Economics 101: Inflation

LA Times: On store shelves, stealthy shrinking of containers keeps prices from rising

“Inflation” is defined as “undue expansion or increase of the currency of a country, esp. by the issuing of paper money not redeemable in specie” (Random House Dictionary). It is also interesting to note that the word “inflated” is defined as “distended with air or gas; swollen.”

Are you complaining about shrinking containers on your local grocery stores shelves? Thank government intervention -- the Stimulus Package, the recent government bailouts and takeovers, increased federal spending, the Fed, and whoever else thinks that turning the printing presses on every other day has no consequences.

Yesterday, I signed a lease on a 2008 Honda Civic Sedan. Base price: $18,200. I purchased a comparable car 16 years ago for under $10,000. Yes, the new car has a lot of great improvements, however, the difference in price was not because I now have a CD player or airbags, but because of inflation.

As with computers, in a free market, our dollars will consistently buy more over time. Innovation and competition force prices down while driving profits up. In a unfree market, innovation and competition are stymied, while taxes are increased.

My real dollars from 2008 are worth less than they were in 1992. There is no one to blame but the government. Inflation is nothing more than a hidden tax.

All that said, I love my new car. Replacing my used 1998 Honda Civic, which I bought two years ago, with the new 2008 model was one of best upgrades I have ever made. It is still America, and values are still available for our enjoyment. But boy, it would have been nice to see what I could have bought if it wasn't for the past 16 years of growing government intervention, inflation, and taxes.