast food burger, $30k for a home etc. It worked then, so why not now, why not just agree to lower the prices of everything?
In: Economics
No one here is getting to the heart of the problem so I will. Imagine all the money in the US is 10 whole dollars. If the government swoops in to “save the economy” and injects money to the tune of adding 10 dollars it then means there is 20 dollars total now. There was only 10 dollars worth of labor. That means that my 10 dollars is now worth exactly half of what it was worth originally. The real true inflation rate is 50% and it’s not 5% because the cost of goods went up 5%.
Latest Answers