Lots More Information
Author's Note: How Inflation Works
If you are 30 or older — like some of us — then you have caught yourself saying things like, "A gallon of gas is almost $4? I remember when it was $1.25!" I call these grandpa (or grandma) moments. In our exasperation, we fail to account for the long-term effects of inflation. And in our refusal to acknowledge that we are indeed getting old, we forget that two decades have passed since gas prices were that low, or that $1.25 didn't feel particularly cheap back in 1993. What I'd like to know is the exact age at which we psychologically imprint prices. We use this internal reference point to compare prices for the rest of our lives. Maybe it's the year that you first start paying for things yourself, like gas. Or the first time you get a paycheck and realize the true value of money. Soon enough, we all have our first grandpa moment.
Related Articles
Sources
- Appelbaum, Binyamin. "Inflation Deflation." The New York Times. April 15, 2012. (March 21, 2013) http://economix.blogs.nytimes.com/2012/08/15/inflation-deflation/
- Batten, Dallas S. "Inflation: The Cost-Push Myth." St. Louis Fed. June/July 1981. (March 21, 2013) http://research.stlouisfed.org/publications/review/81/06/Inflation_Jun_Jul1981.pdf
- Board of Governors of the Federal Reserve System. "How will the Federal Reserve ensure that the size of its balance sheet won't lead to excessive inflation?" April 27, 2011. http://www.federalreserve.gov/faqs/money_12852.htm
- Bureau of Labor Statistics. "Consumer Price Index." March 15, 2013. (March 21, 2013) ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
- Bureau of Labor Statistics. "Consumer Price Index: Frequently Asked Questions." (May 21, 2021)https://www.bls.gov/cpi/questions-and-answers.htm#Question_2
- Federal Reserve Bank of New York. "The Story of Monetary Policy." (March 21, 2013) https://www.polk.k12.ga.us/userfiles/909/Classes/177525/the%20story%20of%20monetary%20policy%20comic.pdf?id=242739
- Goodman, George J.W. "Paper Money." Summit Books, February 1981. (March 21, 2013) http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_germanhyperinflation.html
- Jung, Alexander. "Millions, Billions, Trillions: Germany in the Era of Hyperinflation." Speigel. Aug. 14, 2009. http://www.spiegel.de/international/germany/millions-billions-trillions-germany-in-the-era-of-hyperinflation-a-641758.html
- National Association of Theater Owners. "Average U.S. Ticket Prices." (March 21, 2013) http://www.natoonline.org/statisticstickets.htm
- Spicer, Jonathan. "In historic shift, Fed sets inflation target." Jan. 25, 2012. (March 21, 2013) http://www.reuters.com/article/2012/01/25/us-usa-fed-inflation-target-idUSTRE80O25C20120125
- Task, Aaron. "No, the Fed Does NOT 'Print Money.'" Yahoo! Finance. Jan. 24, 2012. (March 21, 2013) http://finance.yahoo.com/blogs/daily-ticker/no-fed-does-not-print-money-just-explain-150433185.html
- U.S. Census. "Historical Income Tables: Household." (May 18, 2021) https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-households.html
- U.S. Census. "Median and Average Sales Prices of New Homes Sold in the United States." (March 21, 2013) http://www.census.gov/const/uspricemon.pdf
- U.S. Department of Energy. "Fact #219: Average Price of a New Car, 1970 to 2001." June 3, 2002. (March 21, 2013) http://www1.eere.energy.gov/vehiclesandfuels/facts/favorites/fcvt_fotw219.html
- Vlasic, Bill; Bunkley, Nick. "A Bad Year for Car Bargains." The New York Times. May 20, 2011. (March 21, 2013) http://www.nytimes.com/2011/05/21/business/21auto.html