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Old 04-13-2011, 02:01 AM   #116 (permalink)
Thymeclock
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Quote:
Originally Posted by jamesqf View Post
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?
No, that's a predictable, cyclical trend in prices, typical of most produce items. If next year's price cycle rotates from $2.49 to 4.75, that's inflation.

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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.
You are saying that when the price of gas goes up, the price of other things goes down? My, what peculiar logic!

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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 ), increasing demand, of course the price is going to go up over the long term.
If you truly believe that "there's only so much in the ground, so every barrel pumped decreases the supply" tell us how much exactly is there. You can't do it, can you? Nor can anyone. Ever heard of oil exploration? If anyone could say they knew where every drop of oil on earth was, oil exploration wouldn't exist. That part of your argument is obviously total nonsense.

But the available supply (actually it is the production not the supply that is limited) - is limited by an oil cartel that largely determines what it shall be. Even though the demand goes up, the supply is not increased, because it is not to the advantage of the cartel to do so. Remember, a market with a cartel as a dominant force is anything but a "free" market.

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PS: It's the same with your house price. Even ignoring effects of inflation & housing bubble, you'd expect the price to go up.
Why is that? Because we have gotten used to inflation as a chronic government policy and have become inured to it as being a "good" thing. Yet there is no inherent good in it. YOU expect it because it is predictable and it is your expectation. If it were to increase or decrease beyond that expectation I could paraphrase your logic from the earlier paragraph: *But no one with any sense would have expected the inflation rate to remain stable, even in the most stable of economies.* Again, food and fuel can increase much beyond the supposedly predictable official rate, because they are no longer in the index, which has been selectively edited.

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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.
Only if you want that. You could buy a huge tract of land and live in a small cabin if you wish. Nothing is preventing you from doing that. "Mc Mansions" may be the fashion these days, but fashions come and go, and mansions do too.

BTW, you never did tell us where you live where we will find those cheap food prices you cited.
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