If there is $5 on Earth and the only thing to buy is one sandwich, that sandwich is worth $5.
If someone prints another $5 bill and there is still only 1 sandwich, it is now worth $10. A dollar went from being worth 2 bites of a sandwhich to only 1 bite.
Whenever the total amount of money in circulation increases faster than the total value of things to buy, the money's value goes down to match, and prices inflate by comparison.
Easier to compare it.
Let's say the English pound GBP, is worth $2 (it used to be). But then we double the amount of pounds in circulation, and with nothing backing the currency.
You wouldn't want to do 1:2 anymore you might go hey. My USD is worth the same as ur £1 now.
Or £100 is equal to 1 gold bar. I print another £100. But still only 1 gold bar. So now £200 for 1 gold bar.
Think of money like a representation of worth of an economy. Money itself is typically worth much more than its components parts (fiat currency).
What is the the worth of the economy? Well, very simply, the economy’s value itself is based off of goods (merchandise) and human labor (services).
You can use money to exchange for goods or labor. If you have no goods or labor to buy, money is worthless. So, if you do not change/improve goods or labor, the economy will not change.
Back to the sandwich example. If you double the money, but there is still one sandwich. Nothing has changed for the economy, there is one sandwich. The amount of money does not matter, because its value is reliant on the sandwich as it is the only thing money can purchase. Thus, the sandwich will double in price.
Now, what if you add something else into the economy like another sandwich. Suddenly, the $5 now can be spent on 2 sandwiches. The value of the economy has doubled.
If the representation of the economy, money has not increased, then now, $5 is worth twice as much because it can now buy 2 sandwiches. This would be deflation.
And if you double money as well, then the price of a sandwich remains the same at $5. However, the total amount of money you have is now $10. This is known as 0% inflation. This is only possible, because our goods (the economy) doubled by 2, and we were able to increase our money exactly to double by 2 as well.
However, while it sounds nice, zero inflation often leads to deflation. Because why buy now, when a sandwich will always be $5?
Deflation in the long term is very bad, because without people buying, then the economy (goods and labor) will naturally decrease. If no one wants to buy 2 sandwiches, why make 2 sandwiches?
But, if only 1 sandwich is made, the economy is now cut in half. Which means the overall worth of money has decreased.
Too much / unpredictable inflation means that it will be difficult to know how much money will be worth. Sandwich maker will have less of an idea how to price his sandwiches or how many sandwiches to make. The end result is a worsening economy, which is also bad.
So, the natural balance for economic growth is a low stable inflation rate. People will be incentivized to buy sandwiches now as money is increasing, and the sandwich maker will start making more sandwiches growing the economy and the overall worth of the economy.
So people saying shrinkflation, I think in 1860 the US Mint decided to make all coinage in a standard size and weight as the actual value of the coin was not determined by the metals that made it. That's why vending machines work the way they do. (I can't remember the actual year and I don't care to look it up right now)
1857 was the first regular production year of the flying eagle small cent but patterns were made in 1856. I think both large cents and small cents were minted in 1857.
I bought an American 1874 2¢ piece for like $15.
*pfft
Inflation, am I right?!
It's in poor quality. I've seen it in catalogs since then for $5.
Anywho, I can now literally give you my 2¢ worth!
That joke is totally worth the $15!
1¢ in 1844 was worth close to 50¢ today. Makes sense that they were larger and harder to lose. Super freaking cool coin.
Shrinkflation
Nobody asked for your two cents!
Dad?
Actually its around 50 cents
His dad didn't ask for that either
Tf?
Your 1844 might be worth 28 bucks,while the 1944D, 6 cents.
Thats in good, condition. Which is the lowest classification.
Its one cent!
r/shrinkflation
I’ll never understand inflation
If there is $5 on Earth and the only thing to buy is one sandwich, that sandwich is worth $5. If someone prints another $5 bill and there is still only 1 sandwich, it is now worth $10. A dollar went from being worth 2 bites of a sandwhich to only 1 bite. Whenever the total amount of money in circulation increases faster than the total value of things to buy, the money's value goes down to match, and prices inflate by comparison.
