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Want to understand how inflation impacts your purchasing power? Let's look at The New Yorker, which publishes the price of each copy right on the front of the magazine. 1925: 15 cents 2024: $8.99 What the heck happened to make The New Yorker so much more expensive?
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It's important to understand that technology is naturally DEFLATIONARY. Everything should be getting cheaper over time, including The New Yorker. Think about it: printing, writing, & editing technology has improved tremendously since 1925. So, why is the magazine more expensive now? From 1925 to 1971, The New Yorker increased in price from 15 cents to 50 cents, an increase of 233.33%. That's pretty dramatic, but not THAT bad... But from 1971 to 2024, price increased from 50 cents to $8.99, an increase of 1698%. So, WTF happened in 1971? In 1971, Richard Nixon "temporarily" suspended the convertibility of dollars to gold, ending the Gold Standard. This meant that the Federal Reserve could now print dollars out of thin air without restriction. Increasing the money supply by creating new money out of thin air is literally "inflation." "Prices rising" is the result of inflation. When more monetary units are created, the purchasing power of the monetary units that already exist decreases. When the government/central bank prints money out of thin air, they are STEALING your purchasing power. Here's The New Yorker over a few decades: 1971: $0.50 1980: $1.00 1990: $1.75 2000: $3.00 The magazine did not become more valuable, our MONEY became LESS valuable.
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By looking at this example of The New Yorker, which cost 15 cents in 1925 and costs $8.99 today, we see that the U.S. dollar has lost approximately 98.33% of its purchasing power in less than 100 years. This is what happens when you print money out of thin air... When money is controlled by the State, you are powerless to stop the destruction of your purchasing power. Technology should be making everything LESS expensive over time, but even something as simple as a magazine gets more and more expensive over time. image So, what can you do to protect yourself from the government/central bank printing money out of thin air and destroying your purchasing power? Study #Bitcoin with @THE Bitcoin Podcast There will only ever be 21 million bitcoin and no government or central bank can print more.

Replies (16)

Inflation and your purchasing power image
walker's avatar walker
Want to understand how inflation impacts your purchasing power? Let's look at The New Yorker, which publishes the price of each copy right on the front of the magazine. 1925: 15 cents 2024: $8.99 What the heck happened to make The New Yorker so much more expensive?
image image
It's important to understand that technology is naturally DEFLATIONARY. Everything should be getting cheaper over time, including The New Yorker. Think about it: printing, writing, & editing technology has improved tremendously since 1925. So, why is the magazine more expensive now? From 1925 to 1971, The New Yorker increased in price from 15 cents to 50 cents, an increase of 233.33%. That's pretty dramatic, but not THAT bad... But from 1971 to 2024, price increased from 50 cents to $8.99, an increase of 1698%. So, WTF happened in 1971? In 1971, Richard Nixon "temporarily" suspended the convertibility of dollars to gold, ending the Gold Standard. This meant that the Federal Reserve could now print dollars out of thin air without restriction. Increasing the money supply by creating new money out of thin air is literally "inflation." "Prices rising" is the result of inflation. When more monetary units are created, the purchasing power of the monetary units that already exist decreases. When the government/central bank prints money out of thin air, they are STEALING your purchasing power. Here's The New Yorker over a few decades: 1971: $0.50 1980: $1.00 1990: $1.75 2000: $3.00 The magazine did not become more valuable, our MONEY became LESS valuable.
image image image image
By looking at this example of The New Yorker, which cost 15 cents in 1925 and costs $8.99 today, we see that the U.S. dollar has lost approximately 98.33% of its purchasing power in less than 100 years. This is what happens when you print money out of thin air... When money is controlled by the State, you are powerless to stop the destruction of your purchasing power. Technology should be making everything LESS expensive over time, but even something as simple as a magazine gets more and more expensive over time. image So, what can you do to protect yourself from the government/central bank printing money out of thin air and destroying your purchasing power? Study #Bitcoin with @THE Bitcoin Podcast There will only ever be 21 million bitcoin and no government or central bank can print more.
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So somewhat counter intuitive is the inflation rate decreases over time. From 1925-1971 price increase is on average 7.9% per year compounded. From 1971-2000 price increase is 6.5% per year and from 1971-2024 it’s 6.0% per year on average.
Great post! I assume sales volumes have dropped as with a lot of printed and paid media. The quality drops as they make up the short fall with more internal advertising, before long it’s 90% ads. I am not a reader, but I imagine the above phenomenon is also a reason for the price increase.
Publishing/printing technology is just one small part of it. What matters is content quality. You need to find and pay high quality educated and tallented writers. In today's economy you can't pay them the salary from 100 years ago. So the point is valid, money are loosing value, it's just that technology can't offset quality writing. Ai is not there yet either.
The New-Yorker example makes sense and I fully agree with the general idea of deflationary technology, but it can't be extended to every product and service. Technology by itself will not make everything cheaper. Just look at a car made in the 60s and compare it to a current car. Sure, there's a tremendous amount of productivity stolen by inflation. But there're also safety improvements (ABS, airbags, structural design,..), regulatory changes ("safety", fuel efficiency,...), and hedonistic enhancements (AC, better seating, multimedia,...). The same goes for houses. The function has not changed though: drive from A to B for a car and shelter for a house. Eventually, even if salaries had followed inflation, cars and houses have become less affordable for the average family. image
Fully agreed. Posted a similar note too. Same thing for gold, real estate. Value increase yes, to a certain extent, but primarily driven by money supply increase. When I use the same line of argument for friends and family, they revert to "observational" counterarguments like "because wages are increasing" or "because raw material prices are increasing". All symptoms but no one can pinpoint the actual root cause. How else can we explain this to them apart from "our money is broken?" Whats the flow of thought to bring them to the conclusion?
Kian Jer
What are your go to analogies/reasonings in explaining a deflationary world to friends & family?

