Quote:
Originally Posted by Thymeclock
Some items have increased that much in a short time frame. When a price increase does come it can be large if viewed as a ratio.
|
But when the price of one or a few things increases, it's not inflation, it's supply and demand at work. Inflation is a decrease in the value of the currency, so that everything costs more. It's like strawberries: earlier in the year, you could buy a basket for about $3.98, now they're down to $1.88, in a month or two they'll be down to about a dollar, maybe less, then in the fall they'll start going up again. The value of the dollar hasn't changed, has it?
And in the same time that you see the price of gas (or houses or whatever) go up, you see the price of other things go down, as for instance most electronics, because the supply goes up.
Quote:
|
But actually they were expecting not so much a "right to cheap gas" but a less volatile economy where prices would be more stable and predictable.
|
But no one with any aense would have expected the long-term price of gas to remain stable, even in the most stable of economies. It's good old Adam Smith economics at work: Fixed supply (actually decreasing, 'cause there's only so much in the ground, so every barrel pumped decreases the supply), increasing demand, of course the price is going to go up over the long term.
PS: It's the same with your house price. Even ignoring effects of inflation & housing bubble, you'd expect the price to go up. Increasing population, fixed supply of land. And notice how these days they build on ever-smaller lots? My house, built half a century ago, is about 1300 sq ft on a couple of acres. Nowadays they build 5000 sq ft McMansions on lots of a quarter-acre or less.