2
$\begingroup$

I was just reading how \$1 from sometime in the mid-1800s is worth a little over $30 today.

This got me wondering, where does this go in the long term? In the year 2400, will a loaf of bread be $200? Will an average house be tens of millions? What about the year 2700?

My understanding is that inflation is a universal economic phenomenon. Has a currency ever lasted long enough to know where it leads in the very long term? If not, are there theories predicting what might happen?

$\endgroup$
  • $\begingroup$ I'm only half-kidding when I suggest this: you could look to the economies of long-running MMORPG video games (e.g., World of Warcraft) for some experimental insight on this. In Canada, we recently got rid of our one-cent denomination coin, and I suspect inflation was part of the reason. $\endgroup$ – heh Oct 3 '19 at 21:54
  • 2
    $\begingroup$ Possible duplicate of Does Inflation Make Money Eventually Worthless? $\endgroup$ – Kent Shikama Oct 4 '19 at 5:48
  • $\begingroup$ Yes, Canada got rid of the penny, lol $\endgroup$ – A Dynamic Squid Oct 6 '19 at 4:18
1
$\begingroup$

Inflation is not a fixed number, so there is no way to predict the value that a loaf of bread or an average house will be in 2400 or 2700. Inflation is the result of a complex macroeconomic process rooted in the behaviour of individuals, and people's expectation of future inflation. The central bank is a key role player, so the integrity of that institution will determine how stable inflation is.

When there is high inflation, in the long run governments often just divide the numerical value of the currency by, for example, a million, in order to simplify the currency for the population. That doesn't change how much real wealth people hold, since it is done across the board. There is a common understanding that, for example, 1 million Zimbabwen Dollars yesterday is the same thing as 1 Zimbabwen Dollar today, so everyone catches on as to what happened.

$\endgroup$
0
$\begingroup$

The long term outcome of inflation is that Denomination eventually becomes excessive and must be re denominated

https://en.m.wikipedia.org/wiki/Hungarian_peng%C5%91

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.