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I remember when I was eight years old. Somebody said angrily that gas cost two bucks.
$2…
I barely even knew what that meant.
Now it's over $4 where I live.
This sounds small. It's not. Gas has over doubled in 20 years. Groceries? Worse. Housing? Don't even get me started.
And it just seems to be accepted. "Things get more expensive over time." You heard that everywhere. We’re programmed to believe it. And I believed it too.
Here's what nobody told me in college. In a productive economy — one where people are getting better at what they do — prices are supposed to go DOWN. Not up.
The purpose is to economize. To save. To create tools that makes us better at our jobs and allow us to produce more over time.
Think about it. If chicken farmers get more efficient and produces twice as much chicken, what happens to the price of chicken? It should drop. Supply goes up, price comes down. This is a simple principle to grasp.
So why doesn't it happen?
Because someone is printing money. This increases the prices of machines, fuel, food, labor and other variables needed to create these chickens. That makes the end product (The chicken) more expensive, and thus, a higher price must be charged.
It also makes it less competitive, because less individuals are able to enter the market because they can’t afford the price of the inputs.
This is not capitalism.
The best analogy I’ve heard for inflation is to think of the entire money supply as a pizza. Everyone owns one slice. When they print $200 billion, they didn't bake a bigger pie. They just slice the pizza into more pieces. Your slice (ownership) just got thinner.
If that sounds like theft, it’s because it is.
Thomas Paine said is best: "Our calamity is heightened by reflecting that we furnish the means by which we suffer."
We're paying for it. All of it. The wars we didn't vote for. The bailouts we didn't approve. The $39 trillion in debt that no one asked for.
Next time someone tells you "things just get more expensive," ask them one question.
Why do you think that is?
The very best,
Matt McMahon