# Is there any way to roll back salaries and also prices? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [October 14, 2013, 10:18pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255 "2013-10-14T22:18:42Z")\ **Posts on this page:** 15\ **Page:** 3
**Author:** ![Running\_with\_Scissors](https://avatars.discourse-cdn.com/v4/letter/r/a183cd/32.png) [@Running\_with\_Scissors](https://boards.straightdope.com/u/Running_with_Scissors)\ **Post date:** [October 15, 2013, 8:20pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/41 "2013-10-15T20:20:43Z")
Since it’s been brought up, here’s an [inflation-adjusted chart](http://inflationdata.com/Inflation/images/charts/Oil/Gasoline_inflation_chart.htm) of gasoline prices over the last century. Quick translation: excepting the first two decades of the last century, gas is as expensive as it’s ever been (well, it was in 2012; it’s decreased somewhat this year), and was significantly cheaper in the 1960s. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [October 15, 2013, 9:07pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/42 "2013-10-15T21:07:41Z")
> [@Chessic\_Sense](#): > > Why is everyone talking about deflation? That’s not what the OP is suggesting. Deflation is when you have a dollar in your wallet that is worth X, and tomorrow it’s worth \>X. > > The OP is talking about rebasing. In that scenario, you have a dollar in your wallet that’s worth X. Tomorrow, you have a dollar that’s worth X, but also worth Y new dollars. You can trade it at any time for either X or Y. All electronic accounts, debts and credits, automatically change to Ys, which are good for buying anything in the national economy. > > In deflation, your currency earns value over time. In rebasing, all else being equal, it never does. Yes he is talking about deflation–declaring that on day X, all prices and wages must be cut by 30%. I assume he would also need to cut all bank accounts and debts by 30% as well. Yes, you could create a new currency and have everyone switch over to the new currency by day X, and on day X+1 the old currency officially becomes wastepaper. Countries that have gone through hyperinflation often do this. Except the United States has never gone through hyperinflation, hyperinflation is usually defined as having over 50% inflation PER MONTH. After 12 months of 50% inflation prices would be about 90 times higher. We’ve never had anything close to that, even in the 70s annual inflation was barely hitting double digits. We’ve only had a doubling of prices in the 28 years since 1985, when the OP was a teenager and prices seemed normal. Although why we couldn’t go back to price levels in 1950, then we could just knock off a clean decimal point. But what would be the point of this? So we could buy things for a dime that today cost a dollar? What problem does this solve? When you’re dealing with currencies where buying a candy bar requires a 100,000,000 unit bill, changing the currency to lop off a dozen zeros makes sense. Lopping off one zero doesn’t make sense, even though kids today think a dollar is worth what kids in 1950 would think a dime was worth. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [October 15, 2013, 9:29pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/43 "2013-10-15T21:29:06Z")
It’s a bit windy and repetitive, but I suggest the more interested read Poundstone’s _Priceless_, which explains (and then re-explains about nineteen times, _sigh_) how prices are determined for consumer products. It has next to nothing to do with cost of manufacture and is driven by almost everything except common sense and basic economics. In very short, pricing is often set by something much like “what the market will bear,” but with the idea that a greatly inflated price will actually increase sales. There’s also a well-researched concept called “anchoring” that is used by marketing entities to influence price acceptance. Point being, arguing too long and hard about relative prices and inflation from the notion that a price of gas or milk is priced according to some sensible or mathematical basis is nonsense. ---
**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\ **Post date:** [October 15, 2013, 9:34pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/44 "2013-10-15T21:34:45Z")
> [@aceplace57](#): > > If you go further back to our parents and grandparents the sticker shock is even worse. Some of my older neighbors told me the newly built houses in my neighborhood sold for $10,500 in 1954. But, they only made about 8k a year salary. The standard of living was about the same. Everything was just proportionally cheaper. Are you suggesting that where you live, new houses still only cost about 130% of an annual salary? If so, please tell me where you live! Round here that’s more like 600% or 700%. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [October 15, 2013, 10:35pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/45 "2013-10-15T22:35:39Z")
