Is class in session? Very good, clear explanations of the impact of inflation on the value of assets. But one of the points made was regarding impact of inflation on near-term affordability.

Back to Burger King…

If you make $1 day, and a Whopper is $1.85. You’re not having a burger today. Five years later, BK still sells the Whopper for $1.85. Inflation was 3% during that five years, so in real terms the dollar is now $1.56.

Now let’s say that your wage grew 5% annually during the 5 yrs (a fairly typical annual wage increase), now your making $1.22.

You still aren’t buying a burger!

$1 per day wage may sound ridiculous, but we aren’t really talking about burgers. Median income in SD is about $62k and median home is 9x that!

Who wants to lend me some $$ for a burger? Fixed rate only please…