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When I was a Kid an Ice Cream was 10 cents

January 24, 2022

Everyone has heard it, probably from parents or from grandparents.

"When I was a kid, an ice cream was 10 cents. Now it's more than a dollar."

We have gotten used to hearing it, as has every generation. It seems that the story is told over and over again by each generation. It doesn't have to be that way. I think it's fair to ordinary people to try to provide a system where the money in their bank accounts doesn't decrease in value every year.

Those who are pro inflation argue that when money is invested that is a good thing, and inflation is an incentive for that because the value is diminishing. It is true that investing should be incentived. I think that people who invest should be paid for the trouble. But still something must be wrong, because even though investing is incentivized, saving in itself is penalized, and saving is a good thing. So even though it makes sense to incentivize investing more than saving (otherwise no one would invest), saving should nevertheless be incentivized.

An inflationary goal of 2% means, of course, that people who have their value stored in cash get 2% poorer each year. One can easily look up the figure of the ability of the average American or the average European's ability to cover an unforseen expense. The figure is always astoundingly low. The average person doesn't have very much money saved. The least the government and its instititutions can do is to construct a monetary system that works with people, not against them, by not having their value diminished year be year.

I'd much more prefer if the story was "When I was a kid, an ice cream was 100 dollars. Now I can buy a hundred ice creams for that money". Then maybe people would choose not to buy that ice cream but to save instead.