I appreciate the reply, but with respect it just explains what happens, not why 25c doesn’t have the same value now as it did 60 years ago, or 100 years ago.
Ultimately no one agrees 100% on the answer. But we can say there are two major reasons.
Demand is significantly higher than supply, thus raising prices. It basically costs more to buy the same thing because it’s scarce.
Or prices go up because raw materials cost more. Tariffs are an artificial way to add costs of production. But lack of the basic materials causes prices to go up thus lowering purchasing power.
To a lesser extent, public sentiment can drive inflation. And printing money as well.
All of this is exacerbated by the dollar not being tied to gold anymore.
The simplest factor is that more money gets printed. One of the foundational assumptions of market systems is that the more of something there is the less valuable it is (generally speaking). So inflation is just your dollar slowly getting less valuable over time
In the 1960s, you could buy a candy bar for 25c. Today, the same candy bar is like $5.
That $5 has the same buying power as 25c in the 60s. It means the money is worth less over time.
I appreciate the reply, but with respect it just explains what happens, not why 25c doesn’t have the same value now as it did 60 years ago, or 100 years ago.
You didn’t ask why. With all due respect. You said you didn’t get it. Maybe next time be more descriptive of what you’re looking for.
The joys of the internet. My “respect” comment was genuine.
But why
Ultimately no one agrees 100% on the answer. But we can say there are two major reasons.
Demand is significantly higher than supply, thus raising prices. It basically costs more to buy the same thing because it’s scarce.
Or prices go up because raw materials cost more. Tariffs are an artificial way to add costs of production. But lack of the basic materials causes prices to go up thus lowering purchasing power.
To a lesser extent, public sentiment can drive inflation. And printing money as well.
All of this is exacerbated by the dollar not being tied to gold anymore.
The simplest factor is that more money gets printed. One of the foundational assumptions of market systems is that the more of something there is the less valuable it is (generally speaking). So inflation is just your dollar slowly getting less valuable over time