What happened to inflation?
Last night I came home and went into the office to check email. When I turned on the computer the screen of my monitor was all white. The contrast was going. It was time for a new monitor. Being that the last time I bought a monitor was 6 years ago, I had a very nice 17” CRT. So K and I pop’d down to our local Best Buy to look at new monitors. I found a 19 flat screen CRT for the same price I paid for my 17” non-flat screen.
First, let me say, I really like my new monitor. It is very nice. It can handle much higher resolutions then my 17 could. I played WoW for a little while last night, just to ‘test’ the new monitor. It was a night and day kind of difference.
Inflation is about 3%. That means things I bought last year for a $1 will cost me $1.03 this year. The monitor I just bought cost the same as the one I bought 6 years ago. At the same time this one is much better then that one. What happened to inflation?
I know something about economics. The raw materials that went into both products are about the same. The labor to build both monitors was done in china, so it did not get cheaper. With the exchange rate at an all low, what cost $1.20 6 years ago now cost $1.80. (thank you sky rocketing budget deficit) So the question remains…. What happened to inflation?
17” monitor in 1999…. $170.00
With 3% Inflation…. $197.07
Higher exchange rate… $295.60
19” monitor in 2005 … $180.00
Comments
Labor in third-world countries is cheaper.
Posted by: Dana | March 17, 2005 11:02 AM
Both built in the same country (China).
Posted by: Me | March 17, 2005 11:38 AM
Supply and Demand, You passed by all the slick LCD's that folks really want. Less demand for CRT's means the price drops to push them out the door. That 19inch high end CRT cost me 350 3 years ago.
Posted by: Patrick Haughton | March 17, 2005 05:17 PM
Ah yes, Patrick's answer is better and much more accurate. But I still think the cheap labor has something to do with it. Not only is assembly going overseas a lot more, sadly so is R&D. Not to mention the pay cuts everyone in the technology field has taken so that we can have our items cheaper.
Dana B
Posted by: Dana | March 18, 2005 08:12 AM
Reason #12 that web sites are fun and my friends and I are geeks:
"Like asking people on the street question, great way to understand likes and dislikes, but a bad way to learn about economics."
Posted 3 days prior to a discussion about inflation.
Luv ya Dan!
Posted by: Glenn | March 22, 2005 02:19 PM
Ok... that way funny. I wasn't intending to give a econ lesson, just thought it would be interesting.
I do not read heydan I just write it.
Posted by: Me | March 22, 2005 02:24 PM