Quote:
Inflation is ineviteble in a thriving economy.
The reason for this is because in a thriving economy compaines will give thier employees raises due to the profit generated from sales, and once the compnay raises wages for ther employees the also increase the price for the products or services they sell. Thus creating inflation. Now when one company tends to increase wages and prices other compaines do the same to compete with the increased profit of the competing company and to prevent loss of workers due to better wages elsewhere.
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No, when physical commodities are used as the currency, technological advatages increase their production as well so the ratio between currency/commodity and product remains the same (or relatively similar with no long term inflation like trend, only shorter term ratio changes). So far example:
Let's say in 1950 a man hour of labor could create 1 unit of currency or produce 1 unit of product.
In 2005, with technological gains, a man hour of labor might produce 3 units of currency or 3 units of product. So, yes, a person receives 3 times as much pay but the cost per unit of product is the same, so prices don't increase.
To use a real example, let's just take the hershey bar dollar currency and oil again. In 1970, it was more difficult to create both of these, but the ration in labor and resources was still similar.
So maybe a man could make 5 hershey bars per hour in 1970, or make a barrel of oil in 8 hours with the ratio being 40 to 1.
In 2005, the same man could now make 10 hershey bars per hour or make a barrel of oil in 4 hours. So his productiviity has doubled as well as his pay but there is no inflation. He can still buy a barrel of oil for 40 hershey bars. So prices stay the same and inflation is removed - basically a gold dollar in 1950 buys the same thing in 2005 just like the value of a hershey bar, a house or oil remains the same (for most intents and purposes). Dollars lose value because banks print them up like sand (likely noone even had 1 billion dollars in 1910 and the population was smaller as well, they've devalued the dollar in half, about 4 1/2 times. Imagine being able to take a large chunk of the worlds savings and spending it 4 times over in a period of 100 years or so ... that's the power of the banks ... not to mention additional power granted via. taxes. And you likely wonder why we both work for heavily regulated and subsidized government industries - that's why. Except I quit).