Usually for the past few years inflation if considered "normal" when it is between 1.5 and 3%. Let's examine the doubling of prices. With 1.5% inflation, it would take 47 years for the price of goods to double. With 3% inflation, it would take just 20 years for the price of goods to double. The official definition of hyperinflation is a value of 50% inflation in a month. In this definition, prices would double after only 2 months. A bit ridiculous and far fetched, but possible I guess. But, what about all the other inflationary values in between. Like how about 4%, or 5% or even 8% inflation in a year, sustainable over a few years time....lets say 6 years for arguments sake. at 4%, prices would double in 18 years or in 6 years prices would be 25% higher. At 5%, prices would double in 14 years or in 6 years prices would be 35% higher. At 8%, prices would double in just 9 years and in 6 years prices would be 58% higher. I don't know about you, but prices doubling in just 9 years sounds like hyperinflation to me. So, what do you think hyperinflation is? Is it 8%...is it higher? How fast do you think prices need to go up for it to be considered hyperinflation....because according to these stupid experts, an inflation of 40% in a year is considered just normal inflation.
As you point out, there is no single answer. Nixon imposed price controls when inflation hit 4%, and that rate is certainly high. In the 1970s, it was popular to caclulate the "Misery Index" by adding together the inflation rate and unemployment rate. Anything over 10 was bad and anything over 20 warned of potential collapse. I don't think hyperinflation is a number. It is the point where folks lose confidence in the dollar and begin to protect themselves from holding it or seek alternatives to it. My guess is that a hyperinflation mentality would not kick in unless the rate hits at least 6% and probably could not be avoided if inflation hit 12%+, but that's just my personal estimate.
Hyperinflation is a step beyond merely severe and damaging inflation. It's a term used for when money loses its usefulness as even a short-term store of value and begins to lose its value as a medium of exchange. In hyperinflations people start using foreign currency and barter.
As I understand it, information from my father who lived through it, Nixon didn't institute a price freeze....he instituted a wage freeze. There is a big difference. I don't think 4% inflation is too bad, as we've had that many times in the past 20 years, but maybe only on a monthly basis, not for a whole year. But, for those not working that are on a fixed income, like SS or retirement funds, even 3% inflation is high, as that means all prices will double in 20 years. Retirement being age 65, that means by 85, everything will cost twice as much. I wonder how many people actually consider inflation when they think they have enough money to retire. At my age, I think I will need 1M dollars in the bank and that will just be to cover expenses like food and rent when I retire.
That makes since, a Republican would never freeze prices, but wages would be game. I believe it was Carter, the Democrat, that froze prices.
Take a look at these charts. It's one thing to say prices didn't increase. Its another to look at charts and actually see the prices of things going up. If there was a price freeze, why did these prices increase? http://www.flickr.com/photos/boredzo/3045823858/ http://inflationdata.com/Inflation/images/charts/Oil/Gasoline_inflation_chart.htm http://mysite.verizon.net/vzeqrguz/housingbubble/ 1972] We find several articles about a scandal concering the McDonald's food prices and the Federal Price Commission, no simple hamburger prices quote in tje New York Times. Sample here: "Quarter pounder priced at 55 cents." --"McDonald's Told to Reduce Prices," New York Times, June 3, 1972 (p.21) [Foodtimeline.org] But, when an employee went to ask the boss for a raise, because the price of everything was going up, he was told, "Sorry, Nixon has a price freeze going on." Beside, the information you posted is conflicting. If Nixon wanted to stop inflation, why would he go off the gold standard as a way to devalue the dollar bill? Sound like that would increase inflation, not stop it.
"Ask 5 economists the same question and you'll get 5 different answers. 6 if one went to Harvard."- don't remember the author
I only know one simple fact - I can no longer order a Burger King combo meal without hesitation. With their prices jumping up, I am now more savvy about their junior size items and I have more excuses to avoid ordering drinks.
No kidding. I eat out for lunch nearly every day through the winter. I'm finding prices to be higher everywhere I go. Higher than they've ever been. Yesterday, Pizza hut buffet. With drink...8.86. Plus 1 dollar tip, $9.96 for lunch. For one person. Today I ate at a bar. Had an average (frozen) fish sandwich with cheese only (no lettuce) fries, a small cup of cottaged cheese and a small plastic cup of pop loaded with ice. The pop was so watered down it didn't even taste like pop. This meal was $9.95 after tax. Plus $1 for a tip. So lunch was $10.95 today. Another bar, in a small town roughly 100 miles away from this one today, I got an average bacon cheeseburger and fries, small cup of chilli and one can of pop (worth 0.25). This meal cost over $11.00 not including tip. Just a common bar lunch. Prices weren't even close to this last year. And I've eaten at these same places many times. $8 total was high last year. Not anymore! Don't know what's to blame but I'm really noticing it. Then if you do try to go with the old fashioned $5 lunch, you will get $5 portions. $5 doesn't cut it anymore. The pop is a bad ripoff at most places.
I seem to dimly recall reading somewhere that soft drinks are the highest margin item on many menus, especially in fast food places. And most of the time, the pop (or soda if you're from Joisey) comes in a cup that is filled to the brim with ice. I've been to at least one place where they will not sell you the "super biggie" soft drink unless it is served that way-- filled with ice, maybe 5% of the volume is actual pop. Anyway... With respect to inflation and/or hyperinflation, I think the current metrics are a bit of a joke. First, it's hard to average out when prices rise on different things at different rates; second, there are all kinds of games played with the official measurement. I have a tough time believing that the inflation rate is low every time I visit the supermarket.
Well, I believe (not certain) that food and gas aren't included in the index. The one thing about fast food prices in general, is once they go up, they never bring them back down. So, the prices you see today are here to stay.
