$1,000 Bagel

It now costs $1.10 to buy a bagel at a store by me. Are bagels becoming more popular? I don’t think so. Well then maybe the dollars we use to buy them are losing value. A dollar used to be worth four bagels, now it can only buy about 1/4 of a bagel. In other words, the value of the dollar has decreased about 400%.

This happened because the Federal Reserve creates dollars and loans them to the U.S. As more dollars flow into the system, the value of every dollar in the system declines.

To return to the bagel store, you show up with one dollar to buy four bagels, but someone who works for a military contractor, that just received a new government order, arrives with four dollars and buys the four bagels. The bagel store owner thinks bagel appeal rose and raises the price per bagel. Next time you go to the bagel store, you have to pay more than a dollar per bagel.

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