The Belief About The Decline Of Purchasing Power
(Edited)
You money goes further than it use to. Yes you read that correctly.
People seem to think the purchasing power of a dollar is taking place. This simply is not true. The dollar buys more than it use to.
How can that be? The cost of things are going up?
In this video I discuss how this viewpoint omits a lot of factors. The first is we now have a lot of things that are free which use to cost money. Secondly, and even more important, very little is the same as it was 40 years ago. Thus, what you are purchasing is much more than what you received back then.
▶️ 3Speak
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Everyone always talks about inflation and your buying power losing value. But really when you think about it on a deeper level you do get more for your $. Manufacturing costs are dropping, it's easier to get resources with less man power and it's only going to keep getting better. Imagine a time where we actually mine other planets and asteroids for resources.
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We are spending money on stuff today that was only a dream a few decades ago.
How do you even begin to compare that?
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It's all about how you think of things relatively. With the advances in technology, we are getting better items at a cheaper cost. If people are just comparing the prices short-term then of course it seems expensive. All you need to do is compare the price of a brand new high end graphics card and then compare the price a few years down the line. It becomes far cheaper because there are now even better graphics card and the costs have gone down.
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I think if people talk about the purchasing power of the dollar, it is in the long run
I really think that the purchasing power has decreased from what it was in previous years
But this matter is not only for the dollar, but for all currencies around the world
So it is relative
But the good thing is cryptocurrency's purchasing power is going up
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I think its near impossible to measure a basket of goods over decades anymore. 25 years ago no one paid $50-100 a month for a cell phone plan - and you nailed housing - they were 1400-1800 sq feet, now you can't buy one that small.
We voluntarily sign up for monthly services that nickle and dime your disposable income to the point where many don't save. $100 a month for cell/internet/cable/etc plus some steaming services and we end up eating the extra purchasing power we got from all the technology gains.
I think we can take back a lot of our purchasing power if we take a real hard look at our recurring monthly services we sign up for, some are mandatory, others can be eliminated, and some can be reduced.
I do think we are currently in 2021 facing some price pressures in several areas from 2-3 years ago. Food and building materials are the easy ones, there are shortages, and rising prices across the board, but that is likely a short term trend in response the the past 18 months.
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You mentioned the dollar,..well I think it also depends on the country ,from where I am,the purchasing power have reduced and it was caused by the bad economy of the country,things you could buy for a certain amount two years ago now cost up to X2 of it's previous price so In 2021 you even have to spend more to get that same thing....my opinion here is based on what is going on in my own country and it's not a general situation I think....
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I guess when you have a significant percentage of the population struggling even though they work full time you can get these misconceptions quite easily
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And how many of those people are paying for cable television, smart phones, driving new automobiles, subscribing to netflix, and a hos to other things that didnt exist years ago.
So perhaps the misconception is yours.
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I meant that people that are struggling might have the misconception of the dollar is worth less than in the past
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Wow taskmaster.. you are constantly changing my perspective.. the purchasing power argument has been my go-to critique of central banking/fiat currency, and governments flooding the markets with trillions of dollars in "stimulus".
Summary:
In this video, the speaker addresses the misconception surrounding inflation and purchasing power. He challenges the belief that an increase in the money supply automatically leads to a decrease in purchasing power. The speaker emphasizes that technological advancements and shifts in the economy have led to more opportunities, diversification in where money flows, and the availability of various products and services at lower costs or for free. He highlights how certain key indicators like the Consumer Price Index (CPI) do not fully encompass these developments, thereby leading to misinterpretations about the strength of the dollar and purchasing power.
Detailed Article:
The speaker delves into the topic of inflation and purchasing power, shedding light on the common misunderstanding that an expanding money supply results in reduced purchasing power. He clarifies that this belief oversimplifies a complex economic landscape and fails to consider important factors like the growth in population over the years since 1915. By comparing the expansion of the money supply to population growth, the speaker challenges the narrative that more money should equate to diminished purchasing power.
Furthermore, the speaker elaborates on how advancements in technology have significantly impacted various sectors, contributing to greater efficiency, cost reduction, and accessibility to products and services. Examples cited include the evolution of communication systems, space travel, biogenetics, and information technology. He argues that these advancements have led to a diversification in where capital flows, ultimately influencing the value of the dollar and the perception of purchasing power.
The speaker also touches on the limitations of traditional economic indicators like the CPI, noting that they fail to account for the numerous free or low-cost services and products available today that were previously expensive or inaccessible. He discusses the deflationary effects of technological progress, such as the reduced costs in video production, communication, and online shopping through platforms like Amazon, which provide products at lower prices compared to physical stores.
Addressing specific examples, the speaker mentions the relative cost reductions in items like smartphones, laptops, and internet services, highlighting the significant advancements and affordability of these products over the years. He contrasts the expenses associated with long-distance calls or video production in the past to the current landscape where these services are often free or heavily discounted due to technological innovations.
In conclusion, the speaker urges viewers not to fall into the trap of believing that purchasing power has declined over the years due to inflation. He emphasizes the importance of recognizing the abundance of free or low-cost advancements in today's society and how these innovations have transformed daily life, making many services and products more accessible than ever before.