Inflation: According to the Elf (hmmm....)

Inflation Explained to the Economically Challenged: Or What kind of strange things happen inside the mind of Jane Ellen when she has to compose an exam for her Economics course

Two girls stared awestuck at their computer screen. Slowly, Beatrix scrolled the mouse while she and her sister continued to drool over the vintage pictures Grandma Mary had sent them. Picture after picture flaunted darling dresses, vintage kitchens and antique cars, all in their prime. Towards the end of the slideshow, the picture appeared. A sudden gasp escaped from both the girls' lips. An inattentive passerby would only have seen a group of teens from the 195-s ordering at a drive through. What startled Beatrix and Rosalie was the menu. Hotdogs for fifteen cents? A soft drink for five? Were they dreaming? Indeed they were not. To their 21st century minds, such low prices were definitely worth gaping over. However, what they didn't realize was that the price rise over a course of 50 years was more than a coincidence. In fact, a logical explanation can be offered for it.

Prices rise as a result of either inflation or runaway inflation. Diamonds are valuable; this fact is well known (especially by the male variety of human beings who, seeking to please their lady-loves, take out a loan to purchase the glittering pebbles). Because few flawless diamonds exist, the meager amount that are around have been highly priced and prized. If diamonds were as common as, say dirt, would all the lady-loves feel special upon receiving one? I think not. This idea -- that an item's value is proportionate to it's quantity -- is an important one when it comes to economics. Inflation is purely and increase, or a rise, in the amount of money. Following the logic explained above, when more money is circulating amongst the population, the money is less valuable. A runaway inflation, like a toddler on a caffeine high, is simply out of control. Prices rise over a matter of hours when runaway inflation occurs! Obviously inflation is a very serious matter, buy how does it effect a rise in prices?

When money isn't valuable, desirable items are going to cost a lot more. To illustrate my point, imagine the infamous muffin man's plight. Once up on a time in A Land Far, Far Away, the Drury Lane dweller sold decorative tins brimming with delectable muffins for two dollars a piece. But then Old King Cole, not wanting to be outdone by his brother, Good King Wenceslas, decided to rebuild his gingerbread palace. Rashly, he began to purchase all the various building materials (you know the sort -- gingerbread, frosting, gumdrops) and hired plenty of construction workers (mainly elves -- they really are the most efficient creatures in A Land Far, Far Away). Unfortunately, before Old King Cole finished his melt-in-your-mouth mansion, the Royal Treasure Chest ran out of money. Impatient for the castle's completion, the monarch demanded money. Quickly, all the king's men started manufacturing extra pennies, dimes and dollars.

All that money started dancing around A Land Far, Far Away and, living up to the law of inflation, decreased in value. The mill workers, chicken farmers and orchard owners had to start raising the prices for their flour, eggs and blueberries. Therefore, the muffin man had to pay more for the ingredients he needed to create his munchy morsels. Just getting by with two dollars for a tin, the muffin man didn't see how he was going to survive on it in it's inferior state and keep all the king's horses from knocking him off a wall, the consequence for indebtedness. (You didn't know that's what really happened to Humpty Dumpty, did you?) So, as much as he hated to, that good old muffin man raised the prices on his tins of muffins. Meanwhile, Jack had to require more money for his brobdingnagian beanstalks, Prince Frog for his rescue diving services, the Three Little Bears for their slow-cooked porridge and Truly A. Princess for her royal pea replicas. After a little while, everything in A Land Far, Far Away cost much more than it did before the palace renovation began.

Yes, I know the original fairytales are better, but my version fulfills my purposes beautifully by illustrating an important fact -- when inflation (more money in circulation) occurs, prices rise. Some people confuse the steps and believe that after prices rise, the government inflates to give people more money to buy things. Indeed, the opposite is true. If my cheesy allegory didn't make things click, you're welcome to memorize this: when the amount of money increases, the value of money decreases and prices increase. I'd suggest just remembering the story.

How's that for an explanation? I have no idea if it is right. What I mean is, I have no idea if it is sufficient as an answer to the essay question: "So what ever did happen to penny candy?".

But it made me laugh. And it sounds good. Enjoy.