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$20 doesn't buy jack anymore

I don't know about you guys but $20 dollars now-a-days doesn't seem to buy much of anything.  Go to a movie bam at least $20 bucks is gone.  Go to the grocery store and you only have a handfull of groceries for $20 bucks.  Was going to go to a 'Country USA' this weekend until I found out it cost $60 bucks a day and then if you buy a drink or two whoa plus parking.  Sheesh.  Buy gas at the pump and you drop big money.  Most people don't seem to care.

Now I know all about inflation, but it seems a bit out of hand.  There's a bad attitude infecting the country.  Most of this inflation is 'artificial' so-to-speak.  There was no reason to raise gas prices.  Hell no one could even give a solid answer as to why they went up.  The oil companies obviously pocketed the money using every excuse in the book to justify it.  You mean to tell me they don't run their refineries at full blast all the time?  Bunch of scum liars.

$200 - $400k for a new house?  Give me a break.  I live in a poor rural area too!  Don't people know how to save any more?  Is this whole country (USA) built on credit?  What in the world is going on!  Are people so dumb or just so addicted that they fall for all this inflation stuff.  Hey Greenspan raise dem dere interest rates eh?

What really gets me is the 'artificialness' of the whole situation.  It doesn't have to be and is explained away by economists and the 'rich' as something that is 'natural' when in fact these people are exploiting the poor and middle class.

ok.. </end rant>

All of this makes me think I should raise the price on my software.  Yes I would contribute to inflation but who cares I've got to make it up somehow.  I want a new house, a new boat, a new car a new this and a new that also.  Damn it!

db
Sunday, June 27, 2004

"There was no reason to raise gas prices."

This is not true. The dollar has lost value (about 30% in the last few years) compared to foreign currency and we import all our oil with dollars. Therefore, to sell the oil for the same value in their own currency, they must charge more.

The reason that the dollar is devalued is because a currencies intrinsic value compared to other currencies has to do with what it can buy. The US does not manufacture things any more but rather prints dollars and sends them overseas to get stuff. This has the result of lowering the intrinsic value of the dollar.

$20 doesn't buy much anymore because it is only worth $10 of a few years ago.

Dennis Atkins
Sunday, June 27, 2004

db,

If you live in a poor rural area you will be able to find a good house for less than $400k.

Dennis Atkins
Sunday, June 27, 2004

And yes you should raise the price on your software by 30% or more to keep up with things. Your software has intrinsic value. Green ink on linen does not.

Dennis Atkins
Sunday, June 27, 2004

If $20 ain't buying you squat, you need to reassess your lifestyle.  Houston has a plethora of houses for under $100K, and you're living in upper middle class luxury for a $250K house.

$20 buys 4 matinee movie tickets, three meals at Taco Bell, and 20 items off the Wendy's 99cent menu.  $20 also is more than one fillup in my Altima, which gets 360 miles to a 12 gallon tank.

Ankur
Sunday, June 27, 2004

Oh, and don't confuse the market price of oil with the production cost of oil.  Though production costs may not change with time, costs have literally no bearing on price - prices are a conglomeration of supply, demand, risk, and speculation.  If you're so pissed at the price of oil, there are plenty of low-producing oil fields in Texas and Oklahoma that are ripe for the take.

Ankur
Sunday, June 27, 2004

Funny you say that, as just today I was thinking exactly the opposite, though it's for a reason that gets a lot of people emotionally passionate -- globalization. My wife picked up a cheap, $17 CDN, umbrella fold-up baby stroller for mall journeys, undoubtedly made in China, and I was amazed looking at what is ultimately a complex little device, and thinking that all the materials were mined or woven, it was engineered and manufactured, and then shipped around the world, and has probably 60% of the cost as retail/middleman costs, and it costs a measly $17. When I was a lad of 16 working in a pizza/family restaurant (Mother's Pizza in glorious St. Thomas, ON), we sold deluxe pizzas for ~$23, and I saved up my minimum wage pay to buy a pair of jeans that normally went for around $60, or a cool Ocean Pacific t-shirt for $45. Now, 15 years later, I can get 2 large pizzas with 6 cokes for $19, and a pair of jeans often goes for around $25.

While we bitch about certain types of jobs going overseas, there is absolutely no doubt that for household items there has been tremendous deflation (even for made-in-the-USA items there is tremendous value because of plastics. A fold-up childs picnic table is like $25), and items that would have been an economic setback 20 years ago are now just disposable cash.

Ultimately in the future it may be that 99% of our pay goes to our home (because of competition for space, especially in metropolitan areas), and entertainment.

Dennis Forbes
Sunday, June 27, 2004

One thing that strikes me is the economics of being a school teacher: a teacher's salary is not high, at least in part because they teach no more than 30 students per year (and it would be a lot to ask each set of parents to pay more than 3% or 4% of their own salary to their child's teacher's salary, or double that to 10% or more because of overheads like the school building, the school principal and janitor, books, ...).

