Two competing forces in one chart.
Force one: technology relentlessly pushes prices down. That’s what progress is - making more with less. Left alone, everything on this chart would be falling.
Force two: our system runs on debt and that debt can’t tolerate falling prices. If prices fall, incomes fall, and yesterday’s loans can’t be repaid. So the system defends itself: whenever prices sag, more money and credit are created to push them back up. Trillions, decade after decade.
Now, why does all that new money land on the red side and not the blue? Because everything on the red side shares the same broken structure: the person consuming it isn’t really the one paying for it, and the price is inflated by someone else’s money.
Housing: bought with mortgages. When credit expands, buyers show up with bigger loans and bid up the same houses. Cheap credit doesn’t make homes affordable - it raises the price of every home.
College: paid with government-backed student loans handed to any 18-year-old for any degree. Colleges saw an unlimited pipeline of borrowed money and priced accordingly. The loans didn’t make college affordable - they told colleges exactly how much more they could charge.
Healthcare: the most distorted of all. You don’t see prices, you don’t shop, and you don’t pay directly - your employer, your insurer, or the government does. When a third party pays, nobody asks what anything costs, and providers charge whatever the middlemen will absorb. Add regulations that block competition and you get 281%…with worse service.
Then the supply side seals it. You can’t quickly make more land, doctors, hospital beds, or accredited universities - regulation, licensing, and zoning cap them all. So new money hitting these sectors can’t be absorbed by more supply. It gets absorbed entirely by higher prices.
The blue side is the opposite: you pay with your own money, you see the price, competitors fight for you, and supply scales infinitely. That’s why blue falls even while trillions are printed - technology deflates it faster than money is created. TVs still fell 98%. Without the printing, it would have been even more.
And that’s the hidden part: consumer tech’s visible progress is masking the true scale of what’s happening to your money.
So the whole picture: falling prices were supposed to be your reward for progress. Instead, that reward gets captured to keep the debt machine running - and funneled through credit, subsidies, and middlemen into the essentials you can’t opt out of. Wages up 131%. Tuition up 197%. Hospitals up 281%. More productive than ever, falling behind anyway.
We explore this on my show constantly. It’s the most important economic story of our time.
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Here is what this chart means (from a real economist.)
Unfortunately, the CPI (Consumer Price Index) does not measure the value of dollars. Instead, it measures the price of goods.
Over time, the real price of some goods -especially manufactured goods- falls naturally as our technology improves our productivity. We learn to make more goods with less human labor.
The resulting drop in real prices masks the decline in the value of our dollars, but only for some goods.
That's what you see in the chart. Over time, we learned how to produce cars and TVs with less human labor, and that decline in REAL costs masked the decline of our dollars.
But our technology cannot lower the cost of an hour of human labor; it still costs an hour of human labor. Now that hour costs more dollars, because each dollar is worth less.
Thus the dollar price of human services -education, medicine, childcare- have all skyrocketed as our dollars lost their value.
We see that in the chart because the price increase is not masked by rising productivity.
In numbers, our CPI (wrongly) says our grandfathers' dollars have lost only 95% of their value . In truth, our grandfathers' dollars have lost 99.5% of their value, but some of that loss was masked by a tenfold improvement in productivity.
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@grok, please compare U.S. cellular data prices with European data prices. Which is higher and by what percentage? Use Italy as an example.
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📊 This chart from Sasha Gusev is one of the clearest illustrations of what’s gone wrong with the American economy in the last 40 years.
The red lines... hospital services, college tuition, and housing.... have exploded in price far beyond wage growth. These are the exact areas where government involvement is heaviest: third-party payer systems in healthcare, massive federal student loan subsidies in education, and restrictive zoning plus low interest rate policies in housing.
The blue lines... TVs, electronics, computers, cell phones, and new cars, have collapsed in price. These sectors face real competition, rapid technological improvement, and relatively little government price distortion.
This isn’t random. When government subsidizes demand without addressing supply constraints, prices rise. When markets are allowed to function with real competition and innovation, prices fall dramatically.
The result is that the things Americans need most to build a stable life... healthcare, education, and housing, have become significantly more expensive relative to wages, while the things that are nice to have but not essential have become dramatically cheaper.
This is one of the core reasons younger generations feel the system is rigged against them, even as they carry around powerful computers in their pockets that would have been science fiction 30 years ago.
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See also Baumol's Cost Disease en.wikipedia.org/wiki/Baumol…
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