Inflation is a separate phenomenon that occurs through time and can be influenced by the money supply. The government encourages inflation to encourage investment (i.e. prevent people from hoarding cash) and for various other reasons.
I'm only looking at a snapshot: imagine you work for a year in 1985 and spend all your money the same year. Can you buy more or less than if you work for the same amount of time (with the same skills etc) in 2011, and spend all your money the same year? Turns out you can buy much more in 2011.
If you really want to look at the "through time" case, calculate what your $1.00 in 1985 would be worth if you invested it and what it could buy in each case.
http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#...
Inflation is a separate phenomenon that occurs through time and can be influenced by the money supply. The government encourages inflation to encourage investment (i.e. prevent people from hoarding cash) and for various other reasons.
I'm only looking at a snapshot: imagine you work for a year in 1985 and spend all your money the same year. Can you buy more or less than if you work for the same amount of time (with the same skills etc) in 2011, and spend all your money the same year? Turns out you can buy much more in 2011.
If you really want to look at the "through time" case, calculate what your $1.00 in 1985 would be worth if you invested it and what it could buy in each case.