I guess I'm saying that school-teaching at least doesn't take advantage of the economies of scale from mass-manufacturing (which is why an entertainer may be richer than a teacher).

Currently, $10 buys me a two-hour lesson with a class of 9 other students.

Christopher Wells
Sunday, June 27, 2004

The other name for the $20 bill is "Yuppie Food-Stamp".
;-)

Actually I think there are two broad events ocurring -- I think inflation has been under-reported over the past 10 years, and I think peoples expectations are unnecessarily high.

The combination of two has resulted in people thinking they *need* to live in a 4000 sq-ft (371 sq. meter) McMansion with a pool and two BMWs, and the under-reported inflation means that both members of a couple need to work in order to afford it.

There's some benefit to the "Live Simply" movement.  Unfortunately it often gets confused with the people building houses out of recycled beer bottles (ummm, no thanks).  I've been following Susan Susanka's books and writings for a while (http://www.notsobighouse.com/) and she's onto something -- don't build big -- build better.

Chip H.
Sunday, June 27, 2004

Just to clear up any misconception.  I don't live in a big house or own a boat or anything of the sort.  In fact I bought my house for $70k 3 years ago and drive a Neon.  It's a nice house and a nice car.  I'm just thinking about all of this new stuff and if it's for the "rich" people or are the "poor" folks suppose to fall for all of this with easy credit.

I just think it's a poor attitude that has embraced the nation.

As far as raising the price of my software.  I am doing it gradually.

db
Sunday, June 27, 2004

A teacher's salary is not high?  Compared to what?  Compared to a baseball player, sure, it's not high, but compared to your average B.A. or B.S. who gets out of college and discovers that a bachelor's is damn worthless because everybody under the sun has one, teachers' salaries are pretty good.

Kyralessa
Sunday, June 27, 2004

$20 buys about 6 lbs of food at Taco Bell.  Could last for weeks.

hoser
Sunday, June 27, 2004

Christopher's point about schoolteaching is spot on. Schoolteaching is a labour-intensive service industry, and as such can never command salaries much above the average wage in countries where education is near universal.

That said, there is still a lot of leeway, and from what I have seen of salaries in the States, great regional variations.

Incidentally, don't expect mid-term prices of oil to do anything but rise. We are very close to having consumed more than half the worl's total supply of oil, and most forecasts I have seen are talking about prices of around $60 a barrel in 2010, and this is  discounting political instability.

And finally spare a thought for the people who are really affected by the rise in the price of oil, which are those in the Third World. Where I am now, Sri Lanka, only 15% of the population can afford to use gas for cooking (the rest use firewood), and of that 15% I would say only one third choose to use gas, the rest being people living in large cities with no pratical possibility of cooking with firewood. When a bottle of cooking gas (will last maybe six weeks) costs three days pay ($7) then increases in the price of oil do hurt. The electricty company here wanted to persuade people to change over to low usage neon bulbs (cost about $4 a time). To encourage people to make the change they devised a system where you bought the bulb in installments deducted from your electricity bill.

Stephen Jones
Monday, June 28, 2004

Dennis Atkins is right:  only an increase in the supply of money can cause inflation.  The "rate of inflation" is just a percentage equal to the rate at which the government is increasing the money supply. 

Look, I can raise prices all I want, but no-one is going to buy my stuff if it's not worth what I'm charging for it.  On the other hand, if our money is becoming worth less over time, then any given product will have to increase in price just to cost the same.  Value determines prices, prices don't determine value!

Systemic inflation has nothing to do with the price of oil, it's just another way that the government can tax you without calling it a tax.  A gallon of gas was far more expensive in 1981 than it is now, even though the price was lower.  This is why people are throwing around 20s like toilet paper -- because 20s are worth way less nowadays.

Printing more dollar bills makes each one worth less.  So you'd be a fool not to increase the price of your software, unless you think that each release is worse than the one that came before.

John Wilson
Monday, June 28, 2004

The fall in the price of the dollar compared to the pound sterling and the euro, and possibly the yen, will only affect oil prices in the States if the US importers have contracts to pay for the oil in other currencies than the dollar and I don't think this is true. The Saudi Riyal is pegged to the dollar, and most oil contracts are in dollars. The Kuwaitis peg their dinar to a basket of currencies, and I suspect it is possible that the contracts are not directly tied to the dollar, but I don't know for sure.

Incidentally an increase in the supply of money is not the only way to cause inflation. A decrease in the supply of goods will have the same effect.

Stephen Jones
Monday, June 28, 2004

Yes price inflation can be due to scarcity as well as over supply of money.  And its a little more complicated than just physical currency.  Actual money available, which includes credit, is the inflationary measure and that is increasing at a greater rate than the rate of growth of the US economy.

