231–240 of 619 posts
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.
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The lowest income workers have seen the largest wage gains over the course of the pandemic.
Meaningless when housing costs have soared. They've made wage gains because it's literally not worth it to work for $8/hr anymore and companies were unable to find workers.
>> This loss of trust is a major problem. For example, if you no longer believe the Fed inflation target, then you will base your actions on what you think the inflation rate will be, which can lead to cycles of inflation. If you believe inflation will be high soon, you will buy a lot of stuff now when prices are lower. However, other people will realize this too, and then there will be a race to buy goods and servic…
You understand that the paragraph you quoted was a didactic illustration[1], not a description of reality, right? In fact inflation is sitting right at 3% right now, not at the 2% target but hardly very far off. > The real question is Who is in charge here? If the Fed was, they would and could get in front of inflation and raise rates They... did? [1] Specifically of the situation where a change of target rate (which…
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It is the result of the government creating money to fund the deficit. How does the inflation tell the difference between money created to fund the deficit and money created for other reasons?
Great question. When banks loan money, they create the money. But when the loan is paid back, the money is destroyed. The federal deficit is not paid back. (Oh, there's the fiction of it being paid back, but what actually happens is the government just issues more debt.)
You mean the federal debt. The federal deficit is funded by the federal debt. [1]
If the federal debt were fully paid back, would any money be destroyed? Wouldn't it just go from taxpayers to bond holders?
1. https://fiscaldata.treasury.gov/americas-finance-guide/natio...
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Although a great deal of smoke and mirrors is used when justifying the banks unique right to print money, and it's easy to miss the wood for the trees as you get lost in the details, the bigger picture is quite simple: 1) the banks print new money every time a loan is taken out and charge interest on that money 2) the amount of money loaned out is increasing every year 3) the total amount of money currently loaned is…
1) incomplete statement - When the bank creates new money (its liability to you) it does so because it agreed a loan contract with you (its asset). The consequences of this are wide ranging, but relevant to this thread, it means a bank does not get richer when creating money, it gets richer when you pay interest in excess of its costs of providing you with money. Although the bank created the loan money from nothing,…
> it gets richer when you pay interest in excess of its costs of providing you with money.
Apart from the costs of running the bank, any other costs are simply what I would call money laundering (i.e. smoke and mirrors - as I mentioned, we can argue over who exactly receives what proportion of the money, but it doesn't escape the facts that the population is paying interest on trillions and trillions that were created out of thin air by a select few).
> This means interest paid on the loan no longer goes to the bank but to whoever bought the loan.
The key words here are "...whoever bought the loan". So someone has paid the bank money (I assume relatively equal to the outstanding balance of the loan) for money (the loan) that the bank printed effortlessly. This is simply more money laundering.
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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.
Yellen supposedly told Greenspan & co in the mid 90s that 2% was a good way for companies to be able to adjust labor costs down if needed (if you don't give someone a raise when inflation is 2%, you're effectively lowering their salary). It was the only way to have some flexibility there. If you admit that this is a desirable thing, this is defeated by wage negotiations (or say, benefits) than tend to be indexed to i…
This is EXACTLY the issue. The economy is rigged such that in the absence of any positive action, workers' purchasing power goes down over time by default. This obviously isn't a problem for the rich, whose money is stored almost entirely in assets which by definition rise in value with inflation. Meanwhile, everyone else whose income comes primarily from a wage must constantly struggle for more concessions just to earn the same real amount they did last year.
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Why are inflation truthers so resistant to spending even the tiniest amount of time learning how inflation is computed instead of repeating nonsensical conspiracy theories that match their ideological priors? Replacing porterhouse with hanger steaks in the basket simply means giving the change in price of hanger steaks a higher weight than the change in price of porterhouse steaks in the basket. It does not mean reco…
> nonsensical conspiracy theories that match their ideological priors People's lived experiences in many parts of the country don't match what they're being told. If macro trends go one way but microtrends all over the country go the other way, then the macrotrend analysis is functionally meaningless for millions of people. That's not a conspiracy theory, and hand-waving so many people's lived experiences away becaus…
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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.