Could someone with more knowledge about economics than I help me with something? I was watching Dr. Salerno's presentation from CPAC 2011, and something didn't sound right:
https://invidious.tube/watch?v=eb9plNmw4ns
The guy claims that, in 1914, there was $11 billion (
$247.43 billion adjusted for inflation) in circulation. In the century since, by 2011, that amount increased to $10
trillion in circulation. Now, the part I'm confused by is why that's necessarily a bad thing. On the surface, I can understand the fact that having more money in circulation means that the dollar is worth less, and tying that to a commodity prevents the Feds from blowing the budget.
That, I understand.
HOWEVER, I'm questioning is the part where they're pointing to that number and trying to say that
that alone is the reason why "things are so terrible". Using some simple napkin math, I was curious what would be the proportional difference if you "redistributed the wealth" (
Basically took all that money in circulation, divided it equally among the population, and giving everyone the same amount of money). Using the 1914 numbers, with a population of 99,111,000, each person would receive $111 ($2,496.82 adjusted for inflation). Using the 2011 numbers, with a population of 310,500,000, each person would receive $32,206.
Now, looking at that number alone (
If I'm understanding things right), it seems scary how much things have gone "up",
until you look at costs of other goods. A gallon of milk in 1914 cost $0.12 ($2.70 adjust for inflation to 2011) and a loaf of bread cost $0.06 ($1.35 adjust for inflation):
https://archive.vn/pug5u
Then, fast forwarding to TODAY, you can go to some random store like Walmart, and find
the price for a gallon of milk costing $2.29 and a loaf of bread costing $2.98. In other words (Adjusting for inflation), the price for milk has decreased while bread prices have doubled.
But, that's only part of it. <Look at the average household income in 1918 (Closest year I can find).
Apparently, with an average family size of 5 people, the average household income was $1518 ($34,145.74 adjusting for inflation). Fast-forwarding to 2015 (Again, closest year I can find), with a family size of 3, that income
increased to $56,277 (About 50% increase in income over 97 years):
https://archive.vn/FHSVv
But, that's not the only part. Looking at the cost of milk and bread in proportion to the average income, the bread and food cost .00012% of the average income in 1914,
meanwhile the bread and food ONLY costs .000094% of the average income in 2015. In other words, when you look at the actually money needed to be spent,
cost have generally deflated in practice, while ONLY increasing on paper.
And, this is just shitty napkin math that I produced on the spot with no degree or college education in economics, markets, or finances.
Why is it people are treating the current financial situation like there's some crisis to be had when prices have overall decreased only for people's standards of living having increased?