Inflation V.S. Devaluation

Inflation. Devaluation. Are both of them the same? Yes. And no. They ARE the same, BUT ONLY in some context.

So what’s the DIFFERENCE between “Inflation” and “Devaluation”?

Inflation and devaluation are both big words. Words used daily in most business and sectors. So are you sure you are using the right words?

The purpose I’m sharing this is, I come across people time to time who mix up both of the words mentioned. No, I am not a professional in business or economics, but some reading here and there made me realize that those two words aren’t really the same, although they might be intertwined.  Plus most of the time when I see people complaining about the economics or their daily consumerism, it is always “inflation, inflation, inflation”

So before going on, I suggest you guys take a peek at this site which breaks down the words into simple explanation.

Inflation happens when a price is higher than most prices. A very good example would be living in a city will be much costlier than the country side as prices of groceries, services and etc. are generally pricier. If you compare the price of an apple (or whatever commodity that pleases you! :D) bought in a city for 2 dollars (for example) and an apple bought in a village for 1 dollar, it is safe to say that the price of a city-bought apple is inflated compared to the village-bought apple.

Devaluation on the other hand, is much more about the worth and value of a currency. Devaluation means losing value. An apple from our grandparents or ancestors day could well be worth around 50 cents (example again!). Compare with an apple today which cost 2 dollars, it is fair to say prices way back then was cheap, only because back then, money has SO MUCH VALUE that you just need 50 cents for an apple! Now with money losing it’s value, you’ll end up paying more for an apple! And it’s not because your fruit seller is ripping you off to be a millionaire!

So I hope with my layman explanations and the site linked above would give you guys a little insight of what inflation and devaluation is. It isn’t the same.

Is it?




3 responses to “Inflation V.S. Devaluation

  1. I too became tired of hiring the same politicians and still not having a stable currency policy.

    I took a job in 1973 at General Tire at between 3.85/4.00 per hour, in real spending power it’s in the neighborhood of 21.00 per hour today, if the devaluation calculators are correct.

    So the double attack on workers goes like this:

    As a soldier at Ft Hood, in 1975, I spent all of my spare time studying free market economics, Dr Friedman, member of (original) YAF (Bill Buckley), etc. Free market economics is great IF you have it. You can’t have a government that is this big, controls this much and have freedom too, its a contradiction of terms. Or a “free market” economy for that mater.

    Government power was “way too big” back in the 70s, I worked my ass off getting as many votes as I could for Reagan, and he finally wins four years later.

    We really thought he would make a major case for abolishing big money sucking federal agencies, (ie), DOE, HEW,etc.He not only didn’t correct the “big government” problem, he grew government larger and raised taxes. When asked, his guys said,”we slowed government growth” (that WAS NOT THE DEAL).

    So now in 2014, the government is a behemoth, it’s so big, and growing so fast, no one can get an actual count of size, and the power? Every form of human activity is now being put under the control of the state (in the US).

    The factories were moved out of the US, 55k in one decade, this was sold (packaged) to the public as “free trade”, to soothe the masses. In fact it was to get around child labor laws, It was sold as “free trade” to placate the masses so there wouldn’t be rioting in the streets, after all Reagan’s “aw shucks”, Andy Griffith smile makes everyone feel good, right?

    If the factories were still here, they would be required to install expensive clean air systems to prevent employees from breathing, fumes, lead, cadmium, benzene, methyl bromide + dozens of others.
    The kids in China/Mexico are breathing them and getting sick, really sick.

    So “free trade” is really good, but, WHAT WE HAVE NOW IS NOT FREE TRADE. If it were, there would be plants/factories from other countries on every street corner.

    To add a double whammy attack on the worker, the american dollar has been devalued, not only there are fewer dollars to be made, because the MFG is in China/Mexico, but the dollars are worth less and less.

    This is NOT a union vs non union issue it’s just plain ol fact.

    In 1973 I could go to any factory, (ie) St Regis Paper, General Tire, Wagnor Ind, and 90% of the time get hired on the spot, because they were competing for my labor. Imagine those plants here now, starting everyone at 21.00 in real dollars, what that would do for our economic growth.

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