Econ 101 lesson 5: Inflation

Good morning class. First, let me say that i am sorry for being away so long. Here is a bit of insight into the life of the LibertyHound. I am taking 18 credit hours this semester at a private college so i can get out of there in May. I carry a full time job in sales and study and teach Gracie Jiu Jitsu. Today, I am bereaved with the death of Grandmaster Helio Gracie, so I turn to the warm bosom of Economics to make me feel better.

First, a review. Supply and demand: The more of something that exists in an economy the less value it has. Value: Remember, Value is not only measured in dollars. We best determine the value of fuzzy dice by looking at the tradibility of them with several other goods. If fuzzy dice trade for 5 dollars or a car, then 5 dollars is not a fair measure of the value of said dice. so it can be said that the value of one dollar is about one McDonalds double cheeseburger, or not much at all. For a better understanding of how inflation works please watch the following animation.



See, when the Fed prints more and more money prices go up and the value of your savings drops. This takes up away from a savings based economy. (see earlier blog entry) All prices go us as a result of inflation. This stabilizes quickly enough domestically if wages increase to meet the new prices (this NEVER happens quickly), but we get most of our important goods from other places. When we inflate our currency it takes more dollars to buy other currency. Therefore, prices on foreign goods go up fast, first, and forever. These prices do not stabilize as easily as domestic ones. Thinks like oil spike in price and do not fall again easily. Fora an example of this look at the past and future stimulus packages. Gas spiked immediately after and will again.

To see how this phenomenon is happening in our nations economy today, please watch this clip from Glen Beck. My respect for seems to keep growing. I hope Fox News doesn't ruin him.



For your homework, keep studying America's unique economy and PAY ATTENTION TO REALITY!! Class dismissed!