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How can I explain to my ignorant econ-teacher that US currency has been heavily inflated over some time?

Asked by Magnus (2884points) March 19th, 2009

It got pretty heated in econ class today, and I got very surprised.

My 50+ y/o economy teacher that has been a teacher for 29 years was denying inflation.

She is saying that a dollar is a dollar and the same dollar that it was 100 years ago.

Then I said, no, when you create money out of nothing, like the federal reserve does, the result is inflation.

She denied that.

So I said. Hypothetically, if there’s 100,000 coke bottles in the world and $100,000 in circulation. One coke bottle is $1.

If you add $100,000 to the circulation and the amount of coke stays the same, every coke bottle is now $2 and one dollar is worth less now than before because of simple supply and demand concepts.

She said no, supply and demand concepts doesn’t apply to money.

Sigh

Can you think of any examples that I can show her which might make her understand that when you create money without any real value to back it, the result is inflation?

I was shocked by her not recognizing that it’s a consensus between economists that inflation is a constant in american economy as well as any other country using fiat money.

Hell, this other kid even quoted the text-book saying something about putting more money into circulation = inflation.

And she said no, because we’re in a recession… wtf… seriously.

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