We are repeatedly told how the value of our money is not going very far and we can purchase a lot less than we could in the past. People mistakenly tell us how inflation is killing our standard of living making us all poorer. Of course, they tell us this communicating to people around the world for free on devices that have more computational power than what could be purchased for millions of dollars decades ago.
The reality is that technology, which is fueled by money, ends up accelerating over time, raising our standard of living. Most do not consider what cost money in the past yet is free today.
Consider this article. How much would it have cost 40 years ago for me to get this information?
It is hard to tell but the analysis starts with some type of newsletter. Thus, it would have to have a mailing list with everyone on it. If a stamp cost 10 cents, that would mean sending it to 100 people is $10 in postage. Of course, we need to add in the cost of producing the newsletter along with the envelop to mail it. Would that run another $10? Perhaps it would be $20 to reach 100 people.
Of course, if I was a "professional" journalist, my article might appear in a publication. In that instance, the readers would have to spend anywhere from a quarter to a couple dollars for the publication.
Today, this is simply posted without cost to me on Leofinance while there is no charge to anyone for reading it.
Is this a simple case? Of course. But how often do we repeat this event in our lives today?
Technology penetrates most areas of life. Those industries where it has not, are the ones that have, so far, failed to see technological deflation. This is on its way though.
Source
Food Consumption
We all heard the fears that we will not have enough food. The fact the global population is growing, we are told, means there will be billions starving. This was the mantra since the 1960s.
However, the reality is our food production keeps increasing. We have more than enough food to feed everyone in the world. The issue is not with our production but, rather, the distribution. Since we do not get it to where it needs to be, many are going hungry. Hence, the fear for all those decades was unfounded.
Time is our most constant element. We each have only 24 hours in a day. Because of that, we can break down the hours we pu tin earning each facet of our basic sustenance. When we view things from this perspective, we can understand how much better things are getting.
Another way to look at it in terms of where does our money go. We already covered how Energy Prices Dropping As A Percentage Of Total Expenditures. Since this is a vital component of any budget, it is essential to have a firm grasp on it.
There is a second necessity that no household budget can overlook. That is f in how much of our overall expenditures are going to that.
ood. This is something that we also need to frame properly to understand how things are truly going.
It should come as no surprise, as technology allowed for the increase in food production, we see a radical shift
Here is a chart detailing what took place over the last 60 years.
Source
It is evident that going out for food is on the rise although that as much as on would expect. Nevertheless, there was an increase in that category. However, what is happening with food at home, it tells a completely different story.
In 1960, roughly 13.75% of disposable income was spent on food at home. By 2018 this dropped to 6%, a decline of 56%.
Perhaps people eating out more caused a decline in the at home numbers. Even so, we can see the overall went from 17% of the disposable income in 1960 to 11% almost 6 decades later. That is still a drop of 35%.
Of course, this is a much different story than we hear from the masses. We are told how we are spending more for the basic necessities when, in reality, we have more income to spend on other things. As food and energy consumption requires less of our income, we can afford things such as Netflix, Spotify, or a new smartphone.
Exponential Technology
Many will look at this and claim the trend is over. The above chart cuts off in 2018 so many will state that, since we saw a recent run up in prices, that will last forever.
If we look closely at the chart, we can see there were periods where the trend did temporarily go the other way. It was not a reversal, just a momentary condition that, ultimately, resulted in a return to the longer term norm.
As for this concept stopping, just take a look at what is taking place right now.
Source
Many do not think of agriculture as high-tech but this shows how this is one of the most advancing industries there is.
Just look at some of those categories:
- Drones and Robotics
- Smart Irrigation
- Sensors
- Animal Data
- Farm Management Software
This is advanced stuff. Agriculture is a technology industry and here are 100+ firms that are working on pushing things even further ahead.
And one thing we know about technology, when it enters the picture, it drives costs down.
Therefore, do not buy into the claims that we are falling further behind. The reality is that technology is penetrating every industry. This disruption is going to eliminate obsolete companies while allowing more efficient entities to take over.
