US GDP per person has grown about 1% per year on average.
Wages stopped increasing to match productivity in the early 1980s, and that trend continues.
1970s not 1980s:
"The World War I era and its aftermath, 1917–1920, then produced sustained inflation unmatched in the nation anytime since. Prices rose at an 18.5-percent annualized rate from December 1916 to June 1920, increasing more than 80 percent during that period."
I'm not sure of what you are saying there, but it can be interpreted like war bonds is the cause of inflation.
It's exactly the opposite. At war, a government have to use all the available resources for the war effort. That will produce inflation, because the war spending is competing with the private spending for the same resources.
A way to avoid it, is for the government to retire money from the private sector. A way to retire money from the private sector is to sell war bonds to the population. If you buy a war bond, basically what you are doing is promising that you will not spend your money until after the end of the war. Normally you will get some interest for your patriotic sacrifice.
Also, for the gold standard fans out there, imagine what would happen if a government can not mobilize all the available resources of the country because it has not enough gold. That would be the most ridiculous way to loss a war.
I’d start by studying Bryan’s “Cross of Gold” speech to get some perspective away from people writing about their pet economic theories.
It’s an interesting period of history with many parallels to our current state of affairs.
What a useless response. Suggest instead how to check it out! What books should be looked up or terms googled?
Inflation defined as an increase in consumer prices.
Consumer prices are affected by many factors other than the money supply, for example if oil prices rise then it tends to push up consumer prices and therefore inflation even if the money supply were static.
Sure, you can build a money system without inflation but that doesn't change that you still have to represent the loss of value via unemployment caused by saving money. i.e. you will need money with an expiration date, negative interest rate or wealth tax.
I'd heard that there was no inflation in England in 1914 versus 1614. That's not quite right, but there was a remarkably stable period (for some value of "stable") between c. 1650 and c. 1750, and another from 1820 to 1914.
And then extending that, one could make the argument (and cryptocurrency maxis frequently do) that inflation is really only good for the existing upper class, who like it because it makes it easier to pay off their debt (of the "building a factory" variety, not credit cards) and because the wealthy own most real assets (e.g. property) that don't get devalued by inflation.
I haven't done enough analysis myself to say whether I think this argument holds water, but that is the argument I assume GC would make and I've done my best to steelman.
There were plenty of "periods of stagnation" in that time interval, though.
In general, stable money income flows promote economic resiliency far more than stable prices do. This means a rising price level (inflation) when the economy is hit by real-world constraints such as war or disasters, and stable or even falling prices when there is a lot of real growth. Pegging the value of the US dollar to gold led to an economic disaster in the late 1920s as the Banque of France was hoarding a lot of gold in a futile attempt to re-establish "sound" money after WWI. Widespread devaluation in the 1930s made it possible to stabilize nominal income flows again, which had beneficial effects even though it came with some mild price rises.
It's pretty obvious what the problem is. If the value of the money is kept stable while the real world deteriorated (through unemployment) then A becomes a leech on productivity or productivity growth. I.e. the way he is maintaining his savings is by exploiting the slack in the labor force. Thus anyone who wants to save in USD is dependent on an underclass that willingly sacrifices their labor. I don't see how this benefits poor people. I can kind of see how this benefits a middle class founded on exploitation. I definitively don't see how reducing the savings until they reach their real value benefits an upper class. They are the ones that want their money to be stable because it means they can extend debts arbitrarily long into the future at their own whim.
Anybody know any good treatises on inflation?
BTW, that's one of the things that make me so excited about DEFI – bringing even more financial instruments previously only available to the rich for wide masses.
The problem with many financial instruments being available is that, because there isn’t anything very interesting to say about “normal” investment, someone reading about investing (or talking to some financial advisor trying to sell them something) will think that it is sensible to be picking investments in various new or weird instruments. The incentives don’t work for the cover of every issue of Barron’s to say “yep, people should probably just invest in broad-ranged low-fee index funds”.
But maybe it is hard to stop people from foolishly getting involved in these sorts of schemes and instead of weird financial instruments they will be convinced to make “totally safe but high interest” loans to obviously dodgy companies.
