Let's talk economics

[Rtwfreak]

I'm looking at how things seem to keep on growing in "cost" not necessarily value. If the current increase in cost of thing continues to grow over the years what's the point of it if the value remains the same?

For instance a loaf of bread in my youth was .15 to .25 on sale .10 and now it's over $2 a loaf and has no more value than it did 50 years ago. But if the cost continues to keep going up like it has over the last 50 years bread is going to be $10 a loaf some day and that just seems kind of ridiculous. When does it end? When do we reach to "cap" of cost of everything because obviously wages aren't keeping up with costs. If it continues on this way the bottom is going to drop out and not many (the majority) of people are going to be able to afford a friggin loaf of bread.

I'm just using the above as an example many things are just getting out of hand in costs. Does it have to stop with people demanding higher wages or with the producer having a cap on revenue and profits?

Seriously this just looks like a stepladder of cost and the value of the item remains the same [a loaf of break is a friggin loaf of bread]

[warspite1]

ORIGINAL: Rtwfreak

I'm looking at how things seem to keep on growing in "cost" not necessarily value. If the current increase in cost of thing continues to grow over the years what's the point of it if the value remains the same?

For instance a loaf of bread in my youth was .15 to .25 on sale .10 and now it's over $2 a loaf and has no more value than it did 50 years ago. But if the cost continues to keep going up like it has over the last 50 years bread is going to be $10 a loaf some day and that just seems kind of ridiculous. When does it end? When do we reach to "cap" of cost of everything because obviously wages aren't keeping up with costs. If it continues on this way the bottom is going to drop out and not many (the majority) of people are going to be able to afford a friggin loaf of bread.

I'm just using the above as an example many things are just getting out of hand in costs. Does it have to stop with people demanding higher wages or with the producer having a cap on revenue and profits?

Seriously this just looks like a stepladder of cost and the value of the item remains the same [a loaf of break is a friggin loaf of bread]

warspite1

Well I'm no economist - I'm an International Lover (see the What does everyone do for a living thread) but I think you are looking at it from one side only. In terms of affordability surely many things are cheaper now - even if the actual cost is higher. E.g You mentioned the Waltons era - but how many peeps could afford a car then?

[catwhoorg]

Its an effect of simple inflation.

The worth of each $ (or pound or Euro etc) decreases by roughly 2-3% per year. (though there are periods where it is much worse)

But was Warspite points out, not everything increases in cost. Computer for example remain fairly static in cost, whilst steadily increasing in power.


A steady level of inflation is generally a positive sign in an economy, for one thing it encourages use of capital for investments. High inflation is pretty much uniformly bad for an economy. Hyperinflation, well thats where you get the wheel barrows of paper money to just buy a loaf of bread.

Negative inflation is not actually a good thing, as it reduces the active money supply for investments.

[Rtwfreak]

Well what I'm driving at is the cost of a loaf of bread in another 50 years. Why does the cost have to keep going up? Why can't we reach a nice happy level of cost to consumers and revenue/profit for the producer? A loaf of bread has the same ingredients and still takes the same amount of baking time as 50 years ago, bout the only thing that has changed is the speed of packaging and deliver but even that should have a cap over the years shouldn't it? What I keep seeing in my minds eye is the producer wants more profit, then the consumer who also works at that bread factory wants more money to pay for the increased revenue/profits the producer wants then the guy that sells the machines the producer needs wants more revenue/profit so he can pay for that increased price of bread and then the cogs keep going on an on with the next guy and the next guy.

What I'm say is in the next 1000 years how much a friggin loaf of bread is going to cost if we keep using this same revenue/profit/cost system. Each one is a drain upon the next. It seems it has to stop somewhere or I see in my minds eye a loaf of bread costing 1000 somethings lol

I remember seeing a long time ago I think it were a person actually went into this store with a wheelbarrow of money to pay for a loaf of bread. I thought it funny then but the reality of it grows near.

[warspite1]

ORIGINAL: Rtwfreak

Why can't we reach a nice happy level of cost to consumers and revenue/profit for the producer?

warspite1

Because how many "things" are relied upon to make the loaf of bread?