This is simply how it works. We are in an exponential technological era. We are going to witness exponential deflation.
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I hear your points and at a intellectual level, it sounds right, but I bought some $12 milk today, which isn't that big of a problem for me, but I'm watching my kids try to raise young families in this economy and it's rough.
I hear your points, but I guess I haven't digested the message yet.
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Certainly right now prices shot up. We had disruptions all over the global supply chains, one that have not resolved themselves. This is something that will take time.
Sure car prices are up right now. But how many take time to consider they go twice as far as once from the 1970s and 1980s? Whereas those were dead at 120K, a new car today will go 240K without much issue. Also, the MPG is much higher.
People look at things right now and that is all they focus upon.
Finally, looking at the price of milk for the young families does not take into account what they are making. If they are making 1970s wages, that is a problem. Since most are not, things are different in terms of their income statement.
Hard for people to believe this when pries are elevated yet short term focus, which is what humans excel at, skews what is truly taking place.
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Yes, food dropped as a percentage of total expenditure over the past few decades. But food prices have been rising over the past two years, and more steeply over the past few months. If this trend continues, food will once again account for the most expenditure in many people's budgets before long. I'd love to see that chart with 2019-2021 added on.
Yes they have yet the mistake is to believe that food prices will continue to go up. While they might have some higher side, there is a limit to what people can spend.
However, to get an idea of historic proportions, just look at the commodity prices of food on 10 and 25 year charts. This will tell you what some of the different food prices are in terms of their all time highs.
https://tradingeconomics.com/commodity/wheat
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I also think it's a supply chain issue. I remember all those videos about how crops, eggs, meat and even milk were all destroyed since the farmers couldn't get them out. I have noticed that more and more of the produce is being made by larger farms (or corporate farms) and the smaller farmers are probably losing out. Then again the previous point I made is probably more of a guess after seeing what happened with the meat production plants.
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I think it is beyond dispute that smaller farms are being squeezed out. This is sad but it was a trend set a number of years ago. Certainly there could be some issues as larger Ag corporations achieve the same status as Big Pharma.
And yes I do recall those videos. Fields of crops plowed over because the picking couldnt take place. Another factor is crop rotation was messed up, something that has an impact for a couple years.
Fortunately, there is a lot of tech going in this realm which means we are going to see massive advancements. The biggest challenge is to increase production where it is consumed. That will help a lot of the price along with starvation issues.
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We live in a paradoxical world. While our financial and political structures have deteriorated, technology has improved to such an extent that life is radically improving for most people on the planet.
Imagine how beautiful the world could be if people simply rejected the negative politics and if we had political leaders who stood against financial corruption rather than participating in the corruption?
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Politics are power and we know that institutions are purchased to help promote a particular agenda. Hence the media, scientific study, and other entities are promoting narratives made to scare people and force them to comply.
When we delve into the numbers, we see that what is being told to us by the mainstream media is not true. Yet people buy it from CNBC or Bloomberg the same way they do from CNN or FOX.
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Oppositional thinking leads people astray. They tend to think that if a given group is wrong; then the opposition must be right. However, when the ruling coalition and opposition hold the same foundational views; then switching parties just changes the form of the underlying problem.
I think that, in the United States, the left is worse than the right at the moment. The left controls the schools; so it sets the foundations for the narratives that the ruling class uses to control the people.
The right fails because Conservative leaders seem to think that oppositional politics will somehow restore the principles of liberty. History shows that base oppositional thinking just leads to greater division.
