My favorite convenience store has seen its muffin prices rise by 30 percent over the past few months. However, the muffins are not larger and the blueberries are not 30% fresher. And the convenience store isn’t 30 percent less convenient.
The price rise is due to a decrease in the value money (also known as inflation).
According to the Federal Bureau of Labor Statistics Consumer Price Index, 2021 saw an average increase of 7 percent in consumer prices. This means that if you don’t receive a pay rise of at least 7 percent from the previous year, you could be getting a pay cut.
Many readers may recall the high levels of inflation in the 1970s. Inflation was below 5 percent every year except one between 1983 and 2020. There have been a number of factors that have kept it below this level, including not exceeding 4 percentage in any year between 1992 and 2020.
Inflation is not a problem that can be confined to the pandemic recovery period or the disco era.
The king’s caravan made so many gold purchases and gifts through Egypt that the value fell for a decade. Both instances occurred centuries ago.
Inflation in modern times is most likely caused by an increase of the money supply. Dr. Friedman is known for his contributions to the economic school called “Monetarism” as well as the quantity theory on money.
According to the quantity theory, inflation is determined by the amount of money and how quickly it is spent.
Between March 2020 and March 2022, the Federal Reserve purchased mortgage-backed bonds worth more than $2.5 trillion.
It is important to consider the causes of inflation.
A common example is retirement savings. An individual may work hard for years to build up a retirement fund, only to see that value decrease with inflation.
Readers of the magazine are concerned about inflation’s impact on fixed damages caps in lawsuits. The $350,000 limit approved by voters in November 2004 is now equal to $235,000 in 2004 dollars. Would Nevada voters approve a $235,000 non-economic cap on medical malpractice damages today?
In medical malpractice cases, injured parties could be protected against inflation by regular increases in the damages cap. As a result, plaintiffs could claim for $520,000 in non-economic damage.
Inflation is a concern that could reduce the value of medical malpractice damages caps. Nevada legislators need to review such damages caps.
Stan V. Smith, Ph.D., serves as VLM’s Quarterly Economics columnist and is the president of Smith Economics Group, Ltd., which is based in Chicago. Smith studied at the University of Chicago, one of the most prestigious institutions in the world for economics research and the home of law and economics movements. He also taught at the university. Smith co-authored the first textbook about economic damages. Smith is a nationally recognized expert in economics. He has testified in numerous cases involving personal injury, wrongful deaths, and commercial damages. Smith has helped thousands of law firms achieve successful results for plaintiffs and defendants, which includes the U.S. Department of Justice. Smith was also the founder of DePaul University’s first course in Forensic Economics. He also pioneered the concept “hedonic damage” and testified about it in important cases. His work was featured in the ABA Journal and National Law Journal as well as on the Wall Street Journal’s front page. Kyle Lauterhahn, a Senior Economics Analyst at Smith Economics Group, Chicago. Smith Economics Group, Ltd. is located at 1165 N. Clark Street, Unit 600, Chicago, IL, 60610. Dr. Smith may be reached at 312-943-1551, and at [email protected].
Vegas Legal Magazine published the article Inflation Woes.