 I might back down from this a bit and allow normal equities but not penny stocks and definitely not options. I’m not suggesting no one should be able to get involved but rather that it should be somewhat inconvenient to do so, eg maybe you need to turn up to some office in person or send in a form and wait 2 months (as opposed to the system of “accredited investors” who just need to be somewhat wealthy, a requirement that cuts out people who could make good decisions while still allowing plenty of dentists to be duped into stupid schemes.)
 Maybe Barron’s is a slightly bad example as their focus is on financial markets, but you could imagine instead the personal finance section of a regular newspaper.
I have looked up before that the average person in 1914 worked 60-70 hours a week for a 2020 inflation adjusted wage of 5 dollars an hour. 60-70 hours a week in deplorable conditions.
At that time you basically worked to pay rent and buy food, then drank to find some kind of happiness.
Gosh - I'm pretty sure the last time I walked out of Chez Panisse it wasn't for less than $250 each (with wine).. inflation surely doesn't count for this?`
Population growth is another. The Bay-area population went up by ~2 million people between 1990 and 2020. Even if the income distribution remains the same, the number of potential diners who can afford an expensive meal goes up.
Income distribution is another. If the percentage of the population who could afford an expensive meal and would buy one goes up, the number of potential diners goes up even faster.
Perceived social impact of an expensive meal is another factor. If more people believe there is social benefit in buying to an expensive meal, the number of potential diners goes up. This could be due to a larger pool of expensive meal buyers trying to impress each other, better awareness of expensive restaurants by the general population, etc.
Edit: changed "going to an expensive meal" to "buying [...]"
And with that, the housing situation in the Bay Area has seen rents skyrocket disproportionately high compared with the rest of the country. At least some of the cost of the meal goes to the restaurant baking in their increased overhead, which again, is higher than it would be in the rest of the country.
(and if Chez Panisse owns its space, you can exchange "rent" with "property tax")
I don't think that really has anything to do with it being labour intensive, nor suggests that it must be even more so in the post-lava-cake era though. It just 'went viral', was over done (no pun intended), and lost its mystique.
The same no doubt happened to all manner of exotic (or once exotic) dishes before it.
Also a soufflé has a high % of whipped egg whites versus a typical cake which has unwhipped eggs but a bit of baking powder.
Wage inflation for professionals living in San Francisco, however, does. A lot more people in SF are making ~$400,000/year, than were making ~$10,000/year, back then. Hence, the restaurant can charge ~4x, and still be fill its tables every night.
The price of Rolex watches has also massively increased, but that doesn’t go into inflation calculations either.
fine dining in a city needs a support base, and for a good deal of history there weren't enough people who could afford to eat out luxury food to support a fine dining scene.
1833 - cheap meal for 1 shilling = $10.80
1834 - moderate meal for 15 3/4 cents = $14.18
1838 - beef steak 25 cents = $22.25
1849 - corned beef and cabbage = $112.50
and so on. A very rough rule of thumb is multiply by 100 and that's the rough price in gold today. Things weren't all that cheap and monetary expansion since the devaluation of the dollar makes these prices seem much cheaper than they are.
10c for two fried eggs, but 25c for a plain omelet? Did omelet mean something other other than eggs back then? Or is it that "omelet" implies cooked fresh, while boiled and fried eggs are cooked in bulk and served cold?
1860 The Globe, Salt Lake City: Porter House Steak (25¢), Ham & Eggs (37½¢), Bowl of Oyster Soup (1.00).
1865 The Pioneer Restaurant, Portland OR: Porter House Steak (20¢), Sirloin Steak (15¢), Ham & Eggs (25¢), Apple, Prune, or Pear Sauce (5¢), Cranberry, Apple, or Custard Pie (5¢).
Meanwhile you don't have an industrial production of eggs, so you get at best one egg every day per chicken, more likely one or two every three days. That is of course if you assume it is egg season.
A chicken in every pot was a slogan for Johnsons great society, because chicken was a luxury. It would have stayed that way, but then capitalism happened.
I mean if you imagine putting one fried egg on another, a two egg omelette's going to be smaller than that (losing some to the fold).
That seems fine to me? I'd probably expect some toast with the eggs too.
(The steak in the middle does seem more of an outlier, but you called out the omelette so am I. :))
Most products are far cheaper in terms of hours of labour needed to produce them nowadays, while services and restaurants largely stayed the same in labour-intensity, so inflation-adjusted numbers would not be very helpful.
