What is inflation? | Inflation | Finance & Capital Markets | Khan Academy

The basics of what price inflation is and how the CPI-U is calculated. Created by Sal Khan.

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Finance and capital markets on Khan Academy: $1 went a lot further in 1900 than today (you could probably buy a good meal for the family for $1 back then). Why? And how do we measure how much more expensive things have gotten (i.e., inflation)?

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[queenmelanin]

watching this in 2020. Quarantine life bruhh

[ChooseAname]

Yes but what CAUSES inflation to begin with?? Why do prices HAVE to go up?? Why does inflation have to happen?? I apologize if these are dumb questions, I'm just trying to figure this out. If anyone could please let me know the answers. Thank you.

[jamaalknight]

Cost of education: people taking out so much loan to get a degree and end up with a job that don't pay much or they might not be working at all.

[vangelv]

I’ve watched like 3 vids on inflation and I still do not know what it means

[ihearu]

I believe you meant to say, in your example in the video, that we say that "inflation is 2%" rather than "the inflation rate went up by 2%."

[sanpedrosilver]

It's too bad the government doesn't always use the same basket of goods. They often swap items to get numbers to fall (or rise)
in a way that makes the CPI look like it's not moving up as much as it actually is.

[generationalist]

Our differences
1) Agreed -without losing it's -current- value
2) Non-monetary properties give it a high assigned value
3) Agreed, deservedly high assigned value as result of it's properties of rarity, longevity,
electrical & chemical
4) Agreed
5) Fungible but because it is not always a required unit of a fixed & standardized CPI it is not always amenable to liquidity which is economically wrong
6) Agreed but as a standard of exchange & not as a monetary coin
7) I need the standard not the coin

[UHereY]

I agree with the post below @mdadnan. I don't know which order I should watch them in. Please prefix with a number or something to indicate the order.

[generationalist]

That was exactly my point. Gold does -not- have intrinsic value; nothing has intrinsic value. Gold's ornamental properties (not qualities) & gold's industrial properties are intrinsic. Properties of objects are natural. It is the way they are. Values are never intrinsic. Values are assigned as an abstraction of the properties of the object.
Value is emergent. But the valuing system today is -not- objective; it's an ideology. >Money value< is NOT based on the intrinsic properties of goods traded.

[krazyknowles]

Sal if you are watching can I suggest to put a number in the video title before and after? Usually you have just the title like "What is Inflation" I download all videos but once downloaded they are not in sequence(see the algebra videos they are numbered in end). Obviously you made in a sequence but I have no clue which one should I watch first(in the finance section). Another related issue I cannot find a missed video in the finance section, alphabetically ordered once missed difficult to find

[KingPtolemyIII]

Can you do a video on PPP? You seem really good at all this economics stuff. Maybe you should do global economics after that. I think it would help tons of people.

[tmac]

@alphacodexx exactly, the two most important resources are not included...

[MonicaKn]

Aww...i thought he was making a video of cosmological inflation...and then i realized it was in finance...
Sal please make a video on cosmological inflation, it's confusing.

[generationalist]

"Gold 'officially' dates back a few thousands years." Try about 5, 000 years.
You need to clarify that 5, 000 is not coinage, it's artifacts.
Coinage is very new on the human time scale of money.
Please do explain how you easily identify the difference between 18K & 24K when you're buying your groceries and making change?
How many coins can you carry in your pocket?
How many coins can be rapidly redistributed to replace credit?
How are the coins going to tracked and separated from painted lead?

[UHereY]

Questions, why did we move away from elemental metal "money", ie. Gold, Silver etc, to paper currency? Paper currency can be forged, elements can't be. Does the world need more "money" that there are elements in the world? Paper of course can be easily reproduced (for circulation). Would be interesting to see a comprehensive historical/economical discussion on paper currency and metal currency.Especially with how gold and other metals affect regional and world economies. Any videos address that?

[joepeeler]

Here are the reasons that gold and silver are natural monies:

1) Divisible without losing any value

2) Non-monetary value (this is key)

3) High unit value per measure of weight

4) Very durable

5) Fungible--one ounce of pure gold/silver is equal to any other ounce of pure gold/silver anywhere in the world.

6) Scarcity, but enough exists to function as media of exchange.

7) Hard but malleable so as to fashion into coins.

It's not a coincidence that they are natural monies

[joepeeler]

Malaysians are using gold. Just because the govt. issues a paper currency doesn't mean that people aren't using their preferred monies. That Malaysia is tiny (why you felt the need to capitalize that word is beyond me) is beside the point.

BIG (see, I can do it too) countries will be going back to gold within the decade. The process of increasin gold stocks has already started in countries like China, India, Russia, et al.

[Downtime-]

The basket of goods is hugely flawed. If someone was buying beef and then beef became too expensive due to inflation, and they had to buy chicken instead, the CPI would go down because the basket would change from calculating beef to the cheaper chicken. Also most actual major living expenses are now excluded.

[joepeeler]

Lots of things are "shiny, " but most of them have never been used as a medium of exchange. Absent legal tender laws, gold and silver eventually win out in more advanced populations.

Gold/silver are natural monies for following reasons:

1) Scarcity

2) Fungibility

3) Possess non-monetary value

4) Divisibile without losing any value

5) High unit value per measure of weight

6) Durability

7) Hard metals but are malleable so as to be fashioned into coins

[Zorn]

You forgot.

Hedonic quality adjustment.
Food and fule exclusion.
Basket of goods Substitution bias.

Teach people the full story. Not just part. or at least follow up on these topics.