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Do prices really go up or down?

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There's a great deal of time wasted by the economic gurus, prognosticators, speculators, about whether prices are going to change, whether they're going to go up or down. Knowing what a price is, I've always thought that was a peculiar thing to do, to say that prices are going to change, but I took their word for it. Figured it must be due to some kind of magic that only applies to prices changing.

But, curiosity got the better of me, and I decided I wanted to see a price change. I wrote a price on a piece of paper, what would be the price of a military fighter plane made in China, $1.95, and stuck it on my refrigerator. Watched it for over a month. It didn't change. It didn't go up or down. It just stayed the same.

I go to the grocery store during the day, as most people do, and I knew that all the prices are neatly posted on their little cards, and I knew that at the times I was there, no price had ever changed. I reasoned that they must change late at night, when no one's around to see it. I wanted to stand there and watch a price change.

I went to a large store after midnight and found that a guy comes out from the back and takes the little price card out and puts in a new one. Ah Ha! Reality intrudes. Prices don't change, someone changes them.

This stands to reason, because a price is an inanimate thing, it has no life, it can't do anything. It can't change itself. At any one moment, all over the world, everything for sale has a certain price. Those prices will stay the same until someone changes them. In any organization that sells things there's someone who makes the decision to change the price of what they have for sale.

It's going to come as a shock to the economic predictors that they no longer have to make fools of themselves by making wrong predictions about prices. They can now be dead accurate, every time. All they have to do is call up the person in charge of changing prices, and ask them. That person knows whether they'll change the price and what it will be.

A typical announcement, reflecting the actual relationship of the price of oil and the price of gas that we have seen recently, would be: "The oil companies report that due to the fact that the people who set the price of oil have dropped that price by $20 a barrel, the people who control the price of gas report that they will raise that price by $0.50 a gallon."-

This response in raising the price of gas to compensate for the lowered price of oil by the oil companies is the economic principle of supply and demand in action. The supply of money coming to them is less due to the lowered price, so they demand more money. It's the only thing they can do to maintain their $40 billion profit per quarter. It's quite rational, really.

 

Ed Martin is an ordinary person who is recovering from being badly over-educated. Born in the middle of the Great Depression, he is not affiliated with nor a member of any political, social or religious organization. He is especially interested in (more...)
 

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You could buy a newspaper to learn the price of al... by UncleSim on Friday, Jul 25, 2008 at 6:13:45 PM
There's no such thing as a market that operates by... by Ty on Friday, Jul 25, 2008 at 8:19:34 PM