Net worth and real value
I’ve often spoken and expressed my opinion of inflation.
Headlines today spoke to record inflation this year and increased personal net worth and home values.
Having been born in the middle of WWII my view and opinion of the dollar is far different from the youth of today. Inflation as I watched started in the 60’s the cause and effect can be discussed by the experts. I only speak to my own observations.
Today we go to the grocery store and meat is neatly packaged in cleanly and safely. When I was a child, we went to the butcher shop. There was saw dust on the floor, you picked the type of meat you were interested in, and it was cut and packaged then and there.
This type of service may improve hygiene and safety which is wise and practical, but they are also expensive and add to the cost of the product. Labor shortages and logistic supply issues have increased the overhead and are recouped by business through higher prices. There is no increase in the value of a product, just the cost.
From personal observations, wages seem to have increased over the last 50 to 60 years. Wages rose from $2 to $3 dollars per hour to $18 to $20 per hour. The same purchase of gas for a car went from $.50 to $3.50 per gallon, to build a home from $15 per square foot to $100. We seem to have greater wealth, but the value of our net worth has changed little.
Much of the inflation we are seeing today came from the good intentions of the COVID stimulation packages. Thousands of dollars were given to the public to prevent hardships anticipated by the government mandated regulation.
This in turn was a windfall of spending money at a time of limited resources being produced due to quarantine. The easy money gave the public a feeling of greater wealth. It will be painful, but to restrain the beast we call inflation, the availability of these unproductive dollars to the public must be restrained.
Within a short time production of available merchandise will balance with the true wealth of our society. This in turn will return the economy to a normal balance with contained inflation.