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You have left out many facts that need to be addressed. While food production has increased, food quality has decreased. In order to grow more, we have modified our agriculture. GMO's are prevalent in the food chain and the run-off from fertilizers in many cases has resulted in the contamination of local groundwater sources which in turn are causing health issues for the residents in these communities that use well water. Vegetables today which are mass-produced are not nearly as rich in nutrients as produce grown 50 years. These conditions have led people back to organic alternatives, and don't even get me going on the meat industries, anti-biotics, steroids, chemical feeds. Remember whatever they eat you're basically eating too! So let us look now at what it cost to eat if you don't want to eat pre-processed or mass-produced unhealthy foods. Hmmm, guess we just added about 30-50% cost to eat quality food that won't cause cancer or birth defects over the course of your lifetime. Seems like there is a cost involved with your analysis that you failed to include - oh now let us add in the cost of medical bills for later in life from eating a poor quality diet of GMO's, antibiotics, steroids, and the rest. WOW, food just got really expensive!!! Now add to all THAT inflation and look again at what happens to your chart. Beef prices in stores are up by 20-30% where I live, produce is up about 8%, chicken is creeping higher at about 5%, fish is through the roof, dairy products 7-10%. Nah my disposable income is indeed eaten up by an ever-increasing grocery bill. I'm upvoting you but not for the accuracy of content but because of your sincerity and the time you put into writing a posting.
Another thought about world population - at some point, the scale will tip and we will no longer be able to produce enough to feed everyone. When that starts to happen the food supplies will hyper-inflate and people WILL begin to starve. With more people comes less land for agriculture, less land means less production. Fortunately, at current rates of growth, you and I will not be here to experience those times but it will start accelerating at some point, the more people the more births. Sorry for being a buzz kill but that is mathematics and science,
While I am not too sure about your first point, I kind of disagree a bit about the world population since the population growth is going down. So I don't think it will hyper-inflate.
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You might find this interesting.
World Population Clock
While the population growth has slowed slightly there is no statistic I have seen that shows it "going down" at any point. Even with the many Covid deaths in the last 2 years.
Also regarding my first point, the following article is just one of many written over the last two decades regarding food quality decline. This one appeared in Scientific American on April 27th, 2011.
Have Fruits and Vegetables Become Less Nutritious?
There are also many reports and research papers written on fertilizers and groundwater contamination.
People always say that when warping things so it carries no evidence of reality anymore. What people are promoting as science is bullshit and anyone with an objective viewpoint knows that science is nothing more than a propaganda machine.
A concept that was started 50 years ago and was wrong for half a century. You even acknowledged that food production is going on yet you believe it will stop. What about vertical and climate controlled farming? Didnt we show there is a lot of innovation in that area?
While the quality of the food can be debated, the amount produced is evident.
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I think we will just agree to disagree, I will rely on science and research. So far they have done pretty well with the advancement of civilization.
Great post boss and thanks for sharing. Your facts are so true and I hope to see more
Agriculture is getting better and everyday with the introduction of technology, food production has increased but in some areas as cost alot More because of bad economy.
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Most of it is supply chain disruptions along with a cyclical move in commodities.
Over a couple year period, this happens (well the global supply chain screwup is new) but people do not look at longer trends.
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I'm always learning. Facts put the fear messaging into perspective.
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One of the big problems over that is that the people getting the less money from the food sales are often the farmers. I know that due to small salaries and bad work condition and bank pressure, in France one farmer commit suicide each 2 days.
There are a lot of things to do to make agriculture a better universe and most of that will be through social changes. Technology could really a big thing into that but one need would be to have more farmers and less technology.
For a long time I thought that would mean a more expensive food, because if the farmers need to pay 15 salaries per months instead of 4 and work slower they are loosing a lot of money. And that sounds totally normal, but nowadays the farmers are repaying enormous loans they used to pay their machines, drones, self driving tractors (that's a real thing). Things they pais often several millions with only the loans' interests bigger than their own salary.
Having the food on the speculative market is also making it really hard because the farmers don't really know how much they will earn at the end of the month, everything can change everyday. The industrialization making them need to buy more pesticides and fertilizers each year doesn't help.
In fact a lot of farmers who tried to work that way, with more people and less machines and a better respect for the environment with a natural culture are the ones who are making the more money for themself and who have the best results.
The problem is that making this would totally destroy a huge market of agriculture machines and AI research and not every farmer can choose to stop using some of their machines because they still need to repay the loan
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