inflation without income inflation

[kev374]

It is an agreed upon concept that inflation lowers the value of savings and decreasing the purchasing power of the currency. But here is my question, if there is no income inflation isn’t the relative value of the currency still held?

For instance, say an item costs $1000 today and someone earns $2000/month and has savings of $1000 to exactly afford that one item.

Now forward some time period, that item costs $2000, earning is still $2000/month and savings is $1000 (forget interest income).

In both cases it still takes 15 days of earning to result in a savings of $1000. So in terms of “amount of work” required the value of the savings has not gone down.

Does this even make sense? I’m just trying to look at this from a different lens.

[Eugene]

Since you could buy 1 item with your savings and now you can only buy 0.5 items, the value of your currency has clearly declined compared with the value of the item.

You should ask yourself why this item now costs more, and whether it translates into higher wages for somebody.

[Eugene]

Since you could buy 1 item with your savings and now you can only buy 0.5 items, the value of your currency has clearly declined compared with the value of the item.

You should ask yourself why this item now costs more, and whether it translates into higher wages for somebody.

[Eugene]

Since you could buy 1 item with your savings and now you can only buy 0.5 items, the value of your currency has clearly declined compared with the value of the item.

You should ask yourself why this item now costs more, and whether it translates into higher wages for somebody.

[Eugene]

Since you could buy 1 item with your savings and now you can only buy 0.5 items, the value of your currency has clearly declined compared with the value of the item.

You should ask yourself why this item now costs more, and whether it translates into higher wages for somebody.

[Eugene]

Since you could buy 1 item with your savings and now you can only buy 0.5 items, the value of your currency has clearly declined compared with the value of the item.

You should ask yourself why this item now costs more, and whether it translates into higher wages for somebody.

[vagabondo]

I’ve understood inflation to be a product of money supply. In a given economy, if the money supply increases, yet your income remains unchanged, both your buying and saving power decrease.

[vagabondo]

I’ve understood inflation to be a product of money supply. In a given economy, if the money supply increases, yet your income remains unchanged, both your buying and saving power decrease.

[vagabondo]

I’ve understood inflation to be a product of money supply. In a given economy, if the money supply increases, yet your income remains unchanged, both your buying and saving power decrease.

[vagabondo]

I’ve understood inflation to be a product of money supply. In a given economy, if the money supply increases, yet your income remains unchanged, both your buying and saving power decrease.

[vagabondo]

I’ve understood inflation to be a product of money supply. In a given economy, if the money supply increases, yet your income remains unchanged, both your buying and saving power decrease.

[kev374]

yes, I understand the traditional relationships – that the buying power is decreased.

However, I wanted to determine the value of the currency as how much effort it would take to obtain that money…which is how that $1000 is view as in the effort to obtain it.

I am trying to see if the money would have the same perception of value by people… in the context of how hard it is to obtain it.

If it took you 8 hrs of sweat to obtain $10 today and 5 years from now it is the same then how would you value $10? Regardless of how much things cost.

Yes, if we earned more and things cost more then something of a fixed value, that $10 would be less significant. But what if income was constant.

[kev374]

yes, I understand the traditional relationships – that the buying power is decreased.

However, I wanted to determine the value of the currency as how much effort it would take to obtain that money…which is how that $1000 is view as in the effort to obtain it.

I am trying to see if the money would have the same perception of value by people… in the context of how hard it is to obtain it.

If it took you 8 hrs of sweat to obtain $10 today and 5 years from now it is the same then how would you value $10? Regardless of how much things cost.

Yes, if we earned more and things cost more then something of a fixed value, that $10 would be less significant. But what if income was constant.

[kev374]

yes, I understand the traditional relationships – that the buying power is decreased.

However, I wanted to determine the value of the currency as how much effort it would take to obtain that money…which is how that $1000 is view as in the effort to obtain it.

I am trying to see if the money would have the same perception of value by people… in the context of how hard it is to obtain it.

If it took you 8 hrs of sweat to obtain $10 today and 5 years from now it is the same then how would you value $10? Regardless of how much things cost.

Yes, if we earned more and things cost more then something of a fixed value, that $10 would be less significant. But what if income was constant.

[kev374]

yes, I understand the traditional relationships – that the buying power is decreased.

However, I wanted to determine the value of the currency as how much effort it would take to obtain that money…which is how that $1000 is view as in the effort to obtain it.

I am trying to see if the money would have the same perception of value by people… in the context of how hard it is to obtain it.

If it took you 8 hrs of sweat to obtain $10 today and 5 years from now it is the same then how would you value $10? Regardless of how much things cost.

Yes, if we earned more and things cost more then something of a fixed value, that $10 would be less significant. But what if income was constant.

[Author]

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