In other words you're spending tomorrow, just as most of the West is.

And the rise in oil prices wasn't just in the US it was global.  Crude oil prices are set internationally and to be honest no one outside of  oil rich countries in the Middle East is going to care about US pump prices as they're still the cheapest in the West with the most inefficient engines.

If you want to reduce pump prices in the US you might ask your political representatives to release some of the billions of gallons of reserve oil that the US Govt. keeps against the future possibility of being under an oil embargo by the rest of the world.

Simon Lucy
Monday, June 28, 2004

At least in the US your gas prices aren't mostly composed of tax, as they are in the UK.

Here it costs around 80p per litre (1.46 USD), of which well over half is tax that goes straight to central government.

I remember being on holiday in the US and being amazed at how cheap *everything* is, compared to the UK. You guys must really hate the high prices when you come here, especially with the recent USD devaluation, vs the GBP.

Steve Jones (UK)
Monday, June 28, 2004

Stephen, what's your source for the following statement?

"We are very close to having consumed more than half the world's total supply of oil"

I would be very surprised to find this was true.

The "total supply" is an ever-growing number, and is heavily affected by price. During the oil shocks of the seventies there were plenty of people predicting prices would go to $100, but they didn't, because as the price rose, so did exploration. This lead to new discoveries which, long with improved extraction and refining methods, kept the price down. Should prices continue to rise, new sources would be discovered, and currently unprofitable locations would become profitable to drill.

There is also no real certainty over what creates oil - while most people think it is formed exclusively through decomposed organic matter (dead dinosaurs!), there are plenty of competing theories around, some of which have lead to discoveries in unlikely places.

Any long-term forecasts of the total world oil supply (i.e. more than ten years) should be taken with a very large grain of salt.

.
Monday, June 28, 2004

I read that too (about oil being close to it's peak production), on the BBC news site a couple weeks ago.

They linked this site: http://www.peakoil.net/

The original story is at: http://news.bbc.co.uk/1/hi/business/3777413.stm

Steve Jones (UK)
Monday, June 28, 2004

Competing theories that have led to unlikely discoveries?

Can you substantiate this with anything remotely specific?

What else could be the source of oil?  What are these unlikely discoveries?

Ged Byrne
Monday, June 28, 2004

> A teacher's salary is not high?  Compared to what?

Compare to a programmer's, for example.

When I entered the work-force 20 years ago, my mum had already been teaching for 15 years, and her salary was about C$20K/year; and my starting salary (my first job after graduation) was two times that. 20 years later (since the year 2000) her salary was about C50K/year, and mine was 5 times higher.

I figure that the difference is that, as programmers, what we design *can* be mass-manufactured (sold to 1000s of customers) ... or, it can be sold to industry (which, because it mass-manufactures, is richer and can afford to pay more than private individuals can).

Christopher Wells
Monday, June 28, 2004

I tell you what.  Since no one needs their $20 anymore, everyone send your unused 20 dollar bills to me.  Thanks.

Devin
Monday, June 28, 2004

C. Wells,

The difference is, as a programmer you have the oportunity to negotiate your salary each year.  You mom, most likely, has her salary "controled" by the teacher union.  When is the last time she had a yearly review and subsequent salary negotiation that wasn't tied to some "published pay scale"?

Yo
Monday, June 28, 2004

Ged:

I'm not sure if this is what you are asking but there is supposedly a huge supply of oil in Canada.  THe only reason they don't retrieve it is that it is embedded in shale and is too expensive to take.  If oil from other sources becomes rare, the price would rise and eventually it would become worthwhile.

As for OP, I disagree.  Inflation has been amazingly tame for years.  It has mostly been confined to housing and equities prices both of which are more investment than consumer good.

Ironically, though you complain of the minimal inflation over the past few years, signs are that inflationary pressures are actually one the rise again.

Of course if you want to see real inflation, wait until we start paying those baby boomers pensions.  If we haven't increased our productivity radically, look forward to a big devaluation of the currency...world-wide.

name withheld out of cowardice
Monday, June 28, 2004

"The fall in the price of the dollar compared to the pound sterling and the euro, and possibly the yen, will only affect oil prices in the States if the US importers have contracts to pay for the oil in other currencies than the dollar and I don't think this is true."

Currency doesn't matter in the long run. If the contracts are in US dollars, the producers will demand more dollars when the USD devalues.  If the contracts are in another currency, US purchasers will have to spend more dollars to pay for the foreign currency.

NoName
Monday, June 28, 2004

not if they've held a balance of the foreign currency since before the dollar was devalued.  It's not a 1:1.

muppet from madebymonkeys.net
Monday, June 28, 2004

So oil prices haven't gone up for any reason? Might it not be because you started a big ol' war in the world's biggest oil producing region? (alright, alright - we helped too).

