OT: DDG Zumwalt....$1,000,000 per shell

[RangerJoe]

So what do you suggest we do to determine what that $100,000 grew to?

He never did state where that figure came from.

So what do you suggest we do to determine what that $100,000 grew to?

How about using the value in gold instead? In 1971, the price of gold was raised to US$38 per ounce. In 1972, the price of gold was US$42.22. In 2010, the price of gold went up to US$1431 per ounce. The price of gold now is US$1225.10 according to this link:

spot price for gold

The timeline of history, price, and the economics of U.S. Gold can be found here.

[Lokasenna]

ORIGINAL: Rusty1961

For many economic entities, the CPI rate is quite meaningless for the basket does not include goods and services which they use or the weightings are quite wrong. There are therefore different "inflation" rates for industry. The DOD will have it's own internal inflation rates when entering into purchase contracts although here the complication is how does one accurately factor the qualitative improvement component of an increased price level.

It is therefore not simply a case of whether $100k was the correct figure in 1972, but rather what exactly did it cover and are those same items exactly still in play in 2018 with no qualitative improvements. In short, applying the CPI rate is fairly meaningless in of itself as the basket is very different.

So what do you suggest we do to determine what that $100,000 grew to?

Also, it is perfectly legitimate to take the '72 dollars and see what they have grown to using an inflation calculator.

If it wasn't, why do economists do it?

It isn't perfect, nothing is, but what do you suggest we do?

Your lack of 101-level economic knowledge is on display in this post. We've already explained this. I suggest you re-read Alfred's post, slowly and carefully.

[Bullwinkle58]

ORIGINAL: RangerJoe

So what do you suggest we do to determine what that $100,000 grew to?

He never did state where that figure came from.

So what do you suggest we do to determine what that $100,000 grew to?

How about using the value in gold instead? In 1971, the price of gold was raised to US$38 per ounce. In 1972, the price of gold was US$42.22. In 1971, the price of gold went up to US$1431 per ounce. The price of gold now is US$1225.10 according to this link:

http://spot price for gold

The timeline of history, price, and the economics of U.S. Gold can be found http://here.

The price history of gold in the US is a terrible inflation indicator to use for much of anything except the price of gold. Begin with the fact that gold has intrinsic value outside its currency comparison uses, as well as that the price was not free market in 1970. It swings quite wildly with general economic conditions that have nothing to do with the cost of training a US recruit.

That recruit cost is a highly specialized "basket" of goods and services that includes ammunition, specialized clothing, immunizations, and legal services. Dozens more. It is in no way related to the CPI (the basket assortment is widely available), or precious metal price trends.

[RangerJoe]

While you are correct about the price of gold, I was being somewhat facetious in my reply. You can use any commodity and compare the change in value. But to use processed goods to compare the change in value complicates things because the changes in efficiencies in the production/processing of those goods and/or changes in the goods themselves. Just compare the price of aluminum in 1880 to the price it was just 20-30 years later.

http://Aluminum was once more expensive than gold

[Bullwinkle58]

ORIGINAL: RangerJoe

While you are correct about the price of gold, I was being somewhat facetious in my reply. You can use any commodity and compare the change in value. But to use processed goods to compare the change in value complicates things because the changes in efficiencies in the production/processing of those goods and/or changes in the goods themselves. Just compare the price of aluminum in 1880 to the price it was just 20-30 years later.

http://Aluminum was once more expensive than gold

I didn't pick up on you not being serious.

In the case at hand, using pure economic theory isn't that useful since, as I said, you're comparing draft era to non-draft era for labor. In 1970 the supply function was driven by state police power, not economics. Today, DOD must compete with the private sector for labor. Totally different analyses.