I didn't read through most of the thread but would like to point out that MGSV being split into two games is exactly because of the inability to sell games at a higher point.

Trying to sell both parts to make one game sell for $90. Which is only gaining price parity with the 90's. Games should sell for more. It costs more to produce an AAA game, and they make less money per game sold.

So because publishers budgets have absolutely ran away from their control, I should pick up the slack for them.

If my entitlement will cause the crash, publishers greed will be just as guilty.

"Console price in 1996: $199.99
1996's console price today after inflation: $293.28"

I disagree with this figure. You seem to be using BLS (Bureau of Labor Statistics) inflation figures. However, the BLS inflation figures are basically baloney. See http://www.shadowstats.com/article/archived-438-inflation-measurement

A result of $1200 is closer to the truth: http://www.shadowstats.com/inflation_calculator?amount1=199.99&y1=1996&m1=6&y2=2014&m2=6&calc=Find+Out

I can compute some other values:

Based on the True Money Supply (i.e. the increase in the quantity of dollars), I get an answer of about $632:

http://mises.org/markets.asp#More%20on%20TMS

Based on the price of gold, I get $655.

Based  on the price of crude oil, I get $642.

In all of these cases, the value is much higher than the $293 you gave.

Of course, there is no objective means to compare someone's valuation of a dollar today with someone's valuation of it in 1996. But I surely wouldn't use the BLS - data as they intentionally strive to give false inflation figures for political goals. The three latter values, $632 - $655, seem most trustworthy IMHO.

In 1996, if you wanted to play 3D games with high end graphics and innumerable exclusives at a very affordable price, you had no other choice but buying a game console. PCs with equivalent 3D accelerators cost you at least 3 times much, but even then there were not many games that would support those fancy 3D features; and the compatibility in addition to driver issues were a huge heachache. (You needed a $1300 PC vs $300 PSX).

Fast forward to 2014, A PC that gives you a similar experience as consoles would cost you LESS THAN 2X the price of a console, and the number of games with high end graphics available for the PC far exceeds that of consoles, and the compatibility issues of the yore have all gone away thanks to the DIRECT3D and OPEN GL standards. (You need a $600-700 PC vs $400 PS4).

So the PRICE alone is NOT a compelling reason to buy a console anymore. The only major argument in favor of consoles is Convenience and ease of use, that's about it.

Does anyone have an idea of how Nintendo manages to keep prices high years after launch? Are they activly keeping supply short? Do they control retailers somehow? Or is it the Nintendo fanboys that are the reason for Nintendo games long legs and slow decline in price?

"Since people tend to look back at previous generations and point to the prices being much cheaper, let's be accurate."

So I agree with you, consoles and games are much cheaper now. In fact, I think inflation is much greater than your figures suggest, so I agree with the idea even more strongly.

So life is good as a gamer right now. But If you happen to be the unfortunate kind of human being who has to eat food, or fill up a gas tank, it's clear the US economy is sucking hind teat. The people of USA have been getting more impoverished for decades now. (It started with Nixon's gold default, which permitted unrestrained money creation and government waste.)

There is parity between 1996 and 2012, but in 1996 the economy was surging which gives a different mindset about spending money.  In 2012 the economy was uncertain at best.    Between 2000 and 2012, median income for non-elderly households fell from $64,843 to $57,353, a decline of $7,490.  That is why people feel that games are more expensive now.  Imaging having $7,500 more dollars to spend....

I'm not saying prices should remain stagnant.   I'm just explaining consumer mindset that they are more expensive now than they were before.  Sure, if you just choose one year that was 18 years ago to compare with, you can find parity.  However, if you look at the last decade as a whole, you should easily be able to see why people think games are more expensive now.  People don't remember their spending power 18 years ago, but they do recognize that they have less now than they had just a few years ago. 

OK, a bit of perspective should be put in this:

The PS1 had been on the marked for a little while and the SNES was a bit like the PS3/360 at this point (despite having been launched only 5 years or so before in North America!) which would make the 190$ in line with the prices I see for the most affordable packages of the consoles that are being replaced.

It was possible to find games for 15 - 20$, of 1996, you only needed to wait a little longer, but 16-bit systems had plenty of 20$ oldies but goodies by 1996.

Also, neither the PS1 nor the N64 had any internal storage, so you had to buy at least one memory card with the PS1 (N64 games had battery save, but they each cost a lot more too).

and PC gamers did not have Steam sales!

Still, gaming was amazing back then, maybe it's because we had less access to it and the news updates came once a month in the form of EGM (it was probably already fading by 1996).

"because [recessions have] always happened and will never stop happening; people never learn, and they'll find some other bubble to inflate until it pops"

Which people are you referring to? The central bankers running huge money counterfeiting operations? The congressmen backstopping NINJA mortgages (no income, no job or assets) for everyone?