The Weather, oil price, cost of labour are just three. How can anyone fix a "nice happy level" when, for example, the cost of oil may rocket. So in that scenario the price stays the same but the distributors are screwed. Real life ain't that simple.

[PipFromSlitherine]

It's probably more useful to look at cost verses average (or perhaps median) wages to see whether the "cost" of bread is going up. Generally the US specifically has had extremely cheap food compared to the rest of the world, but the stagnation of wages over the last 20-30 years has to some extent broken the system as wage increases (or lack thereof) have indeed increased the actual cost of goods over that period.

The data is pretty easy to find across a variety of (bipartisan! to avoid the P word...) publications via the wonders of the internet. To me the most disturbing is the flatlining of wages while the productivity line keeps a pretty steady upward velocity.

I think that's why your question has begun to come into sharper focus.

Cheers

Pip

[catwhoorg]

Cost of raw materials (flour, yeast, salt, water)
Cost of labour
Cost of energy

Energy costs have been the most variable in recent times, up down back up and back down.

Per unit labour costs have also gone all over the place (mass produced bread trending lower, but 'artisan' breads would be higher).

Flour has notably spiked in cost in recent years.
cost of flour


So bread is up, mainly because flour is up.
Flour is up because globally wheat harvest is not keeping up with demands.
Australia's harvest was down 28% in 2012 (they are the 2nd biggest exporter of wheat). The US harvest isn't keeping up with demand. Globally stocks are almost to their lowest level in modern times. It only takes one regional failure to put undue pressure on stocks, and pricing.

[Rtwfreak]

wow catwhoorg that's scary, so as population increases demand goes up and production is less so cost to consumer goes up per demand or for revenue/profit reasons? Or both? So what happens in 1000 years when the worlds population doubles or triples?

[warspite1]

ORIGINAL: Rtwfreak

wow catwhoorg that's scary, so as population increases demand goes up and production is less so cost to consumer goes up per demand or for revenue/profit reasons? Or both? So what happens in 1000 years when the worlds population doubles or triples?

warspite1

Well if population rises greatly and production can't keep up...then I think we know the answer [:(]

[SLAAKMAN]

INFLATION IS A RESULT OF ILLUMINATI MANIPULATION-


DESTROY THE REDS & THEIR FRONT UNITS LIKE THE "PROGRESSIVES", "FEMINISTS", "SOCIALISTS", "COMMUNISTS" & THE ORDER OF THE RED BANNER!!

[warspite1]

ORIGINAL: SLAAKMAN

INFLATION IS A RESULT OF ILLUMINATI MANIPULATION-


DESTROY THE REDS & THEIR FRONT UNITS LIKE THE "PROGRESSIVES", "FEMINISTS", "SOCIALISTS", "COMMUNISTS" & THE ORDER OF THE RED BANNER!!

warspite1

Gotta love ol' SLAAK [:)]

[histgamer]

Inflation is the key driver and normally wages keep up with inflation (in developed countries anyway) though they tend to lag a few years.

Here's a good example, in 1983 the Nintendo Entertainment System released in the USA for a price of $199.99 dollars.

Now the PS4 is releasing for $399.99 and the Wii U sells for $349.99. Looking at those prices you would say THE COST OF CONSOLES IS GOING UP, NO ONE CAN AFFORD THAT ANYMORE.

You'd be wrong.

$199.99 dollars in 1983 would equal $453.83 today. So if anything the price on the products has come down relative to where it was in 1983 despite a much more powerful system.

[SLAAKMAN]

Now the PS4 is releasing for $399.99 and the Wii U sells for $349.99. Looking at those prices you would say THE COST OF CONSOLES IS GOING UP, NO ONE CAN AFFORD THAT ANYMORE.

You'd be wrong.

$199.99 dollars in 1983 would equal $453.83 today. So if anything the price on the products has come down relative to where it was in 1983 despite a much more powerful system.

(LOL. I just love it when people try to rationalize devaluation of the dollar).
[:'(]

[Qwixt]

I prefer the candy bar valuation. I could get 20 candy bars for a dollar in 1965. These days, one or two. To chart that out

1965: ====================
2013: ==

If you look at the ever more important Baconomics equivalency:

1965: $0.81 per pound
2013: $4.85 per pound

The theory goes that the world ends once bacon reaches $5 per pound, then the four pigs of porkalypse squeal over the world.

