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Economics/inflation for dummies



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amother
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Post Sun, Mar 26 2023, 12:08 pm
So although I have a bit of knowledge of economics there are some concepts I don't get especially with certain things I see on this site.

1 I understand that many price costs revolve around the price of gas so when gas goes up then those things cause each other to go up.. because the eggs milk cheese bread and almost all basic goods are transported by truck with gas and now the trucker raises the price which causes the supermarket to raise the price which causes the bakery who uses alot of eggs to raise the price etc..... but what about services that are digital or don't need gas necessarily.. like therapy , massage ,shaitel macher etc.. online services etc.. why does that have to go up in price ?

2 From what it seems it looks like inflation only affects the middle class (most) and poor but not the rich but why logically is it like that ? I mean to say that once people have less to spend on things then the source of what they can get is usually limited , so by nature there should be less spending and everyone shares in the loss equally , but from what it seems is that the rich use inflation as some sort of advantage and become richer the middle class (which I have a question on soon) suffer the most as there is no support and the poor have to save more and spend less (I am using that because at least they get programs)

3 Why can't middle class raise their prices too and continue to be middle class like everyone else why is it that they get crunched ?

4 why when gas prices do go down (not apllicable now but for example when covid started I saw gas gow down to as low as 1.89) doesn't the price of the other things go down as well with it ? So why when pizza was 2.50 before covid didn't it become 2.00 during covid ?

5 If there really is inflation out there (which there is) How do so many people still afford to continuiosly go to miami especially when prices continue to go up on these vacations ?

Not trying to be judgemental , but more trying to get an idea of how money flows etc..
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amother
Freesia


 

Post Sun, Mar 26 2023, 1:46 pm
1. I don't think inflation necessarily revolves around gas prices. In this case, inflation was largely caused by the injection of trillions of dollars printed and sent to people during and after covid. Imagine, the savings rate in the US was HIGHER during covid -when people weren't working- then before covid. So when Covid ended people had all this money to spend. It's the basic law of supply and demand. There was tons of demand from all the money people had and limited supply. So prices went up.

2. Inflation hurts both the middle and lower class but not the rich. The rich aren't hurt by inflation for two reasons:
1. They can afford it even if the price goes up and
2. They often own assets (like real estate) that are inflating during inflation.


3. The middle class and the poor often have salaried job that are not keeping up with inflation.


4. It's not only about gas prices. There's too much money in the economy from the stimulus as well as zero interest rates which allowed people to borrow money very easily which is inflationary.

5. I guess for many people who have $6000-$8000 to spend on a trip to Florida, the fact that it's a few 15%/20% more doesn't change anything.
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amother
OP


 

Post Sun, Mar 26 2023, 8:46 pm
thanks
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