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What Really Causes Inflation?

64 (6)

"Today we consider real inflation - not official, bogus measures - but the real cost of living 50 years ago compared to today.

I’ve spent quite a bit of time compiling the data in the table below. Please cast your eye over it. It shows the price of various items in 1970 compared to their price today.

I’ve used various different sources from across the net, from the ONS to broadsheets to blogs. I can’t list them all here (there isn’t space). The numbers are pretty sound (more details as I discuss below), though quibble-with-able.

It’s amazing just how much things have risen in price.

Average wages have gone up by 22 times, give or take, over the last 50 years. However, there have been huge deflationary forces at work, which have driven down the cost of labor.

Cheap immigrant or outsourced labor has driven down wages to an enormous extent. So have more women entering the workforce. All mean the workforce has expanded, meaning more competition for jobs, which has driven down prices. Great if you’re an employer, not so great for the employees.

In short, there is no shortage of labor supply and, for the most part, we don’t use debt to buy labor. It is usually paid out of cashflow."

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