The Dismal Science. . .
Posted by Ken on October 23, 1997 at 08:31:55:
In response to The Is No Answer, written by Cassia on October 22, 1997 at 20:23:34
. . . doesn't even let us compare the value of money from year to year, much less over several centuries--just look at the continual wrangling over the Consumer Price Index, the amount of inflation & agricultural price equivalencies in the US. Intuitively, if one measures the price of a basket of goods in one era against the price of the same goods in another, one knows how much the value of money has changed between times. But even if we all agree on what goods should be measured this way, the goods themselves change over time, and the relative importance of products changes as well--just consider the importance & cost of keeping a carriage vs. a car. (Not even considering *which* kind of carriage nor which kind of car!) One common trick is to track the price of bread over the ages, as that is a pretty vital & common product. But I hope no one would argue that a loaf of bread today is the same product as one in 1813! Even if it were, that would still be just one starting point in the equation. So that is why no one will give you a definitive answer--there isn't one.
But consider this: the Bennetts keep house for 7 adults & several servants on 2,000/yr. The Bennett girls will have the interest on 5,000; during the war years, that is about 5%, or 250/yr, and consider themselves to be in a serious predicament, as would most of us if we knew our future income was going to drop by a factor of 7 or 8. Perhaps that is a better way to look at it.
I work with a bunch of economists. I'd ask them, but they wouldn't give me a definitive answer nor a method neither (-:
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