Just be thankful the Japanese are still proping your currency up.

Mr Jack
Monday, June 28, 2004

"not if they've held a balance of the foreign currency since before the dollar was devalued.  It's not a 1:1."

That's why I said "in the long run".

NoName
Monday, June 28, 2004

Mr. Jack- the war in Iraq has something to do with it, but, if the Iraqis can establish a stable democracy (big if) in the long run it will help stabilize oil prices.

A larger contributer to the increase in oil prices is increased demand from China.

Anyway, oil is still pretty cheap.  I am constantly amazed that people of a particular political stripe can bitch about the high price of gas out of one side of their mouths and then bitch about pollution produced by burning gasoline out of the other.

name withheld out of cowardice
Monday, June 28, 2004

Re: the message talking about how globalization has driven down the cost of things like "umbrella strollers."

Yes, but notice that what we're getting now is generally of much lousier quality.

If you buy a $10 hammer at Lowe's or Home Depot, it's just a facsimile of a hammer. If you try to use it like a real hammer, the head will chip or the handle will break. 30 years ago, maybe it was $15 or $20, but it would last 30 years.

Ditto for most house materials being made now--even $500K houses are made of cheap plastic windows and crummy plastic siding, not real materials like wood and stone.

So things aren't really less expensive, they're just more poorly made.

(To say nothing of the slave labor in China making much of this stuff. Boycott all Chinese products!)

Chris Ryland
Monday, June 28, 2004

Dear Cris,
                I have this theory that the Chinese embracing of capitalism is a fiendish Oriental plot. Soon everything will be made in China and of course, it won't work. Technological civilization as we know it will collapse and then the Chinese will come over on their bicycles and take over the world. The only problem with this scenario of course is that if the bicycles are made in China, as nearly all seem to be now, they will break down somewhere in the suburbs of Beijin, so I am supposing that in the heartland of the Middle Kingodom there is a massive stock of hoarded old Raleighs, just awaiting the apocalypse.

Stephen Jones
Monday, June 28, 2004

Things break easily for the same reason Sony loves Evercrack - I mean, Everquest - and Microsoft wants to push web services.  It's all about revenue stream.

Aaron F Stanton
Monday, June 28, 2004

Dear .
          You are confusing the total amount of oil found with the amount of oil it is economical to extract. The latter is affected by price, which is why another poster spoke about the Texas oil wells you could buy, and is also why the Saudis have always been keen on keeping the price stable so that those wells won't come into production.

          The total amount of oil, whether it can be extracted or not is not an ever expanding quantity. There has been a slowdown in the discovery of new oil reserves, and as my namesake points out the sites he links to make it clear that the total known reserves of oil, are now not much greater than the amount of oil that has already been extracted.

          Countries do run out of oil. Bahrain was one of the richest countries in the world in 1972 but now has only one oil field left offshore which it shares with Saudi. The others ran dry.

            Oil incidentally is dead sea animals; decaying dinosaurs would only provide sufficient biomass to grease your bicycle wheels with, even if they could be changed to oil.

Stephen Jones
Monday, June 28, 2004

I remember when $1000 bought a new top-of-the-line 120 MB SCSI hard disk.  (It still works!)  Now look at the prices.  Yeah, this sucks.

As for movies, yeah, outrageous.  So stay home and rent the DVD when it comes out -- instead of $8 per head, it's $3 for as many people as you can cram into your living room.  (And you can pause it for a break, and serve higher-quality food than the theatre, for less money.)  You  won't get to see it the day it comes out, but that probably won't kill you.

I think the moral of this story is: If you insist on doing things exactly the same way you always have, you run the risk of retailers increasing prices on those specific activities.  Heck, they probably do it because they know a lot of people will act this way.  If you apply your noggin to the problem, you can live more cheaply than you did 10 years ago quite easily.

cheapskate
Monday, June 28, 2004

Yeah, I remember when I could buy a comic book for $0.25, and we liked it!

These days, a comic book costs what, $1.25, $1.50 ?!

It's a cryin' shame, I tell ya! :-P

Wisea**
Tuesday, June 29, 2004

A nickel ain't worth a dime today.

Yogi Berra
Tuesday, June 29, 2004

Who is this mysterious "db" I ask of you...?

Aha!  I thought so!  "db" is a software vendor after all!  And one who does not think resellers can help him.  Interesting.  Maybe that is why he is feeling the pinch?

Maybe "db" would find greater success if "db" decided to empower others to help him see success rather than believing he creates all the value and everyone else is simply trying to pilfer the value he created?

BTW, anyone know what software "db" sells?

Mike Schinkel
Wednesday, June 30, 2004

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