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That is not how inflation works! [1]

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Date: 2022-11-11  

Yesterday Octobers inflation rate was announced and it is lower than Septembers. Likely due to the Federal Reserve jacking up interest rates to cripple the housing market and make credit cards more expensive to use.

Of course the right was running on inflation becoming hyperinflation and laying the groundwork to establish a dictatorship. (A common out come from hyper inflation). So when it came in lower, you saw their panicked denial screeching “it can’t have come down, I’m still paying more for food and gas! The price of things have not come down!”

It makes you want to put some sense into them with several blows from a semi-frozen mackerel.

No prices have not come down. Lower inflation rates do not lower prices. “Deflation” lowers prices.

we won’t see prices come down till inflation is flat around 0-1% or maybe 2% if things are done to promote deflationary prices.

What the religious homeschooled “red wave’ers” do not understand is math.

Inflation is the rate of increase from one point to another. It can be measured monthly, yearly, or even hourly when looking at money.

So if something over the year has inflated at a rate of 8% then slows the rate of inflating over another year to 7% you do not have a decline from the base level of 1%, you have a two year increase (inflation) of 15%.



Example: you have a car tire that has a base rate of 20 psi. Over the course of a month you increase the amount of psi by 8%, giving you a new base of 21.6 psi.



The next month you slow how much you increase the psi by 1% and only increase the psi by 7%. You won’t see the tire psi decrease to 21.4. You would see the tire at 23.11 psi. (Had it stayed at 8% it now would be 23.33 psi)

Inflation is cumulative. It does not go down till deflationary pressures develop. Such as economic depression/collapse, massive unemployment, or increased production/improved efficiency. Only one is a good thing. If people are making more goods or making them with less effort the price will go down in a good way. But the Fed can’t cause that directly to happen. It can increase unemployment and make it hard to make ends meet. So they swing that hammer but are careful to avoid the thumbs of the rich and powerful.

The rest of us have to do the best we can with a Fed that does not care about us.

Pay down that credit card debt, develop an emergency fund, increase your food storage, reduce your expenses, and buy quality items that you know will last a long time. Commander Vimes said it well “the rich are rich because they can afford to spend less money.” They but quality that over the life of the item costs less. You could buy a cheep $20 garden hose that will last the year, every year. Or a $60 hose that will last ten years. So you spend $200 buying the cheep hoses vs $60 to have a hose when you need it.

Sadly prices will not go down anytime soon in a good way. Thanks to the Fed’s one trick sledgehammer tool box.

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[1] Url: https://www.dailykos.com/stories/2022/11/11/2135305/-That-is-not-how-inflation-works

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