Good Morning Grumps! Hope your day sours from here. I'm sure mine will. Let's talk value and price. What is value? It is substance or an actual object, and is somewhat subjective.
A gallon of gas is a real object. It moves your car around and you don't have to shovel manure or bale hay to do it. That's value to me. You may prefer horses. A gallon of gas did the same thing when I was a child as it does now. That's value. A gallon of gas cost twenty-five cents when I was a child; not anymore. That's price.
So, now I pay more for the same value. I am willing to pay more because it still beats hitching a team to a wagon and making 10 miles a day maximum. I think so anyway. My personal preference is the subjective part. But where did the price increase come from?
A couple of thoughts for you to ponder: the value of money, scarcity, and demand.
The US federal reserve note is NOT a dollar, FYI. It is a debt based fiat currency. That means simply that NO US FRN's come into existence until someone borrows money. In a debt based system, the price of everything always increases. It has too, borrowed money bears interest and that interest charge was not borrowed into existence. The borrower has to charge more than his repayment amount or POOF! Bankruptcy for someone. No real value there except for convenience and of course the lender makes a killing.
Production costs depend on supply of raw goods for one thing. If for some reason there is a shortage of any component, then production slows, but demand may not have slowed. Who ever has the most money goes to the front of the line. Prices increase because the cost of production increased and somebody has to pay for the milkshake.
As the population increases, the demand for products does too. So, more people want the same thing. The highest bidder gets his first. Prices go up even if there is no shortage.
The biggest problem is the value of money. In a debt based monetary system like the Federal Reserve - which isn't federal and has no reserves - the central bank "monetizes the debt". That's really stupid in my humble opinion Why doesn't Congress do it's job and monetize the wealth - wealth that people like you and I create every day - with US Dollars. US Dollars are a different animal than Dollar BILLS from the federal reserve. I get BILLS from lots of people that have to be paid. HMM! Who do I owe for all those dollar BILLS?
My daughter says no one reads my blogs 'cause they're too long. I will take her grumpy advice and continue this topic on a different blog.
Keep frowning. It's good for the soul.
GG