Inflation

 

We Are The World

We can't go on
Pretending day-by-day
That someone, somewhere soon make a change
We're all a part of God's great big family
And the truth, you know, love is all we need

Inflation may be the price we pay for ignoring the world.

There is an expectation that inflation will always result in an Cost Of Living Adjustment in many programs.   Where specific monetary values have been listed in the US Code, e.g. the minimum wage, inflation has eroded its worth, so that it is really only the value in the statute for the year in which it was enacted. E.g. the minimum hourly wage of $7.25 was last changed in 2009.  Since that time, inflation has eroded the purchasing power of that wage such that $7.25 in 2009 USD is worth  only $5.58 in 2021 USD.   Inflation, which has been positive since as long I can remember, has decreased the effective value of the minimum wage.

The mistake may be in focusing on year-to-year inflation, e.g. the 2022 purchasing power of a the US dollar, versus the 2021 purchasing power.  Annual inflation is to long-term inflation what weather is to climate.   Annual, year over year, inflation may be loved by the financial experts and media.  However if you look at long term inflation, it can  be divided into three periods, which have not changed since a blog post in 2018,  https://dbeagan.blogspot.com/2018/08/the-happening-riding-high-on-top-of.html,  even given recent CPI data though 2021. 

If this trend of long-term inflation is correct, year to year inflation is actually continuously declining and while it is forecast to be only 1.2% in 2050, a 2021 USD then will have the purchasing power of  only $0.6695.  As long as the USD is a major international reserve and trading currency, and the world economy is growing, then the US money supply, which is set by the Federal Reserve which considers the growth of the US economy, but does not appear to account for the growth of the world economy, will have long-term inflation.  Unless we acknowledge that we are the world, then the continued inflation of the US currency has to be expected.