Four Basic Truths of Macroeconomics

Oh I know it does seem like the banks “want to hurt working class people” when you look at what they are doing and why. But thats an unnecessary hypothesis. They don’t need to care about working class people at all, just the financial interests of the oligarchs.

> Which is the opposite of the standard explanation - the purpose of inflation in that instance is to implicitly reduce the downward rigidity of wages so that employment does not contract as much in a downturn.

In other words, trick the workers into taking a pay cut, because they make too much money. “For their own good” and how convenient that it happens to pump up the assets that the wealthy own.

> Presumably you, champion of the working class, would rather more people be unemployed?

I want them to be unemployed the same way you want them to make less money in real terms.

> Citation for your claim that everyone has access to cheap credit. Are you aware of payday loans?

I have at no point stated that. What I said is that inflation affects all debts equally.

Interest rate on loans is defined on "cost plus" basis, where "cost" is the treasury interest rate, and the "plus" is based on your default risk. However, the "cost" is the same for everyone no matter what.

Inflation isn't even the "cost" term. Inflation reduces the value of the principal of every loan the same amount regardless of who took it out or at what interest rate. The principal. Not the interest.

That knocks out your first 5 or 6 points.

> Do you mean someone worth $110k has a $100k mortgage? Or do you mean someone worth -$90k has $10k in assets and liabilities totalling $100k?

You can get a mortgage with as little as 3% down payment, so yes, I am referring to someone who has a $100K mortgage debt, a $100K house an $10K in other, misc assets like savings or investments. This person is leveraged 10X. I don't know for a fact billionaires don't leverage themselves 10X but I can't fathom why they would unless they're on r/WallStreetBets.

> No, the bankers are the ones who made the conscious decision. Good rhetorical judo tho.

Ok so a business sees their revenues go up 2%, and their costs go up 2%, and during annual comp review they say... "let's set the increase in salaries at 0% even though we know inflation is 2%" -- the bankers did that? Were they on the conference call? That's a lot of calls to schedule!

> Some of it is basically common knowledge, like poor people not having the collaterall, credit history, or social value required to access the same loans as billionaires. Some of it just seems like fundamental misunderstanding on your part, like your belief that all prices inflate at the same rate.

You introduced all of these things, not me, and you did so based on a misunderstanding of my point.

C'mon Quixote, put down the lance.

You really must be confused if you think thats a rebuttal.

Some of the smartest people in the field are actively trying to obscure its limitations. The author of this article is more modest but even still it’s a PR rebuttal and a bullshit fear tactic: a “You know what? Things are really bad but what would be worse is if you didn’t listen to us”.

No, they don't. Clearly dollar-denominated asset holders lose by first order effects, though they might see reduced risk as second+-order effects. Non-dollar-denominated asset holders see no real gains as first-order effects, they only see them indirectly from the absence of production cuts and demand throughout the economy, but those are much smaller proportional benefits than the people who would be unemployed by those cuts face.

> So by tricking people into taking less compensation for the same amount of work, we benefit how?

We benefit because otherwise those jobs would be lost entirely, along with the associated production which is worse in first order terms, but because it both reduces output and contracts demand, has second-order effects that would result in more job losses and production cuts. If the workers individually prefer not to be employed than to be employed at reduced real wages, they of course can voluntarily choose not to work (which by contracting supply will drive up wages for the remaining workers.)

> If demand decreases then production should decrease, because less production is indicated.

Yes, naturally if demand decreases both market-clearing price and market-clearing quantity should decrease. Wage stickiness pushes that all into quantity and not price cuts, which is more disruptive than smaller quantity cuts with some price cuts (both for the produced goods and the labor to produce them.)

> When the automobile replaced the horse-and-buggy, demand for buggy whips decreased as it should have. printing money so that the buggy whip makers didn’t notice that there was less demand for their product would have been a disservice.

Inflation doesn't prevent manufacturers from noticing demand cuts, it just makes it more possible for them to cut prices as well as quantity in response to demand fluctuations, which—especially with transitory fluctuations, though this is true more generally, outside of a catastrophic drop to zero demand, where it has no effect either way—has less adverse knock-on effects.