.but by then I will not want to collect the bet in dollars because the doughnuts will be worth more.
There will be a whole case of donuts available.. but no bread.
I am still reeling from the idea that 300% inflation is "slow" , or that she thinks that somehow Americans, most of whom are living paycheck to paycheck and believe they are entitled to a whole slew of goods and services, will easily adjust to "overnight" 300% increases in fuel or food.
Yes, Americans spend proportionally less on food than most other countries (http://www.economist.com/blogs/graphicdetail/2013/03/daily-chart-5
and yes that is part of the "whole lot of ruin in a country" Hoyt talks about. But at the same time 75% of Americans live Paycheck to paycheck (money.cnn.com/2013/06/24/pf/emergency-savings/)
So what are they spending money on? (http://www.thesimpledollar.com/a-look-at-the-average-american-budget-and-how-the-average-american-can-start-saving-more/
From that amount, they spend $9,004 on transportation, $6,602 on food (of which $2,625 is spent at restaurants and $3,977 is spent on food eaten at home), $5,528 on insurance and pensions, $1,604 on clothes, $2,482 on entertainment, $17,148 on housing, $3,631 on health care, $1,834 on cash contributions (donations and legally required spousal and child support), and $3,267 on other expenditures.
The average household in this picture consists of 2.5 people, of which 1.3 are earning an income. An average household owns 1.9 vehicles and 63.7% are homeowners.
So how would an overnight ( 24 hours - to a few months) 300% inflation rate inconvenience this average family?
Rassmussen says most people eat out once a week - ) http://www.rasmussenreports.com/public_content/lifestyle/general_lifestyle/july_2013/58_eat_at_a_restaurant_at_least_once_a_week
) so obviously they stop doing that. Lets say people eat out 1.5 times a week on average. With 2.5 people in your family, each eat out meal costs about $36 per household, while an at-home meal is around $4. So if you stop eating out ( now setting up pressure on those businesses to fail..and their employees left wageless) you can buy 9 more meals, 3 more days , but not eating out. But now that $4 meal is $12-- and you need to spend $13104 on food.
Your wages haven't caught up - and you need to find an additional $6502 in your spending to just eat for the year. Well, cut out entertainment. No Cable. Not theaters. No sporting events. Now you need $4020. Well cut out that Miscellaneous category. Now we are just short $753.
Maybe that comes out of the $9004 you spend on transportation - because you don't have a job anymore? You can sell the second 0.9 of a car anyway .
But how much of that $9004 is fuel?
According to BLS (http://www.bls.gov/news.release/cesan.nr0.htm
) which looks to be the source of the above articles' numbers.. Gas and motor oil come to $2611 or so, so a 300% increase there means you need $7833 - or an additional $5222 a year just in Gas
Well, maybe you need to sell that 0.9 of a car and take fewer trips - you know, assuming you could car pool or don't have a second person that also needs to get to work. But you can't move into the city to eliminate a car completely - part of Hoyt's premise here is that the Burbs are the place to be! So selling that first car
The average gas consumed per vehicle is around 525 (http://www.autonews.com/article/20150325/OEM06/150329911/average-u.s.-gasoline-usage-lowest-in-3-decades-study-says
) and like workforce participation, that is below 1984 levels. Average gas price since the 1900 has been $2.36 in adjusted dollars. (http://inflationdata.com/articles/inflation-adjusted-prices/inflation-adjusted-gasoline-prices/
) - and Gas just went up 300% as well. SO to fill the single car you have left for a year? $3717 - so an additional $1100 over what you used to pay for the "convenience" of two cars. But hey there is an additional $500 you get back form car insurance, so total amount over is closer to $600.
Then clothes - for adults they are optional, but Kids pretty much need them. But lets say you cut back buy and buy 1/3 of what you used to--. Clothing is a wash.
The Personal insurance and pensions category is about the only place to steal from now. Oops - sorry, the BLS puts Social Security in this category which makes up about 75% of the expense. http://www.valuepenguin.com/average-household-budget..
but hey, there is still $1000 to get from here if you forego life insurance for your family in an ever more dangerous world.
So with one car, no entertainment, no assorted miscellaneous goods ( read entropy expenses.), no eating out, no life insurance, and foregoing new clothes you are just getting by. Housing is probably a fixed price - mortgage is 30 year or you have a lease. Insurance - Mandated by the government! - is $2200 or so but if you don't get sick, or just refuse to visit the doctor, you can probably have around $1000 a year of discretionary income.
After all its all just an "inconvenience" - you are still eating. You still have a roof over your head. Its a slow slide.
Only this isn't over in a year. As the restaurant and entertainment industries fail ( because people can't afford them) how many more people are added to welfare rolls? http://www.bls.gov/emp/ep_table_201.htm
-- Just taking Retail and leisure out results in 27 Million people unemployed - probably in that first year ( and that is assuming prices simply stay stale after that 300% increase) - and will the government up the EBT payout to keep with inflation? If so, you are driving even more printed money directly into circulation. Fail to pay enough however, and you will get the mass riots and societal breakdown - especially in the inner cities. This of course begins the supply chain problems that prevent food from being delivered to the burbs. Wages will not rise commensurate with inflation , because so many are seeking work. They may even fall ( unless the government steps in to price fix)
It is also very unlikely that there would be a 300% increase and then stable prices. The underlying factors driving the 300% increase have no been addressed. The government is still printing and spending. You would be very likely to see increasing inflation on top of that initial 300% increase, until the system utterly collapses with more "inconvenience." The end result - within years of the initial and sudden increase, is a world in which very little is produced, and nearly 100% of everyone's budget goes to food. If you are a farmer and your government isn't stolen from you via Government force or gangs, you actually are somewhat immune to the price increases, and though fuel is costly you can charge even more for food when it matures and goes to market to make up the difference. In Wiemar, farmers made out fairly well. IN Venezuela the military is seizing goats to eat them, so maybe being a goat herder has some value if one can keep their goats safe from military action. And that will bring us to the 300 million armed people in a desperate situation and inevitable war "thing"