Corner of Bourbon & Division

Okay, here's where my brain broke: why is it more expensive to buy yarn in order to make a sweater, for instance, than it is to buy a sweater off the rack? The most expensive woolen sweater in the shops will never be more than, say, $200 (cashmere), but it's really really easy to spend that much on a yarn of lesser quality, before even putting in the work to make the sweater. This goes double for scarves: show me a $20 scarf in the store, and I can make the same one for $60 by buying yarn at my FLKS.

So if you're trying to be a thrifty crafts-person, how do you do it? Are there places to get really inexpensive yarn that I'm just not aware of? Part of me really wants to get into the whole fabric/yarn sewing/knitting thing on a more consistent basis, but with the kind of prices I'm looking at, it seems pretty ridiculous, money-wise.

Anyone out there who knits/sews their own clothes and manages to save money at the same time? I would really like to know how you do it.