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Old 10-11-2010, 07:41 PM
 
Location: West Orange, NJ
12,546 posts, read 21,353,711 times
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Quote:
Originally Posted by jhtrico1850 View Post
Flat-screen prices to tumble ahead of holiday season - Sep. 23, 2010

Flat screens are dirt cheap compared to years ago. I paid $300 for a junky 19 inch Polaroid in 2007, they've got brand name 32-inch TVs for $350 today. Should drop even more this Christmas.

Like the original poster said, if wages match inflation (THEORETICALLY), it's up to you to decide to live the same as before, or make your money stretch.
yes, they are cheap compared to when they came out. so are cassette tapes. what's your point?

my point was, 20 years ago, maybe the "average tv" was a 27 inch television that cost $300. now the "average tv" is a 32 inch lcd that costs $300. my point was, to get the average tv, you still have to spend the same amount of money. yes, prices of new technology drop, inflation cuts into our spending power.

is the argument that we're better off bc of new technology? sure...but we're not better than the avg if we're just getting raises matched to inflation.
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Old 10-12-2010, 01:56 AM
 
106,062 posts, read 108,035,793 times
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like i said you have to becareful doing equivelent comparisons ..

that benz driver bought the best of german technology at that time and spent alot of dough to get it.. 15 years later he could buy that hundai and get way more technology then his old car. but to make things equal again he needs to buy the best german technology has today and that will be very expensive again....

you need to do exact comparisons to really compare price vs performance vs where does the product fall out in the hierachy today ...

consumers are so varied in their choices of what they buy and why that to think a basket of stuff the gov't pickss out to represent you is crazy thinking.
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Old 10-12-2010, 10:22 AM
 
Location: Ohio
24,623 posts, read 19,077,671 times
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Quote:
Originally Posted by bradykp View Post
my point was, 20 years ago, maybe the "average tv" was a 27 inch television that cost $300. now the "average tv" is a 32 inch lcd that costs $300.
In 1986 a 27" SONY Trinitron cost $750 and that was at a military base where the military personnel pay Cost + 10% Mark-up (to pay the wages and benefits of employees and maintain the facility plus replace merchandise sold).

The price did eventually drop to about $300, but then who waits 8 years for the price to drop?

I might also add I paid $750 for a Toshiba 4-head VCR with 2-audio heads (that was top of the line in 1986) and those eventually sold for $69 at Wal*Mart around 2002-2003 or so.
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Old 10-12-2010, 04:18 PM
 
106,062 posts, read 108,035,793 times
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i paid 1000.00 bucks for the first magnavox cd player ever sold...

but todays top notch innovations cost thousands when first released so thats what you need to compare it to.
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Old 10-12-2010, 04:20 PM
 
106,062 posts, read 108,035,793 times
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Quote:
Originally Posted by Mircea View Post
In 1986 a 27" SONY Trinitron cost $750 and that was at a military base where the military personnel pay Cost + 10% Mark-up (to pay the wages and benefits of employees and maintain the facility plus replace merchandise sold).

The price did eventually drop to about $300, but then who waits 8 years for the price to drop?

I might also add I paid $750 for a Toshiba 4-head VCR with 2-audio heads (that was top of the line in 1986) and those eventually sold for $69 at Wal*Mart around 2002-2003 or so.
the replacement xbr last sold a few years ago for 2700.00.... thats the cost of staying with the same tier in technology
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Old 10-12-2010, 04:20 PM
 
Location: Atlanta, GA
1,209 posts, read 2,241,679 times
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brady, like you said, technology makes us better off, even if we are in the same financial situation. Don't forget about how dense the resolutions are these days, HD, etc. If your balance sheet is your measure of being better off, I guess not.

Quote:
Originally Posted by mathjak107 View Post
that benz driver bought the best of german technology at that time and spent alot of dough to get it.. 15 years later he could buy that hundai and get way more technology then his old car. but to make things equal again he needs to buy the best german technology has today and that will be very expensive again....
Certainly you paid a lot more 15 years ago to acquire the Benz name. If you were just in it for the car, then the Hyundai is ok. Your point is valid I guess if you want to look cool when you are driving, that is still expensive. It has gotten cheaper to acquire a quality car over the years.

10 years ago, and still a little today, the Hyundai name was a joke, today it is acceptable. Similarly, the $20,000 car of today (any Accord, Corrola) is a lot better than the $30,000 car (Maxima I'm driving) 10 years ago.

I don't buy things because they are new (and inflated), I buy for capability and function. I think it's ok to compare similar functioning devices over time, obviously if you are comparing top price brackets to top price brackets, you get what you want.
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Old 10-12-2010, 09:30 PM
 
Location: San Francisco, CA
15,088 posts, read 13,408,480 times
Reputation: 14266
Quote:
Originally Posted by chicubs View Post
Please help settle this debate with a friend who was an Econ major in college but has me confused on this logic. He argues that hypothetically if your raise matched inflation every year your real spending power would actually increase slightly every year.

This doesn't make sense to me, there are obvious exceptions such as paying off a mortgage at a fixed payment and technoligical advances will increase the standard of living for everyone. However, I say you will have the same salary every year in terms of "real" spending power.

He argues that inflation only effects us if we buy the same exact good over and over. He says that as consumers we can make decisions by choosing subsititutes for lower prices that allow us to "beat" inflation on a lot of purchases. I argued this is true but doesn't have anything to do with inflation.

This was brought up discussing government jobs that once you reach the highest pay grade, your income is only increased to adjust for inflation. So the question is, if you salary raises match inflation every year, are you effectively making the same when comparing year 1 to year 10?
I think your friend should be careful not to change too many variables in the model at one time. Models are abstract approximations of reality that generally hold all else equal and then observe changes that come about from the adjustment of one or a small group of variables.

So, the first place I would start would be to hold the consumer's purchasing choices constant. Sure, they could stop buying a Mercedes and ride a bike instead, but let's leave that variable constant for now.

The second thing I would state is: let's assume that the CPI is an all-encompassing measure of inflation. If this and the former stipulation about the consumer's behavior is left in place, then yes, real spending power will be constant in a world where raises match inflation.

In reality, we know that the CPI is an imperfect, approximate measure of inflation and that not everything goes up or down exactly as the CPI does. We also know that consumers can change their behavior. As we introduce those variables, we see that of course a consumer can influence his or her real purchasing power significantly - but they can do that under most any circumstance irrespective of what is happening with inflation. You might, however, argue that inflation may hasten the tendency of people to substitute to a different set of goods than they had been consuming.

So in a sense, you both have some truth to tell here. But you need to appreciate what the abstract model tells you (and why), where it ends, and where the "real" world begins.
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