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
Edit to ELIF:
Everyone wants candy and the candy company wants to make as much money as possible.
The candy company keeps raising its prices to make more money until people stop buying all the candy.
Oh no the stuff that makes the chewy gooey insides of the candy that is made from sugar and chocolate was destroyed by a flood. Now there isn’t enough stuff to make as much candy and the trucks to get the candy to the store got destroyed in a flood as well.
This causes prices to go up because the little bit of candy left and the trucks not destroyed cost more because those companies red to charge more or choose to charge more because there is t enough candy to go around so price of what didn’t get destroyed goes up.
Now candy is 50 cents a piece instead of 25 cents.
The cost of gas goes up because of some storm in the ocean. And what happens is a trickle of prices going up everywhere and for simplicity sake things now just cost more and do not get cheaper.
Sometimes things do stay the same price but that’s only if uncle Samuel says it has to stay that price or if uncle Sammy buys stuff to help keep a farmer in business to avoid increases in price.
But overall prices tend to slowly creep up because everyone wants to make more money and businesses want to make more money.
This tends to be okay and healthy for everyone as long as the prices of things do not go up too fast compared to how much people make.
Recently prices have gone up about 24% over the last 4 years and that’s why people feel the sting.
I hope this is a better explanation of why inflation is a main reason for candy not being 25 cents anymore or 30k homes. All the stuff used to make those things cost more and sometimes like with homes people like to play games and pay more because they think it will be worth more money in the future. Like beanie babies! Sometimes they are wrong and then the prices drop really fast because POP goes the bubble.
Left my copy paste answer below so you can see what a dummy I was.
At its root, inflation is driven by too much demand relative to supply. More precisely, as former Fed chair Ben Bernanke writes in his macroeconomics textbook with Andrew Abel: “Inflation occurs when the aggregate quantity of goods demanded at any particular price level is rising more quickly than the aggregate quantity of goods supplied at that price level.”
But what causes demand to outpace supply? That can happen for a few different reasons, and to understand them it helps to consider the three pillars of macroeconomics that David Moss describes in his book A Concise Guide to Macroeconomics: What Managers, Executives, and Students Need to Know. Moss structures the book based on output (how much an economy produces), money (how much currency people have or can easily get their hands on), and expectations (what people think will happen next). All three have a role in inflation.
Supply shocks: Inflation often happens because of supply shocks — major disruptions to an important economic input, like energy. For example, if a lot of oil fields stop producing oil because of a war, the price of energy increases. Since energy is a critical input into almost every other good, prices of other things rise, too. This is often called “cost-push inflation.”
Money supply: Then there’s the demand side of the equation. An increase in the money supply will tend to cause inflation, as Moss explains. “With more cash in their pockets and bank accounts, consumers often find new reasons to buy things,” he writes in the book. “But unless the supply of goods and services has increased in the meantime, the consumers’ mounting demand for products will simply bid up prices, thus stoking inflation. Economists sometimes say that inflation rises when ‘too much money is chasing too few goods.’” This is sometimes referred to as “demand-pull inflation.”
The answer to your question is indeed inflation. And hopefully this helps answer why.
I think another reason not specifically stated is the need for corporations to continually show growth and to do that they need to keep increasing in value and one way to do so is increase revenue by increasing prices. This is good for those invested in the stock market but means little to those who are not. And wall street touches pretty much every sector and that one reason candy is no longer 0.25 or homes are not 30k.
[SOURCE](https://hbr.org/2022/12/what-causes-inflation)
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