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Joined 2 years ago
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Cake day: June 13th, 2023

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  • Not quite. The point I was trying to make was that wages/housing are not necessarily tied inflation i.e. the change in the overall effective value of a dollar. Let’s see if we can try to agree on a few points. The effective value of the dollar is not stagnant. It changes each year. The fed tries to ensure inflation rather than deflation to encourage investing/spending of money. As such, the rate at which more money is minted each year and federal rates are controlled to try to hit a healthy amount of inflation each year. Now, if we were to take the average percent of inflation each year between now and 1933, the value of today’s dollars would be roughly (today’s dollar value)=(1933’s dollar value)×[1 + (average inflation rate)]^(2024-1933).

    Do we agree on the above but just disagree on what the average inflation rate would be? Or is something above incorrect?


  • You’re completely correct in the figure for federal minimum wage and average home cost, but that doesn’t mean these two figures are relevant. Let me explain.

    Let’s take a look at the federal minimum wage, in 1960, $1/hr, now in 2024, $7.25/hr; 7.25 times higher. Let’s look at the national average cost of a home, in 1960, ~$11,000, now in 2024, ~$320,000; 29 times higher.

    Does this mean that the government is lying about historic wages or housing costs since they both didn’t increase at the same rate? No.

    Wages have notoriously not kept pace with inflation, while housing is considered a stable asset for building generational wealth, outpacing inflation. It can be a hard concept to grasp, but the value of a dollar is much more complex than being directly tied to minimum wage or cost of housing.