As stated in the title, the question is: years after years, people of our planet kept using the land and sea to get money, but the money they get doesn’t seem to accumulate. If the money accumulated, why don’t we see the rate of inflation increasing by time?
I hope I made myself clear enough to get an answer.
Welcome you to the board.
First, you asked the wrong question. Your question has no direct answer because we need to step back a minute.
People do not use" the land and sea" to get more money. They use it produce useful goods and services. We trade these with other people in order to get other goods and service we like. Bob may be a cattle rancher and Jim may be a fisherman, but since they both like beef and tuna, they trade.
As it happens, we long ago worked out that trading works a lot easier if you don’t need to trade straight across. That is, Jim may want beef but maybe Bob has had enough fish. Well, Jim could go and find somebody to trade fish for something else that Bob wants. Or, he can just substitute money. Money acts as a grease between exchanges of value.
Money has no inherent value, however. Even gold and silver only have value if somebody wants jewelry or whatnot. This means the price of money fluctuates over time. People may want more money at times, and less at other times, if they can invest it or want to use it for things. If too much money is created (printed or minted or backed by the government), then it will tend to go down in price. If too little is created, it will tend to go up in price. Money does not “accumulate”.
Second, do not post giant block letters like that. It’s distracting, rude and annoying. it’s the internet equivelant of shouting in someone’s face.
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We do. The value of money has a reliable but variable decrease in value year to year.
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Most Money does not really accumulate. People spend it or invest it. The places they spend it or invest it then do the same thing, spend it or invest it - ad infinitum. The exception is cash kept in safes or mattresses. Even money in a savings account is invested by the bank - though you only get your agreed upon interest rate - but ditto if the investments go sour then the bank has to cover the losses on the investing.
Please don’t shout. If I understand your question, the money of the world doesn’t accumulate and cause inflation because the amount of wealth is also increasing. As I understand it, inflation is caused when the money supply increases relative to the amount of wealth. It should be noted that the amount of wealth in the world is NOT fixed. Most central bank policies in the developed world seek a low, positive inflation rate (caused by extending credit needed to capitalize, it is hoped, wealth-building ventures) to keep the economy moving.
FWIW,
Rob
First, sorry for shouting, though I meant it to be clearer. Obviously, it wasn’t, so, sorry.
Second, someone reminded me of my stupid teacher who used to skip my questions and tried to show how much he knew. I was hesitant to type that until I read the last line of his post, by which I decided to do so.
This is, to me, the right answer–inflation is a decrease in the value of money. But what is the value of money? It is defined by what it can purchase. So you see inflation when the ratio of money to wealth changes.
The OP seems to be discussing wealth creation–not money creation. Wealth creation (in and of itself), is either neutral or deflationary–since it means that there is now more stuff relative to the amount of money in the economy.
Secondly, I question whether this can even be evaluated on a historical scale. Although money is an old concept, many modern currencies (as many modern countries) are less than a few hundred years old. So money goes away as well as accumulating. A safe full of confederate dollars used to be worth something as money, and then were subject to inflation, but now are worthless not because of inflation, but because the confederacy went away.
So inflation over “years over years” is hard to even evaluate–how do you treat it when a currency changes? In many cases, the answer is that the prior inflation is erased.
Further, currencies can be revalued. For example, in Germany, 1920s, a currency can become worthless and is revalued. That seems to undo the prior inflation–to revalue the currency. The inflation doesn’t “accumulate” in such a situation.
Now, you could look to some kind of nonmonetary measure–how much stuff, for example, an hour of manual labor can purchase. But on that scale, I’d wonder if purchasing power has in fact risen–that you can buy a lot more stuff with an hour of manual labor now than you would, say, in 1535.
There is inflation, and there is purchasing power. When I was a kid you could buy a paperback book for fifty cents. Now it costs $5.95. However, as mentioned, it is likely that the average worker would spend less of his time earning enough to buy the book, so in real terms the price may have gone down. (I have no idea if this is really true, but it is a good example.) That is why you typically see prices comparisons over time adjusted for inflation.
In any case, the money supply doesn’t depend on what people harvest but on how much is printed by governments and how much is virtually created through lending.
I still don’t understand the question. Money certainly does accumulate; that’s how people get wealthy.
And what does land and sea have to do with it?
And why does the OP think that inflation isn’t happening?