Inflation’s effect on us today..
In today’s society, inflation has been causing a rise in the prices of goods and services since the beginning of unified currency. It can be a direct effect of the concept of supply and demand and is often something that has plagued consumers for as very long time. In feudal Japan, noble samurai defeated in battle would take their swords and kill themselves because they believed that they had dishonored their lords and didn’t want to face the ridicule and embarrassment they would receive from returning to their village. This has absolutely nothing to do with Inflation in the economy but I just thought it was a useful fact to know. All over the world, Inflation can be seen in many places today as most currency is worth much less than it was 50 years ago. Money will naturally lose value over time, as more of it is printed and people demand more for less. According to Investopedia, Inflation is defined as a sustained increase in the general level of price among various goods and services, and is measured as an annual percentage change.
Inflation in Ancient Rome..
In ancient Rome, inflation was one of the many other variables that caused the empire’s downfall. After the empire stopped conquering new lands, the flow of new gold into the roman economy drastically decreased. The romans were using too much gold for luxury items. The production of the coin slowed down drastically, and they were becoming rarer and rarer. Merchants raised their prices to accommodate for the lack of new gold in the economy. Eventually gold coins became so rare that only the rich were able to get any. Many people stopped using coins and just decided to barter their belongings to get what they wanted. People started being paid in food and clothing, and taxes were collected with fruits and vegetables. Along with the rising unemployment rate, corruption in the wealthy, and heavy military spending, many of the lower classes such as farmers ended up being poorer than they already were. Inflation definitely played a very large part in rome’s downfall, probably one of the biggest factors.
Inflation in our society..
Let’s use an example: 40 years ago, According to McDonald’s official inflation chart, coined the Big Mac index, the price of a Big Mac from McDonald’s was 75 cents, this was acceptable at the time, as the Big Mac wasn’t as well known as it is today, labor was cheaper, money wasn’t as easily obtainable, and there simply wasn’t as many bills printed back then. Although Inflation isn’t necessarily a bad thing in small doses, When the effect becomes to extreme (more that 2-3% a year) it can become a sign that an economy is failing. of course the Big Mac isn’t reflective of all of America’s economy, but it is a good example to show how much inflation actually effects us. A Big Mac today will cost you 3.99, that’s around 5 times more expensive than it was in the 1970s. There’s many reasons why this happened change happened, among inflation of money being put in the economy, and the use of better materials in the hamburgers, as there wasn’t a ridiculous amount of morbidly obese Americans 40 years ago, so health wasn’t as much of a concern.. In conclusion, the Inflation rate can help an economy when it is contained, but when out of control it can cause its downfall, and that just happened to be the case for ancient Rome.
By Uzoma Nwanneka,
Patrick Conteh, Kelly Carter