> [@Chessic\_Sense](#): > > The OP is talking about rebasing. Stay away from that stuff. Richard Pryor almost got himself killed doing that. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [October 16, 2013, 8:27am UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/46 "2013-10-16T08:27:19Z")
I’m sorry if repetition of “hyperinflation” raises my hackles. It is so ignorant it makes one certain the speaker has been learning his “facts” from the stupidest YouTubes he could find. **Lemur866** defines “hyperinflation [as] over 50% inflation PER MONTH.” If OP instead extends this ever so slightly to include 0.2% per month, one wonders what new word would be needed for 0.5% per month. “Supercalifragilistic-Kenyan-gunhating inflation”? One useful data point for those who learn economics from the Hyperinflation babbles on YouTube: In 1935, you could sell an ounce of gold to the U.S. Treasury and receive $35. Oh let’s be generous: Make it a metric tonne of gold, the government gives you $1.125 million. Place that money in a safe investment that pays 5% interest. (I realize there were eras when no such investments were available. But much higher yields were the norm in other eras so 5% net annual gain doesn’t seem unreasonable.) With your $1.15 million parked in the safe 5% yielding investment, you now have $50.6 million. That would be enough to buy back your tonne of gold and also get several tonnes of silver, a brand new Learjet and still have plenty left over for hookers and blow. To make it a fair comparison we assume expenses are negligible in each case. This is valid for the safe stock/bond investment; for the tonne of gold we assume that Hilly Billie the Gold Bug and his grandkids sit on the gold for nearly a century protecting it with their shotguns. This assumes their wage value is zero, which might be about right. ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [October 16, 2013, 6:28pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/47 "2013-10-16T18:28:14Z")
You don’t have to demonetize the old currency either. When France changed from old francs to new francs in 1960, they left all the old money in circulation and simply declared the 100 franc bills were now worth 1 franc, the 1 franc coins were now worth 1 centime and so on. None the old currency or coins were demonetized but the new ones were sufficiently distinctive that there was no confusion. But when I was there in 1960, a news vendor, say, might ask for 60 francs for a paper and really only wanted 60 centimes. What a small amount of inflation does is actually tax savings and encourage borrowing. Of course, if interest is paid on deposits (which hardly happens today) then that is also not important (except that the government taxes that interest, as though none of it was return on capital). Still it encourages growth. ---
**Author:** ![Shalmanese](https://avatars.discourse-cdn.com/v4/letter/s/45deac/32.png) [@Shalmanese](https://boards.straightdope.com/u/Shalmanese)\ **Post date:** [October 16, 2013, 8:59pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/48 "2013-10-16T20:59:44Z")
> [@aceplace57](#): > > The biggest problem with rising prices is not knowing if it’s inflation or if we are getting screwed by greedy businesses. > > My DirecTV bill is a good example. I have the plus package and two receivers. No premium movies channels. Had the identical service since 2007. Yet my bill goes up every single year. Greed or inflation? > > Theres no way of knowing. Same thing with that burger, fries, and Coke I get during my weekday lunch break. It’s doubled in price since I started my career in 85. Greed or inflation? > > There’s no benchmark to know when we’re getting taken advantage of. Theres no price point to compare against. Yeah, it’s not like there’s any kind of [official measure](http://en.wikipedia.org/wiki/Consumer_price_index) or [way of calculating](http://www.bls.gov/data/inflation_calculator.htm) that sort of thing! ---
**Author:** ![Mrmanface](https://avatars.discourse-cdn.com/v4/letter/m/9de0a6/32.png) [@Mrmanface](https://boards.straightdope.com/u/Mrmanface)\ **Post date:** [October 16, 2013, 9:03pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/49 "2013-10-16T21:03:26Z")
Wages are too low. They should be higher. The effect on prices would be negligible as more businesses open to compete with each other as there is more money to spend. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [October 16, 2013, 9:28pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/50 "2013-10-16T21:28:27Z")
> [@Running\_with\_Scissors](#): > > Since it’s been brought up, here’s an [inflation-adjusted chart](http://inflationdata.com/Inflation/images/charts/Oil/Gasoline_inflation_chart.htm) of gasoline prices over the last century. Quick translation: excepting the first two decades of the last century, gas is as expensive as it’s ever been (well, it was in 2012; it’s decreased somewhat this year), and was significantly cheaper in the 1960s. Yeah, I had some sort of dyslexic moment and apparently read the price of a gallon of MILK, instead of gas in my earlier example- milk was 49 cents, and gas was 29 cents in 1963. So yeah, gas was cheaper back then, but only in the sense that it cost the equivalent of $2.22 in today’s dollars. ---
