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Your money doesn't buy as much. Here's why
Posted: 04.27.2011 at 5:25 PM
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You probably haven't seen your pay check go up over the last few years. You've probably also noticed your money doesn't buy as much as it used to. That's in part due to inflation.
A vintage clip of The Price is Right shows a 1973 Chevrolet Vega being worth less than $3,000.
Today, a similar vehicle costs more than 6-times that amount.
In 1940, a newspaper was ten cents. Now, it's a $1.50, fifteen times more.
Also in 1940, a double feature cost 25 cents. Today, a single movie costs $10.
"Inflation is caused by excess printing of money relative to production," says Tim Nash, economics professor at Northwood University.
You maybe be saying to yourself, "Of course things cost less because people were making less back then." But is that true? NBC25 spoke to a former automotive workers who hired in at $14 an hour in 1971. Today, GM's two tier pay scale pays around the same amount for new hires.
It would take $25 to buy what one dollar could buy in 1913.
When the U.S. prints more money, the value of it goes down.
There is one bright spot, inflation is relatively low now.
"The great recession has brought inflation rates down to right around 1% for the last couple of years," says Tim Nash.
Throughout the month of May, NBC25 will have a series of stories featuring the issue of inflation and how it's impacting you and the country.