To kick it off:
Does he apply this logic to all of his purchases? Is the beer he gets at a bar worth $20? Is the candy bar worth $4? However, you would also need to inflate all of your earnings the same amount, therefore making everything cost the exact same in relative terms as they did before he ran through this stupid exercise.When someone asks me if I've changed my mind yet and now want one of Apple ( AAPL: 348.45*, -0.18, -0.05% ) 's new iPads, I tell them: "Well, even if I did, I probably wouldn't want to spend $2,000 on one."
They generally looked at me, baffled. "What do you mean, $2,000? I thought they started at $500."
But I figure $2,000 is the minimum that Steve Jobs's new toy is going to cost me.
Simple. If I don't spend that $500, I'll invest it.
Historically, the stock market has produced average long-term returns of maybe 5% a year above inflation.
At that rate, in 10 years' time my $500 will have grown to about $800. That's in today's dollars—after inflation. In 15 years it'll be about $1,000, and in 30 years, $2,000.