Feels like my explanation is still seems ...
At most it should be like $3 ... I think. Based on online tools I used.
walker's avatar walker
Want to understand how inflation impacts your purchasing power? Let's look at The New Yorker, which publishes the price of each copy right on the front of the magazine. 1925: 15 cents 2024: $8.99 What the heck happened to make The New Yorker so much more expensive?
image image
It's important to understand that technology is naturally DEFLATIONARY. Everything should be getting cheaper over time, including The New Yorker. Think about it: printing, writing, & editing technology has improved tremendously since 1925. So, why is the magazine more expensive now? From 1925 to 1971, The New Yorker increased in price from 15 cents to 50 cents, an increase of 233.33%. That's pretty dramatic, but not THAT bad... But from 1971 to 2024, price increased from 50 cents to $8.99, an increase of 1698%. So, WTF happened in 1971? In 1971, Richard Nixon "temporarily" suspended the convertibility of dollars to gold, ending the Gold Standard. This meant that the Federal Reserve could now print dollars out of thin air without restriction. Increasing the money supply by creating new money out of thin air is literally "inflation." "Prices rising" is the result of inflation. When more monetary units are created, the purchasing power of the monetary units that already exist decreases. When the government/central bank prints money out of thin air, they are STEALING your purchasing power. Here's The New Yorker over a few decades: 1971: $0.50 1980: $1.00 1990: $1.75 2000: $3.00 The magazine did not become more valuable, our MONEY became LESS valuable.
image image image image
By looking at this example of The New Yorker, which cost 15 cents in 1925 and costs $8.99 today, we see that the U.S. dollar has lost approximately 98.33% of its purchasing power in less than 100 years. This is what happens when you print money out of thin air... When money is controlled by the State, you are powerless to stop the destruction of your purchasing power. Technology should be making everything LESS expensive over time, but even something as simple as a magazine gets more and more expensive over time. image So, what can you do to protect yourself from the government/central bank printing money out of thin air and destroying your purchasing power? Study #Bitcoin with @THE Bitcoin Podcast There will only ever be 21 million bitcoin and no government or central bank can print more.
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