As iceberg recently reminded me via email, Murray Rothbard pointed out that inflation can lead to more than rising prices:

All sorts of monstrous situations will occur. Decline in quality, for example. We will find that there will be more air in the Baby Ruth — you can’t find the Baby Ruth anymore anyway. There will be less chocolate in the chocolate. There is no way the state can police this, of course. And it’s very harmful to the public.

I fleshed out Rothbard’s example in "What ever happened to sexy stews?" and gave my own example:

With many goods, quality can vary significantly, not always in easy-to-measure ways. If people are used to paying 25¢ for a Baby Ruth, to use Rothbard’s example, then the Baby Ruth company is going to be loath to raise the price to 50¢, even if inflation has doubled all their input costs. What they do instead is cut whatever costs they can to keep the price at a quarter. So maybe they cut the number of peanuts in half, dilute the chocolate with cheaper vegetable oil, and make the candy bar 10% smaller. The product looks the same on the outside, and many people won’t notice the difference on the inside. But fans of the Baby Ruth chocolate bar will notice that the quality has fallen.

In my case, it wasn’t the falling quality of the candy I noticed, but the ever-crummier toy surprise in a box of Cracker Jack. Grownups would tell me about the whistles and decoder rings their childhood boxes of Cracker Jack had contained. Meanwhile, I watched plastic toys become cardboard-and-plastic toys become pure cardboard crapola.

Now it’s happening to the McDonald’s "Dollar Menu":

McDonald’s Cuts Cheese to Save Dollar Menu

Turns out the cheese in McDonald’s cheeseburgers is actually made with real dairy! The Wall Street Journal reports that the rising cost of cheese has put the franchise’s famed Dollar Menu in jeopardy. Some restaurants are now pushing a double cheeseburger with just one slice of cheese instead of the usual two. At other locations the price has been jacked up to an obscene $1.10. Now McDonald’s executives are considering yanking cheese from it altogether and calling it a double hamburger. But then there’s the price of beef to consider, which is also rising! It’s only a matter of time before the double mime burger – wheat-free bun, some lettuce and a little imagination – is rolled out.

(via Gothamist via iceberg)

Mises on schooling:

It is often asserted that the poor man’s failure in the competition of the market is caused by his lack of education. Equality of opportunity, it is said, could be provided only by making education at every level accessible to all. There prevails today the tendency to reduce all differences among various peoples to their education and to deny the existence of inborn inequalities in intellect, will power, and character. It is not generally realized that education can never be more than indoctrination with theories and ideas already developed. Education, whatever benefits it may confer, is transmission of traditional doctrines and valuations; it is by necessity conservative. It produces imitation and routine, not improvement and progress. Innovators and creative geniuses cannot be reared in schools. They are precisely the men who defy what the school has taught them. (Human Action, c15, s11)

Salacious bed-sheet print ad from 1949:

(via Snopes via steve2 via email from Scott Lahti)

The ad copy says "This buck may look more like 47¢ — which is what most bucks are worth these days." I thought I’d check this inflation calculator to see if 47¢ is the right number.

Nope. According to the calculator, a 1947 dollar was worth 40¢ (meaning that what cost a buck in 1949 would have only cost 40¢ the year the Federal Reserve was created).

Of course, that’s still ten times the value of a current dollar.