Why the poor pay more for toilet paper and just about everything else • Hacker News Board

Re: Why the poor pay more for toilet paper and just about everything else

#161

Post by dnautics » Fri, Mar 11, 2016, 12:18 AM UTC

aidenn0 wrote: post #155

dnautics wrote: post #151

Earlier quoted context omitted.

it benefits people with debt, but only if the interest rate is lower than the inflation rate. Who gets loans at low interest rates? The ultra-wealthy (more collateral), and banks. Moreover, wealthy investors can take advantage of instruments (margin trading, leveraged funds, forex, shorts, options) that are debt-based instruments that exist because of low interest rates. The wealthy are more indebted than you think,…

Let's play a game: you loan me money at 10% interest. Now, am I better off with 9% inflation or 1% inflation? Clearly the former, despite it being lower than the interest rate. Similarly, I deposit funds in a CD with 3% interest; am I better off with 4% inflation or 9% inflation? Clearly the former despite it being higher than the interest rate.

You're better off with 1% inflation if you're spending 99 dollars out of 100 to stay alive. Do the math out. In one case, you will have to take out extra loans, in the other, you will not.

Re: Why the poor pay more for toilet paper and just about everything else

#162

Post by aidenn0 » Fri, Mar 11, 2016, 3:41 AM UTC

dnautics wrote: post #161

aidenn0 wrote: post #155

Earlier quoted context omitted.

Let's play a game: you loan me money at 10% interest. Now, am I better off with 9% inflation or 1% inflation? Clearly the former, despite it being lower than the interest rate. Similarly, I deposit funds in a CD with 3% interest; am I better off with 4% inflation or 9% inflation? Clearly the former despite it being higher than the interest rate.

You're better off with 1% inflation if you're spending 99 dollars out of 100 to stay alive. Do the math out. In one case, you will have to take out extra loans, in the other, you will not.

Ah, I see. Your theory is that real-wages go down with inflation. If that is true, then yes it hurts the poor people disproportionately, but I'm not convinced that it is true.

Re: Why the poor pay more for toilet paper and just about everything else

#163

Post by dnautics » Fri, Mar 11, 2016, 8:25 AM UTC

aidenn0 wrote: post #162

dnautics wrote: post #161

Earlier quoted context omitted.

You're better off with 1% inflation if you're spending 99 dollars out of 100 to stay alive. Do the math out. In one case, you will have to take out extra loans, in the other, you will not.

Ah, I see. Your theory is that real-wages go down with inflation. If that is true, then yes it hurts the poor people disproportionately, but I'm not convinced that it is true.

Read the Krugman article. Cheating labor out of the value of their wages is an important part of why we have a policy of inflation.

Even Keynes warned: "By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat."

He recognized that the bourgeoisie was getting screwed by inflation but the proletariat not less, I.e. worse.

Re: Why the poor pay more for toilet paper and just about everything else

#164

Post by cableshaft » Fri, Mar 11, 2016, 4:22 PM UTC

SilasX wrote: post #139

Lawtonfogle wrote: post #138

Earlier quoted context omitted.

Because the general rule is that you can't loan money to friends. Either it is a gift which may be repaid back, or the friendship gets put under extreme stress. It may not be logical, but I accept it as one of the quirks of human behavior. Similar to how pointing out the economic nature of some relationships and interactions is often considered creepy and anti-social (for example, pointing out how certain commonly as…

The legal structuring of the loan isn't relevant to the criticism -- as you note, even treating it as a gift which may be repaid would start the friend on an upward spiral, if that $100 is really is what's holding them back. But that just proves the broader point: it's not the mere $100 that's holding them up; it rarely is. Rather, it's the practice of not thinking long term, and not accumulating savings even when yo…

There's more people than you think that would be put on edge accepting that money. Either they're too proud to accept help from their friends, or they constantly feel guilty whenever they see their friend for not paying it back already (hell, I get that way just for forgetting to bring back my friend's DVD each time I go to an event he attends).

Regardless of the terms of repayment (even if there are no terms), it adds stress to future encounters, and they may outright refuse it out of principle anyway.