**Author:** ![Greg\_Charles](https://avatars.discourse-cdn.com/v4/letter/g/839c29/32.png) [@Greg\_Charles](https://boards.straightdope.com/u/Greg_Charles)\ **Post date:** [October 16, 2013, 10:13pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/51 "2013-10-16T22:13:51Z")
> [@aceplace57](#): > > The biggest problem with rising prices is not knowing if it’s inflation or if we are getting screwed by greedy businesses. > > My DirecTV bill is a good example. I have the plus package and two receivers. No premium movies channels. Had the identical service since 2007. Yet my bill goes up every single year. Greed or inflation? > > Theres no way of knowing. Same thing with that burger, fries, and Coke I get during my weekday lunch break. It’s doubled in price since I started my career in 85. Greed or inflation? > > There’s no benchmark to know when we’re getting taken advantage of. Theres no price point to compare against. Well, there are more factors than just greed and inflation behind price fluctuations, but I’m confused by your apparent idea that the differences due to inflation are unknowable. Inflation is very closely tracked and has been back long before 1985. There are sites like [http://www.measuringworth.com/m/calculators/uscompare/](http://www.measuringworth.com/m/calculators/uscompare/) that can tell you exactly what your $5 lunch combo should have cost you in 1985. Direct TV is a bit different since it’s driven by technology. Each year with your price increase, you also receive an increase in service … more channels, higher resolution, DVRs, etc. That muddies the comparison from year to year. ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [October 16, 2013, 11:33pm UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/52 "2013-10-16T23:33:39Z")
> [@Mrmanface](#): > > Wages are too low. They should be higher. > > The effect on prices would be negligible as more businesses open to compete with each other as there is more money to spend. Yes, when an economy is broken and out of control the solution is to make it run a lot faster. Works for cars, planes and killer robots, too. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [October 17, 2013, 12:46am UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/53 "2013-10-17T00:46:13Z")
These inflation calculators that many are posting links to are fun to play with, but don’t paint the whole picture. Advances in technology, wars breaking out in far away places, and development of the third world also factor in. Imagine, in 1980, a VCR would set you back around $1000. Today you can get a Blu Ray player for $50. You can’t use these calculators to say, for example, that today a VCR should cost $2250, or that a Blu Ray player in 1980 would cost you $20. If you have trouble knowing whether the Directv bill is fair or not, see what Dish, or the local cable company charges and compare. If they all charge too much, then read a book for nightly entertainment. Comparing the price to what you paid in 1985, 1992, 2003, or 1974 doesn’t tell you much of anything. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [October 17, 2013, 12:55am UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/54 "2013-10-17T00:55:11Z")
> [@septimus](#): > > Many economists think that very mild inflation (e.g. 2%) is beneficial. For one thing, it allows Job Creators to impose across-the-board 2% annual wage cuts without doing anything! I know you are taking a little jab there, but the real reason that 1 to 2 percent inflation is good is that people won’t put their money under their mattress to save it. They see prices going up so the thing to do is either: 1. Spend your money today lest it be worth less tomorrow, or 2. Put your money in a bank that pays interest so that others can use that money to buy a new house or a car. At 0% inflation there will be some money left out of the economy, causing deflation and all of the evils mentioned that it brings. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [October 17, 2013, 9:08am UTC](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255/55 "2013-10-17T09:08:59Z")
> [@jtgain](#): > > > [@](#): > > > > Many economists think that very mild inflation (e.g. 2%) is beneficial. For one thing, it allows Job Creators to impose across-the-board 2% annual wage cuts without doing anything! > > I know you are taking a little jab there, but the real reason that 1 to 2 percent inflation is good is that people won’t put their money under their mattress to save it. I was NOT trying to be jabby or snarky (except for capitalizing job creators). I won’t Google to see if anyone agrees with me, but I do see a default of slight wage cuts as beneficial to free market principles since, unlike with other free-market prices, _it is very difficult to lower the wages of current employees_. (Color me quasi-Marxist, but I think the public taxpayer should support the poorest, not employers.) [Previous page](https://boards.straightdope.com/t/is-there-any-way-to-roll-back-salaries-and-also-prices/671255.md?page=2)