[histgamer]

Slaak I never said that inflation was inherently good but the fact is it exists and the USA has averaged roughly 3% annually since the 1930s. At that rate prices DOUBLE roughly every 36 years. Some industries are affected by it more (PCs are far more affordable today than in the 1980s) but it doesn't mean you can buy less with your money because your wages also increase to compensate.

A salary of 50,000 in the 1970s would have made you pretty well off, today it's firmly in the middle class, possibly the upper half of the middle class but nowhere near the 6 figure mark which is the equivalent of 50k in the 70s.

[catwhoorg]

ORIGINAL: warspite1

ORIGINAL: Rtwfreak

wow catwhoorg that's scary, so as population increases demand goes up and production is less so cost to consumer goes up per demand or for revenue/profit reasons? Or both? So what happens in 1000 years when the worlds population doubles or triples?

warspite1

Well if population rises greatly and production can't keep up...then I think we know the answer [:(]

The Rev. Malthus may just have his predictions come true.

[SLAAKMAN]

Slaak I never said that inflation was inherently good but the fact is it exists and the USA has averaged roughly 3% annually since the 1930s. At that rate prices DOUBLE roughly every 36 years. Some industries are affected by it more (PCs are far more affordable today than in the 1980s) but it doesn't mean you can buy less with your money because your wages also increase to compensate.

[X(]
Sorry I let my temper get the best of me. I consider the runaway inflation of the past 40+ years to be arbitrary & unnecessary as evidenced by this slope-

[histgamer]

ORIGINAL: SLAAKMAN

Slaak I never said that inflation was inherently good but the fact is it exists and the USA has averaged roughly 3% annually since the 1930s. At that rate prices DOUBLE roughly every 36 years. Some industries are affected by it more (PCs are far more affordable today than in the 1980s) but it doesn't mean you can buy less with your money because your wages also increase to compensate.

[X(]
Sorry I let my temper get the best of me. I consider the runaway inflation of the past 40+ years to be arbitrary & unnecessary as evidenced by this slope-

I wonder about that graph. Not that it is inaccurate but how does it account for new items developed during that curve, our electronic gadgets are very expensive but they simply didn't exist. So how does it measure those types of goods? The slope is not reflective of inflation by itself but only prices, price of what? One would hope the graph only includes goods that were available in the 1800s and 2011 or it's a pretty skewed bit of information. The actual inflation rate is far less concerning on the graph than the change in prices graph.

[jday305]

Slaak, if you look back on American history inflation has definetely gone up since WWII but so has everyone's wages. Everyone's standard of living has also skyrocketed; where else but in America can you have a big screen TV, a car, kitchen full of food, own a home and have all the electronic luxuries and STILL be considered poor. Back in the 1930's there was still a high percentage of the population that were living in tents, had little to no food and had no future hope (until WWII brought us out of that depression). Today, few are in a simular situation (of course there is always stories on the news about it but the news likes to blow it out of proportion). I am just saying as a whole our standard of living is the best in our history. Im sure that there may be a few out there that will disagree but look around your home.

[Mobius]

ORIGINAL: Qwixt

I prefer the candy bar valuation. I could get 20 candy bars for a dollar in 1965. These days, one or two. To chart that out

1965: ====================
2013: ==

If you look at the ever more important Baconomics equivalency:

1965: $0.81 per pound
2013: $4.85 per pound

The theory goes that the world ends once bacon reaches $5 per pound, then the four pigs of porkalypse squeal over the world.

That says it all.
The real cost of anything is in time. How many hours of labor for the average individual does it take to buy it. So if it takes 15 minutes of work to get bacon who wouldn't trade their time that?
Though in many countries you can get something without working for some social reason. For those it would be the number of pounds of bacon they can get per month.

This note - The Chinese are about to acquire US Smithfield Foods. Our bacon will then go to China.

For bread - go gluten free.
For candy bars - Wait for holloween for discounts.