The value of a dollar
Several
weeks before the schools actually started, all kinds of stores
advertised their wares with a generally peppy "Back to school" theme,
even though I have to say that I am at a loss to understand how exactly
some of these products are even remotely related to the needs of
schoolchildren. But I guess that this is what it's like to come from a
different culture, an eternal stranger to the cryptic customs of your
new home country, which makes every day an occasion for wonder and
bewilderment.
But fortunately many things are simple and familiar. There is this lovely Portuguese deli located nearby that has just the best little cakes and donuts that I know are available around here, and for a great price to boot. Often when I walk around that direction, I step in and enjoy a little delicacy there. The place also serves donuts that are big and delicious, way better than anything that Tim Horton's has to offer, and their price was like 50 cents each, which is ridiculously low. Well, it was 50 cents, since the last time I went there, the price had come up to 65 cents, which the lady behind the counter apologized for. Even so, it would be a great deal for twice the price.
I get to see the effects of inflation so very rarely in my own life that it always takes me by surprise. I can still remember years ago back in the old country when inflation was a constant creeping occurrence, but for the five years that I have lived here, pretty much everything costs the same as it did five years ago. I wonder if we should thank Wal-Mart for their valor in the eternal battle against the growling inflation beast who I call Inflor and who is constantly lurking around the homes of widows and orphans to take away the bread from the mouths. Probably, or maybe it is just all that increased productivity and outsourcing in general. Or both.
Either way, I am happy, and hope for deflation. But as much as I like getting value for my dollar, I wonder if it is a sign of something that I should be worried about when our savings account pays us almost as high interest rate as we have to pay for our mortgage, fixed a few years ago when the rates were low. (I'd sure hate to have an ARM right now, even if we don't live in The States but here up north in much calmer waters.) Since the "President's Choice" financial services does not have to maintain an expensive network of physical banks, they can pay your "Interest Plus" savings account 4% annual interest for all the money above one grand. I would say that that is pretty good deal. Good riddance for the traditional banks, especially when Wal-Mart eventually gets to enter the financial sector. Bits are bits, as I always say, and moving them around physically with paper and legwork is so totally 19th century.
But fortunately many things are simple and familiar. There is this lovely Portuguese deli located nearby that has just the best little cakes and donuts that I know are available around here, and for a great price to boot. Often when I walk around that direction, I step in and enjoy a little delicacy there. The place also serves donuts that are big and delicious, way better than anything that Tim Horton's has to offer, and their price was like 50 cents each, which is ridiculously low. Well, it was 50 cents, since the last time I went there, the price had come up to 65 cents, which the lady behind the counter apologized for. Even so, it would be a great deal for twice the price.
I get to see the effects of inflation so very rarely in my own life that it always takes me by surprise. I can still remember years ago back in the old country when inflation was a constant creeping occurrence, but for the five years that I have lived here, pretty much everything costs the same as it did five years ago. I wonder if we should thank Wal-Mart for their valor in the eternal battle against the growling inflation beast who I call Inflor and who is constantly lurking around the homes of widows and orphans to take away the bread from the mouths. Probably, or maybe it is just all that increased productivity and outsourcing in general. Or both.
Either way, I am happy, and hope for deflation. But as much as I like getting value for my dollar, I wonder if it is a sign of something that I should be worried about when our savings account pays us almost as high interest rate as we have to pay for our mortgage, fixed a few years ago when the rates were low. (I'd sure hate to have an ARM right now, even if we don't live in The States but here up north in much calmer waters.) Since the "President's Choice" financial services does not have to maintain an expensive network of physical banks, they can pay your "Interest Plus" savings account 4% annual interest for all the money above one grand. I would say that that is pretty good deal. Good riddance for the traditional banks, especially when Wal-Mart eventually gets to enter the financial sector. Bits are bits, as I always say, and moving them around physically with paper and legwork is so totally 19th century.
In fact, for the economy as a whole, low inflation in the range of 0-2 percent per year is thought to be optimal. That is what central banks these days aim at.
Shrinking money supply is not conducive to economic growth because it makes people and institutions to hold on to their money instead of investing or consuming it. On the other hand, signifigant inflation is also bad for economic growth because it means financing costs and risks will be higher.
Posted by Markku | 8:13 AM