It's technically meant for the homeless/poor, but they serve a very nice lunch or dinner for $1.50 or $1.25 (iirc).
I love that they charge that small amount, because it makes it more sustainable and less of a pure charity where every meal is 100% based on some kind of donation budget.
I've always thought that there should be more organizations like this where the charity is that the service is provided at cost, in a profit free way. By using this model charities wouldn't be utterly dependent on donations.
Its such a beautiful way to fairly utilize capitalism for justice.
I'm not sure if the $1.50 completely covers the cost of the meal but its completely possible.
If you ever felt like going there for a meal I wouldn't discourage you. It's actually a nice thing to try to interact with homeless people on an equal basis. More than that it's also valuable life experience to see how different life can be from your own.
I think my experiences of homeless life taught me things about psychology and humans nature that I couldn't have learned any other way and I feel experienced in life in ways that are hard to explain. Its like going to another country to learn the language.
If you do go, the house would probably appreciate a $5 bill for the meal, which is 100% worth that.
I will say that Sisters is typically fully booked up every day. So you'd want to dine there on a day where they weren't booked up, so as to not deny a space to someone who needed it.
On Sundays the general public can eat at the restaurant. It's run by church youth groups on Sundays. Because most of them have limited to no restaurant experience, the service is a bit slow but tolerable. All of the proceeds from the Sunday meal service for the general public goes into keeping the restaurant running the other six days of the week.
it doesn't need to be fine dining, but i like the idea of having a place where less and better off can go to eat and noone has to be ashamed that they can't afford their meal.
Shouldn't this logic work in reverse as well? In other words, "they were able to charge more for wings because people wouldn't order from a different place just to save a few bucks on wings"?
I'm not sure he was completely wrong though. the bulk of the customers were teenagers and working class families, two extremely price conscious demographics. I'm sure a fair chunk of them would actually go somewhere else to save a few bucks on a routine dinner. getting pizza isn't necessarily "going out" to the working families; sometimes it's just the most cost effective way to feed the family that one night that neither parent has time to cook.
During covid, they're charging nothing at all.
Seems way too much
In my country, before the Euro was adopted in 2015, a Big Mac was the same price as the rest of Europe, which for the purchasing power here was a lot of money. McDonalds was seen as a luxury, only for tourists and the middle class who wanted to show off their wealth.
For the same price or often less, you could go out to pretty much any other restaurant in the city and get lunch. Even now there are still a one or two places I know where you can lunch for less than a Big Mac meal (maybe without drinks), but we've had a lot of inflation since the Euro was adopted, so nowadays the McDonalds meal is usually cheaper, and no longer considered a luxury.
Ive always thought those fast food meals were silly and overly expensive.
Like, the hamburger is 4$ alone BUT add on some terrible cheap pre frozen fries and soda that costs like 5 pennies and there's your 'meal' for 10$. Completely crazy!
And fast food fries really are terrible. I don't know what they do wrong but I used to work at a restaurant that served pre frozen fries that were quite good, so it's not even that.
Recently, I remember in Williamsburg, there used to be a food/restaurant store where you could by home cooked style meals. Eg, greens, beans, turkey, brisket and other home style food. It was cheap and good.
Not sure what happened to those stores, but the replacements, that sell 'build your salad bowl' type of food feel more sterile and just not as good.
eg. There is a huge difference in taste between a good local burito place, then going to Chipoltle and such.
The trend towards fried chicken sandwiches reduces the "meat" part of the sandwich only 50% meat. Happy hours consist of flatbreads, fries, sliders, artichoke dip (mostly oil, and chips to dip), egg rolls, bruschetta, wings with heavy breading, etc.
Basically even medium-tier restaurants are evolving into bar and diner food, and making it seem like a trendy thing.
Advances in medicine probably contributed more to that, however.
Besides, there were more bank runs back in the gold standard era.
The government can theoretically debase its currency at will, but how often does that happen?
>Besides, there were more bank runs back in the gold standard era.
Right, because there's a real risk that the bank/government won't be able to pay up the gold that was owed. These days it's not an issue because you can just print more money to fulfill the obligations.
Pedantically taken, yes. But outside of major wars, debasement of currency was rare. Compared to contemporary inflation stealthily eating away your savings, the difference is in practice stark.