$600 Cars & 12 Cent Hamburgers

$600 CarI always like finding new ways to look at numbers when it comes to personal finances (yes, I’m a geek in that way). It was with this in mind that I read an article over at Mises.org about how the expansion of monetary policy has had a significant impact on the prices that we pay today:

…the expanding money supply over the last 46 years has resulted in a current price level over 34 times higher than it otherwise would have been.

Let’s put this in everyday terms. Suppose these estimates represent the changes in the prices of goods such as hamburgers, cars, and housing. According to these numbers, a hamburger that cost 60ยข in 1959 would have cost $4 in 2005. If the money supp


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5 Responses to $600 Cars & 12 Cent Hamburgers

  1. bluprint says:

    You said: “What this does show is that it’s not only inflation that has caused the prices of the goods we buy (our everyday personal finances), but also how the government runs and increases the money supply. ”

    I just want to point out, that when government increases the supply of money, that CAUSES inflation. In fact, the article even says: “the money supply was fixed, prices would tend to fall”, indicating that in general (adjusting for technological changes or improvements to products) all price inflation is specifically caused by monetary policy.

    The effect of inflation (the reason we should all care) is that it causes savings/cash to become worth less, which deteriorates incentive to save. We literally have a government that regularly takes action (via monetary policy) to discourage savings. Nice, huh?

  2. pfadvice says:

    heh – didn’t word that very well and you are absolutely correct. That’s what I get for writing posts at 2:00 in the morning.

  3. LJ Cox says:

    Of course, your 2005 wage would also be proportionately smaller than in 1959.

  4. livingplanet says:

    i see you read mises (and probably hayek?). good, just as long as you note that there is an eternal power struggle between gov’t, big business, and labor. yet, the economy is a three-legged stool composed of all three. what’s my point? i believe in a radical middle or the third way…

  5. Aniela says:

    Wouldn’t it be nice tho if a hamburger was still .12 cents ? :)

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