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Why the 2% inflation target? (2023)

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Re: Why the 2% inflation target? (2023)

#201

Post by bradjohnson »

silent_cal wrote: post #52
npoc wrote: post #45

The more money the banks print, the richer they get, with the side-effect that prices rise (they make the monetary units less scarce and worth less). 2-3% just happens to be the most they can get away with in the long term without the population getting concerned. What the general population don't realise is that the value of goods and services are going down over time, due to efficiency increases, at a rate of aroun…

Good answer. Inflation is just a euphemism for stealing from working people.

If we operated on a deflationary currency, the value of your labour would be tied to cost of goods, and your salary would decrease each year, while the rich continued to accumulate more of the proportion of cash. Working people would still have to spend most of their income on survival, while the rich would be free to sit on piles of deflationary currency and become even richer.

In an inflationary currency, the rich invest in assets that aren't affected by inflation. Inflation is not the problem in this scenario. Hoarding wealth is. This would be increased with a deflationary currency.

Re: Why the 2% inflation target? (2023)

#202

Post by apelapan »

smegger001 wrote: post #187
jmyeet wrote: post #39

Earlier quoted context omitted.

That's not new or controversial (in economics circles). This really took off in the Reagan years where real wages stagnated [1]. It was from the 1980s where you started to hear statements like "wage incresaes should be tied to productivity increases" [2]. If you parse that statement, it means no cost-of-living increases ie a decrease in real wages. All of this is wealth transfer to the very rich and entirely intentio…

and we didn't even get the productivity increase, if we had the computer revolution should have massively increased everyone wages due to increased efficiency.

Did the computer revolution really make things that much more efficient? Great savings and new possibilities on many fronts, but also enormous expenses and a whole lot of lost flexibility and individual agency.

I'm sure it is an efficiency win on the total, but perhaps not as gigantic as often assumed.

Re: Why the 2% inflation target? (2023)

#203

Post by inglor_cz »

Jensson wrote: post #120
rootusrootus wrote: post #70

Earlier quoted context omitted.

Are poor people's lives objectively worse now than they were, say, 40 years ago?

They can objectively afford less housing, education, healthcare and such things than 40 years ago. They can afford better computers, but that is just thanks to technology, other than technology making things cheaper their lives are worse.

"Housing" ... mostly a NIMBY problem. AKA not a small group of capitalists ruining it for everyone else, but a bunch of soccer moms who hate any densification and insist that their neighborhood must stay the same forever, weaponizing environmental laws to stop any development. Notably, cities that build nonetheless, be it Austin, TX, or Warsaw, Poland, buck this otherwise very widespread trend.

"Education, healthcare" ... depends on the country involved, plus the extent of healthcare you can now get is vastly bigger due to scientific progress. Forty years ago, HIV infection was a death sentence and most cancers too.

Re: Why the 2% inflation target? (2023)

#204

Post by from-nibly »

sega_sai wrote: post #53

If all the money becomes digital at some point, should we switch from inflation target to just automatically reducing every bank account balance by 0.005% per day (equivalent to 2% p.y.)

I mean shares are all digital and that's not how we do it. I don't think it's a technology problem. It's just WAY easier to give more to someone than it is to take from everyone.

Re: Why the 2% inflation target? (2023)

#205

Post by wolverine876 »

cjbgkagh wrote: post #69
jokethrowaway wrote: post #48

Earlier quoted context omitted.

I don't believe leading economists didn't see this coming. Even if they didn't originally, it's been clear now, for decades. This is the system working as intended, making government spending easy and gradually worsening poor's people lives.

One neat feature of ignorance is the ability to hold incorrect ideas with sincerity, I not only think economists are generally wrong, but the most dim amongst them are the most likely to be promoted to prominence.

> One neat feature of ignorance is the ability to hold incorrect ideas with sincerity, I not only think economists are generally wrong, but the most dim amongst them are the most likely to be promoted to prominence.

As you reject ignorance (which I applaud), what knowledge is that based on?

Re: Why the 2% inflation target? (2023)

#206

Post by wolverine876 »

npoc wrote: post #45

The more money the banks print, the richer they get, with the side-effect that prices rise (they make the monetary units less scarce and worth less). 2-3% just happens to be the most they can get away with in the long term without the population getting concerned. What the general population don't realise is that the value of goods and services are going down over time, due to efficiency increases, at a rate of aroun…

> money the banks print

Banks don't print money. The government can.

Re: Why the 2% inflation target? (2023)

#207

Post by inglor_cz »

pastor_bob wrote: post #116
rootusrootus wrote: post #70

Earlier quoted context omitted.

Are poor people's lives objectively worse now than they were, say, 40 years ago?

Certainly in their ability to buy homes. > Since 1963, inflation has risen 896%, while housing prices have risen by more than 2,350%. > For example, between 1984 and 2021, home prices in Massachusetts rose by 469.89% while incomes increased by 221.10%. ETC, ETC https://www.investopedia.com/ask/answers/correlation-inflati...

Land zoned for development is the one thing you cannot produce in factories. No wonder that densely populated areas feel the shortage.

Zone more land for denser development, and you will see the rents and home prices fall, or at least stagnate. That is why people started building skyscrapers immediately after reasonably developed lift technology was available.

Re: Why the 2% inflation target? (2023)

#208

Post by pdonis »

wolverine876 wrote: post #200
spaceman_2020 wrote: post #143

Earlier quoted context omitted.

This is why I think CPI numbers are all hogwash All the younger people I know in less than stellar jobs are really hurting. These people were never well off but were comfortable before the pandemic. But now they’re making hard decisions for basic necessities and grinding down the quality of their lives.

So what do you use that's better? Your personal experiences don't tell us much about the other 320+ million people.

> So what do you use that's better?

If the government would stop trying to micromanage the economy, then it wouldn't need to find some aggregate statistic to use, no matter how misleading or counterproductive it was.

Re: Why the 2% inflation target? (2023)

#209

Post by andrewmutz »

rootusrootus wrote: post #70
jokethrowaway wrote: post #48

Earlier quoted context omitted.

I don't believe leading economists didn't see this coming. Even if they didn't originally, it's been clear now, for decades. This is the system working as intended, making government spending easy and gradually worsening poor's people lives.

Are poor people's lives objectively worse now than they were, say, 40 years ago?

The only way to answer this question is with data, not anecdote. And the people in this discussion thread are saying they don't trust the inflation data.

I trust the data, and the data shows their lives are better. If you don't trust the data, it's impossible to know.

Re: Why the 2% inflation target? (2023)

#210

Post by throw0101d »

mberning wrote: post #57
npoc wrote: post #45

The more money the banks print, the richer they get, with the side-effect that prices rise (they make the monetary units less scarce and worth less). 2-3% just happens to be the most they can get away with in the long term without the population getting concerned. What the general population don't realise is that the value of goods and services are going down over time, due to efficiency increases, at a rate of aroun…

Many people take inflation as an immutable law of nature, but that has not always been so. Food for example, for a long time, became cheaper. Computers and technology as well. Think how nuts it would be if you could get a better house for less money every few years.

> Many people take inflation as an immutable law of nature […]

Not in Japan. They've had stagnant prices and wages for a few decades now (though seems to be changing just recently):

* https://www.youtube.com/watch?v=HFYv-rk4v9Y

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