Inflation: explain it to me like I'm 5

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?

I'm always curious when people say this - who do you imagine is disincentivized to work? Are you disincentivized? Do high prices really pair up with disincentive to work, in your mind?
"

Seriously. The great COVID money giveaway was what - a grand total of $1200 per household? Two years ago? That doesn't amount to squat at this point.

People are forgetting that for the first year of COVID there was extremely generous unemployment relief and a significant number of people took the relief rather than work. Participation in the labor market fell sharply and we still haven't recovered.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?

I'm always curious when people say this - who do you imagine is disincentivized to work? Are you disincentivized? Do high prices really pair up with disincentive to work, in your mind?
"

Seriously. The great COVID money giveaway was what - a grand total of $1200 per household? Two years ago? That doesn't amount to squat at this point.

People are forgetting that for the first year of COVID there was extremely generous unemployment relief and a significant number of people took the relief rather than work. Participation in the labor market fell sharply and we still haven't recovered.

Since we’re three years past those generous benefits I doubt anyone who wants to eat is sitting around refusing to work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?

I'm always curious when people say this - who do you imagine is disincentivized to work? Are you disincentivized? Do high prices really pair up with disincentive to work, in your mind?
"

Seriously. The great COVID money giveaway was what - a grand total of $1200 per household? Two years ago? That doesn't amount to squat at this point.

People are forgetting that for the first year of COVID there was extremely generous unemployment relief and a significant number of people took the relief rather than work. Participation in the labor market fell sharply and we still haven't recovered.

+1 The labor pool shrunk for factory workers, restaurant staff, etc. Not DCUM UMC.

[Anonymous]

Anonymous wrote:Basic economics. Money has less value because there is so much of it floating around. I’d say that one dollar has the value of about 25-35 cents at this point.

That’s extreme. More like 50-60 cents.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?

I'm always curious when people say this - who do you imagine is disincentivized to work? Are you disincentivized? Do high prices really pair up with disincentive to work, in your mind?
"

Seriously. The great COVID money giveaway was what - a grand total of $1200 per household? Two years ago? That doesn't amount to squat at this point.

People are forgetting that for the first year of COVID there was extremely generous unemployment relief and a significant number of people took the relief rather than work. Participation in the labor market fell sharply and we still haven't recovered.

Labor participation rate is almost back to prepandemic levels. It's where it was at the end of 2018.

[Anonymous]

A 5 year old would have jumped off the roof by now

[Anonymous]

Supply and demand. As the supply of money increases, the more common it becomes. The more common it becomes, the more there is available to buy stuff. More demand for stuff, drives the price of stuff higher. The net increase in the price of goods is inflation.

[Anonymous]

Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?

OP has been asleep for 3 years apparently. Biden's failed policies are largely to blame.

[Anonymous]

I’m part of an ‘industry’ that has had a huge increase in prices. I’m a nanny in Los Angeles for high profile families. I’m a former teacher, speak 5 languages, have EMT and doula certifications. Previously I would charge $35/hr, but now families are willing to pay $45-50/hr, so that’s what I charge. Sometimes it means I work less, but I’m still earning more, and my quality of life has improved dramatically. Full time jobs of 100k used to be for only top nannies, but now that’s kind of low end for high profile families. Right now full time jobs are $125-140k. Even regular families are paying at least $30/hr in LA, and I have no idea how people can afford this, when everything here is just so expensive.

[Anonymous]

Whenever you are struggling to understand something, it can help to look at an extreme example: https://www.bbc.com/news/world-latin-america-65524072

[Anonymous]

Anonymous wrote:Why is everything so expensive now compared to just 3 years ago? Is it ever going to go back to how it was? I learn a lot on this board so I'm looking for genuine insight. Is it because the government put so much money into circulation during the pandemic and disincentivized work?

No its going back down! inflation that is talked about is a rate, when they say its 3%, it means prices are 3% higher compared to last year. the fed is just trying to that rate to 2% which is average, ie Soda is $1.00 today, it should be $1.02 (2% higher) next year. Why 2%? Because on average salaries will increase 2% yearly.