Gas in Europe is $8 to $10 a gallon...  
When it starts approaching that price here,.. it won't be the end of everything... but, it will stop the size war on the streets...
We'll start driving cars instead of tanks...

Milk... is artificially cheap in the US... it is subsidized...
...and it is due to expire...
It won't,.. because there would be massive outrage if the price suddenly jumped to $7 or $8 a gallon...

On the other hand...
Flat screen TV's, MP3 players, and tablets are cheap as dirt...
Odd,.. that we can afford luxuries but not necessities...
I have 3 flat screens, several MP3 players, and a tablet (worthless)... but, I only buy milk on sale, and drive as little as possible, thrift shop clothes,.. I buy outdated meat, and stock up on food sale items...
It's also pretty chilly in my house...
1 month's heat bill, or grocery bill,... can buy a new TV... or whatever...
It seems odd to be able to afford these unnecessary luxury items, but be cold and eating food that is discounted...

Luxury is cheap... life is expensive...
Seems out of balance... ...

There are a million reason why Obamacare is the single worst government action of the past 100 years if not ever, but chief among these is it takes away yet more freedoms. It enslaves yet millions more to Uncle Sam.  There are not enough words for the damage it will do.

One reason for inflation is the demand/supply ratio: the more demand, the less supply, the more prices rise.

Another reason for inflation is technological improvement. I'm not talking about electronics, I mean mechanical technology.
Way back when cars were cvars, not computers on wheels, the newer model would often have a fancier paint job and chrome hubcaps, yet cost a tad more. And overall prices would rise.
See the cost of a Chevy BelAir from 1954 to 1958, I don't see a technological improvement yet prices rose.

A third reason for inflation is monetary devaluation, so that imported goods will cost more because on the foreign exchange you need more Dollars to the Yen or DMark or whatever.

Serowbot wrote on 11/29/13 at 22:04:45:


Gas here in Italy is currently €1.80 which means $9.40/gal.
Even back in the 1970's, we only needed a 1.3 liter engine to develop 100hp, and a 2.0 liter car to develop 150hp. (Alfa Romeo figures, SAE net)

Quote:


Milk, bread and flour are three subsidized necessities wherever you go.
Luxury is cheap only in those nations where immediate pleasure is considered more important than the bare necessities.
See Aesop's "The Ant and the Grasshopper".

As far as I am concerned, the only debt I have is my mortgage, which will expire in Dec.2016.
Everything else is bought and paid for upfront. If I can afford it, I buy it, else, I leave it on the shelf.

PS I buy milk, fresh, one quart at a time, on a daily basis; same for bread, fruit, vegetables.
It's the "Old World" habit of having produce grown and sold locally, as opposed to the settler habit of riding to the PX once in a while and loading their wagon.

finally, a good discussion...!!!

Another reason for inflation is technological improvement. I'm not talking about electronics, I mean mechanical technology.
Way back when cars were cvars, not computers on wheels, the newer model would often have a fancier paint job and chrome hubcaps, yet cost a tad more. And overall prices would rise.
See the cost of a Chevy BelAir from 1954 to 1958, I don't see a technological improvement yet prices rose.

lot of good interesting stuff in this inflation post; thanks pga...

Technology gains boost productivity which lowers or negates the effect of inflation....

I'm guessing the price increase on the BelAir with no technology improvements to offset the price increase was a marketing strategy and an attempt to recoup as much profit as possible without sacrificing customer growth. That strategy has a lifespan associated with it. You can't keep increase prices without offset.

An interesting rule of thumb I've always heard, is when you consider technological improvements, the real price of everything other than commodities, lowers over time with the exception of real estate and taxes. Maybe real estate and taxes ARE practically speaking, commodities.

There have been amazing gains in efficiency and productivity in manufacturing. Programs like Six Sigma and Project Management have really made those processes of manufacturing much better. To produce food in a similar way involves the franken-foods industry that is killing us today. Using for for fuel is also a travesty.

Franken-foods industry? Explain. I am heavily involved in the food industry, not sure what you mean.