Don Verto asked in Social ScienceEconomics · 1 year ago

When did inflation start raising prices? Of course we can not go back to zero.I remember coffeee at a rstaurant for 10 cent.?

1 Answer

  • Ray
    Lv 6
    1 year ago

    Once we no longer pegged our currency to precious metals.

    Back then prices were crazy and currency was worse. One day your dollar could have bought a show, a year later you would need 5 dollars for the same show, and a year later 50 cents for the same damn shoe.

    You had hyper inflation and deflation in a matter of months because the price of previous metals is very unpredictable.

    That was also bad, because if you had a period of deflation people would stop spending money and save, which meant stores would not sell and would have to lay off. Then, if you had hyperinflation, well that is self explanatory.

    Ever since we got fiat currency the USD at least has had a steady inflation rate of around 2% every year, so it is predictable and has been an incredibly stable and predictable asset, a little inflation also promotes spending.

    On a side note, while coffee is more expensive in dollar amounts, more people make more money and can afford more coffee.

    Back in the day barely anyone had a car because they were too expensive. Now most people have cars, air conditioning, TV's, phones internet etc etc

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