money illusion: In economics, money illusion, or price illusion, is a cognitive bias where money is thought of in nominal, rather than real terms.
A tale to warm the hearts of those who are celebrating National Economic Education Month (a web site from the experts at controlling inflation)….
As a 165 lb. 6′-tall teenager in 1978, I could afford to indulge in a Lindt chocolate bar every day or two. These were 99 cents at a drug store that was on my way home from work at NASA Goddard Space Flight Center and school at George Washington University. I think they might have been 125g. CVS back in April was selling 150g bars for $8.49. That’s an inflation rate per gram of about 615%, which seems staggering but can be accomplished by compounding 4.3% per year for 47 years.
(note that the size also had to inflate, along with average American BMI, from 125g to 150g!)
Note that October is also Lesbian, Gay, Bisexual, Transgender and Queer/Questioning (LGBTQ) History Month. According to Wikipedia, there’s a Florida angle to this observance: “In 2012, for the first time, two American school districts celebrated LGBTQ History Month. The Broward County school district in Florida signed a resolution in September in support of LGBTQ Americans, and later that year the Los Angeles school district, America’s second-largest, also signed on.”
Here’s a question for you related to today’s post (inflation has been a recurring theme, so clearly interests you…and it should interest everyone!).
Would you and the rest of us prefer some level of general inflation (say 4.3%, to pick your candy bar #) or the same amount of deflation and why?
Phil, the learned students at Wesleyan University encourage you to expand your inclusivity and use the abbreviation LGBTTQQFAGPBDSM for this month’s Celebrations.
Phil, as a New American I often have questions (along with my four wives-ages 8, 9, and two at 11-all of whom I purchased in Kabul last year) and I often find you have answers for me. To that end, I see the abbreviations noted here and I have found it difficult remember this alphabet soup of letters, so am wondering if I can lump them all into the “Buttfucker” bucket that is so familiar to those of us from Peaceful and Inclusive Islamic Countries?
Spent $3 on a commenter grade candy bar, 2 days ago. More satisfying when it’s the currency losing value instead of a price increase. PCE still came in at a low 3% because of falling wages. Most everyone expects a conversion to a digital currency now. $100,000 will buy a digital coin with the buying power of $50,000.