Pennsylvania Investment Network


Recent Blogs


Pitching Help Desk


Testimonials

"For those of you that are asking yourself whether this site is real, the answer is yes. My first thought was that I would put my proposal on the site and it would be sent for review, and at this point someone from within the Dealflow Investment Network office would contact me as an investor so I would be more likely to pay the $249 fee. I received 8 responses from investors overnight and 2 more since then. Thanks Dealflow Investment Network."
David Kriedeman - Chris Christopherson Inc

 BLOG >> September 2019

Inflation: Nature & Causes [Economics
Posted on September 19, 2019 @ 11:20:00 AM by Paul Meagher

I have been reading a book on farming called "Ten Acres Enough: The Classic 1864 Guide to Independent Farming" by Edmond Morris. You can read it online for free here.

The book reports on his first three years of farming after leaving the city and purchasing a farm. He had a family of 10 and appears to have acquired many firm ideas about farming before he ventured into owning and running a 10 acre farm.

Today there are many who will argue that you can make a good living by intensive cultivation of 1 acre. Back in 1864 I would imagine that saying you can make a good living by intensive cultivation of 10 acres seemed like an equally radical claim.

The book is interesting and well written but the main reason I wanted to mention it was because Edmond spends alot of time in the book discussing how much he made by selling certain crops and what he paid out in expenses. He summarized his receipts and expenses over three years with this report:

Edmond Morris wouldn't have written the book if he didn't think he performed quite well so I was curious to convert his profits in the last year ($1327.02) into what it might be in todays terms using measures of inflation to make the adjustment. When you do this using the CPI Inflation Calculator you get this result:

$1,327.02 in 1857 is equal to $39,133.06 in 2019

This result surprised me as I expected his profit (in todays terms) to be more. This surprise has caused me to reflect on the history of entrepreneurship and the nature and causes of inflation to try to figure out what is going on here.

Entrepreneurs have existed throughout history and "10 Acres Enough" is a book by an agricultural entrepreneur on what he did to make his farm successful. What "success" meant to an Entrepreneur in 1857 in terms of wages may be different from what it means to be an Entrepreneur today. Today we expect a successful entrepreneur to be making a high wage but back then a successful entrepreneur was perhaps happy to make enough money to live without alot of financial stress. Being able to produce all your own food (in addition to selling it) certainly helped to reduce/eliminate a major financial stress that a family of 10 would have to deal with and gave the author a hopeful and optimistic outlook on life.

Another way to think about these numbers is that the inflation calculator is not fully capturing the reality of inflation - its nature and its causes. This has lead me to reflect on some categories of expense that are not included in this financial report that we would expect to be listed in the financial report of an agri-business today: sales taxes, insurance, fuel, loan interest, new equipment, repairs, registrations/licensing/permits, etc... For entrepreneurs, new categories of expense are causes of inflation that increase our cost of living and simultaneously decrease the amount of time that can be allocated to earning income. Inflation is reflected in how time and money is allocated.

You can read about Inflation on Wikipedia for how economists talk about inflation or you can examine a financial report from long ago and reflect on that it might be telling us about the nature and causes of inflation.

Permalink 

 Archive 
 

Archive


 November 2023 [1]
 June 2023 [1]
 May 2023 [1]
 April 2023 [1]
 March 2023 [6]
 February 2023 [1]
 November 2022 [2]
 October 2022 [2]
 August 2022 [2]
 May 2022 [2]
 April 2022 [4]
 March 2022 [1]
 February 2022 [1]
 January 2022 [2]
 December 2021 [1]
 November 2021 [2]
 October 2021 [1]
 July 2021 [1]
 June 2021 [1]
 May 2021 [3]
 April 2021 [3]
 March 2021 [4]
 February 2021 [1]
 January 2021 [1]
 December 2020 [2]
 November 2020 [1]
 August 2020 [1]
 June 2020 [4]
 May 2020 [1]
 April 2020 [2]
 March 2020 [2]
 February 2020 [1]
 January 2020 [2]
 December 2019 [1]
 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [3]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [9]
 March 2015 [8]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [5]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


Categories


 Agriculture [77]
 Bayesian Inference [14]
 Books [18]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [17]
 Decision Trees [8]
 Definitions [1]
 Design [38]
 Eco-Green [4]
 Economics [14]
 Education [10]
 Energy [0]
 Entrepreneurship [74]
 Events [7]
 Farming [21]
 Finance [30]
 Future [15]
 Growth [19]
 Investing [25]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [12]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [36]
 Psychology [2]
 Real Estate [5]
 Robots [1]
 Selling [12]
 Site News [17]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [11]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]