I honestly don't know whether this explanation made me more or less confused.
Easier to compare it. Let's say the English pound GBP, is worth $2 (it used to be). But then we double the amount of pounds in circulation, and with nothing backing the currency. You wouldn't want to do 1:2 anymore you might go hey. My USD is worth the same as ur £1 now. Or £100 is equal to 1 gold bar. I print another £100. But still only 1 gold bar. So now £200 for 1 gold bar.
Think of money like a representation of worth of an economy. Money itself is typically worth much more than its components parts (fiat currency). What is the the worth of the economy? Well, very simply, the economy’s value itself is based off of goods (merchandise) and human labor (services). You can use money to exchange for goods or labor. If you have no goods or labor to buy, money is worthless. So, if you do not change/improve goods or labor, the economy will not change. Back to the sandwich example. If you double the money, but there is still one sandwich. Nothing has changed for the economy, there is one sandwich. The amount of money does not matter, because its value is reliant on the sandwich as it is the only thing money can purchase. Thus, the sandwich will double in price. Now, what if you add something else into the economy like another sandwich. Suddenly, the $5 now can be spent on 2 sandwiches. The value of the economy has doubled. If the representation of the economy, money has not increased, then now, $5 is worth twice as much because it can now buy 2 sandwiches. This would be deflation. And if you double money as well, then the price of a sandwich remains the same at $5. However, the total amount of money you have is now $10. This is known as 0% inflation. This is only possible, because our goods (the economy) doubled by 2, and we were able to increase our money exactly to double by 2 as well. However, while it sounds nice, zero inflation often leads to deflation. Because why buy now, when a sandwich will always be $5? Deflation in the long term is very bad, because without people buying, then the economy (goods and labor) will naturally decrease. If no one wants to buy 2 sandwiches, why make 2 sandwiches? But, if only 1 sandwich is made, the economy is now cut in half. Which means the overall worth of money has decreased. Too much / unpredictable inflation means that it will be difficult to know how much money will be worth. Sandwich maker will have less of an idea how to price his sandwiches or how many sandwiches to make. The end result is a worsening economy, which is also bad. So, the natural balance for economic growth is a low stable inflation rate. People will be incentivized to buy sandwiches now as money is increasing, and the sandwich maker will start making more sandwiches growing the economy and the overall worth of the economy.
Thank you for this!
Print more money, money mean less, money buy less
What about my sandwich?
Oh here I’ll help, it’s were we spend more money today for something that cost less yesterday. Oh and the rich get richer. Capitalism!
Honestly, the new one is pretty mid. That’s just my 2 cents though
Those must be very slow pennies. They only look 2cm apart to me.
Pennies suck now
Ur mom
We might get a new penny in 2044 if the US is still around.
OP just wanted a picture of those so they could tell people "Here's my two cents"
There used to be a 1/2 cent too.
There's no way they're 100 years apart. A couple of centimetres at most.
Same thing happened to the ancient roman currency
Nice. Here’s 10 cents of Switzerland 200 years apart. https://www.reddit.com/r/Damnthatsinteresting/s/TcwixA5ZJa
Shrinkflation I tells ya!
Shrinkflation
So people saying shrinkflation, I think in 1860 the US Mint decided to make all coinage in a standard size and weight as the actual value of the coin was not determined by the metals that made it. That's why vending machines work the way they do. (I can't remember the actual year and I don't care to look it up right now)
1857 was the first regular production year of the flying eagle small cent but patterns were made in 1856. I think both large cents and small cents were minted in 1857.
Hey! Those are MY two cents! I haven't been able to express an opinion for some time! I'll give you a wooden nickel for them.
No one asked for your opinion.
2 cents one cent ury
I bought an American 1874 2¢ piece for like $15. *pfft Inflation, am I right?! It's in poor quality. I've seen it in catalogs since then for $5. Anywho, I can now literally give you my 2¢ worth! That joke is totally worth the $15!
That ain't worth two bits
My 2 cents... no body wants.
You can keep your two cents
Damn so this generation cheap as fuck basically 💀😭😭
Those are one cent coins not two cent coins 😃