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Inflation is differential and restructuring (2021)

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Re: Inflation is differential and restructuring (2021)

#201

Post by simonh »

dinom wrote: post #196
simonh wrote: post #189

Earlier quoted context omitted.

There’s no appeal to authority or need for me to know the ‘intrinsic’ value of things. It’s up to individual people what they will pay for things, or sell them for. That’s what a market is. Short term paper pays interest because it’s issued by people who need short term money and are willing to pay for it. There’s no central authority setting its value, no objective criteria, no law of physics, just actual people cho…

> That’s what a market is. To win me you need to consider the difference between a free market vs. a coerced or highly regulated one; the dynamics likely change. > even central governments don’t set the value of money And the difference between real and nominal rates? I'd say your statement is largely true but that doesn't mean a central bank doesn't try to manipulate real rates. That's actually their charter... pric…

> Why should the government actively try to de-value people's savings? Is it a good thing to squeeze elderly retirees back into the work-force?

I don’t want to devalue their savings. I’m in my 50s and looking forward to retiring myself. I want them to have productive savings that grow and provide them with a retirement income. Savings accounts, ISAs, pension funds, stocks and bonds, even property are all productive savings that grow and can provide income in retirement. They help the economy and help savers.

> who gets to allocate my capital? I contend it should be me, you seem to think otherwise

Not at all, it should absolutely be you, we just talking about incentives. The question we’re debating is what should happen to the value of cash you keep in your pocket. Literal cash. Should it appreciate in value or depreciate? Is there a benefit to society either way?

If money itself appreciates in value that’s because someone is paying a cost for that to happen. I don’t think that’s a reasonable expectation. Beyond that, it benefits society if savings are put to economically useful purposes, such as savings accounts and investments. A small amount of inflation incentivises this.

I’m not telling anyone what to do. But on the flip side you can’t tell people what to do either. You can’t tell them what they will or won’t pay you to do, and they’re not going to pay you to keep your money in your pocket, mattress, whatever by inflating the value of cash.

Cash is a financial instrument. You own the notes, but can’t set its value. We all do that collectively, so other people have a say in it. That’s just the nature of it.

Re: Inflation is differential and restructuring (2021)

#202

Post by srean »

kqr wrote: post #180
Turing_Machine wrote: post #141

Earlier quoted context omitted.

"Fiddling with" is not the same as "can create arbitrarily without limit". You're still not addressing the OP's actual complaint.

Governments can (and has!) "created arbitrarily without limit" metal currencies too. Given their monopoly on violence, they can just say "this coin now pays for ten pigs, not one, as you thought before". (Of course, they'd also decrease required tax payments correspondingly to maintain stable inflation.)

But haven't such debased currencies fallen out of favor, more often than not, in favor of those currencies that have not been debased, for example, the Florin https://en.wikipedia.org/wiki/Florin

Re: Inflation is differential and restructuring (2021)

#203

Post by dinom »

simonh wrote: post #201
dinom wrote: post #196

Earlier quoted context omitted.

> That’s what a market is. To win me you need to consider the difference between a free market vs. a coerced or highly regulated one; the dynamics likely change. > even central governments don’t set the value of money And the difference between real and nominal rates? I'd say your statement is largely true but that doesn't mean a central bank doesn't try to manipulate real rates. That's actually their charter... pric…

> Why should the government actively try to de-value people's savings? Is it a good thing to squeeze elderly retirees back into the work-force? I don’t want to devalue their savings. I’m in my 50s and looking forward to retiring myself. I want them to have productive savings that grow and provide them with a retirement income. Savings accounts, ISAs, pension funds, stocks and bonds, even property are all productive s…

> I don’t want to devalue their savings.

Hallelujah! I do presume this means the /kind/ of savings or /where/ it's held is immaterial.

Sometimes I like to keep a portion of my savings as seashells in a shoe-box. But as you acknowledge...

> Not at all, it should absolutely be you,

And after all that circumlocution I was beginning to think you'd never concede. You've made my day!

Re: Inflation is differential and restructuring (2021)

#204

Post by actionablefiber »

ekianjo wrote: post #197
actionablefiber wrote: post #169

Earlier quoted context omitted.

How is that true with inflation? Under the exact same scenario but with an inflationary monetary policy, any money you sock under your mattress dwindles down to a fraction of its purchasing power over the course of many decades if it is not invested into a vehicle that generates returns. That could be equities, bonds, housing, or even an interest-bearing savings account. The point is that an inflationary regime incen…

So you would have to assume that investments would be worthless in a non inflationary state which is a big stretch of the imagination. You think there were no tech revolutions and investments going on while everyone was at the gold standard?

Non-inflationary and deflationary are different terms, with my point strictly referring to the latter, so it would help for you to specify.

Deflation means what it sounds like - goods, assets, wages generally trending downward over time. Yes, I posit that this has a chilling effect on recirculating money into investments, because you get worse odds on a positive return on any investment you make vs. just doing nothing.

Re: Inflation is differential and restructuring (2021)

#205

Post by simonh »

dinom wrote: post #203
simonh wrote: post #201

Earlier quoted context omitted.

> Why should the government actively try to de-value people's savings? Is it a good thing to squeeze elderly retirees back into the work-force? I don’t want to devalue their savings. I’m in my 50s and looking forward to retiring myself. I want them to have productive savings that grow and provide them with a retirement income. Savings accounts, ISAs, pension funds, stocks and bonds, even property are all productive s…

> I don’t want to devalue their savings. Hallelujah! I do presume this means the /kind/ of savings or /where/ it's held is immaterial. Sometimes I like to keep a portion of my savings as seashells in a shoe-box. But as you acknowledge... > Not at all, it should absolutely be you, And after all that circumlocution I was beginning to think you'd never concede. You've made my day!

I don't see how I can concede a point I never contested, but ok.

>> I don’t want to devalue their savings.

>Hallelujah! I do presume this means the /kind/ of savings or /where/ it's held is immaterial.

It's absolutely material, but it's their choice not mine. If they choose to invest unwisely then that can have unfortunate consequences (assuming no crime was committed, that's a different question). Can I guarantee the savings of people who unwisely invest in swamp land? No. Do you think I or anyone else should? So of course the choices people make matter, and have consequences.

Re: Inflation is differential and restructuring (2021)

#206

Post by dinom »

simonh wrote: post #115
ibeckermayer wrote: post #101

Earlier quoted context omitted.

Nonsense. Sure, deflationary shocks can be calamitous, like the Great Depression or the GFC. But steady deflation over time is logically the natural and good outcome of improvement over time—as technology advances and we get better at producing things, they should get cheaper, on average. Instead, our savings are buying us LESS over time, so that government can buy votes, fund wars, bail out defense contractors, phar…

Devaluing in-the-mattress savings is a good thing, hence all the many government schemes to incentivise small scale productive investment. Here in the UK that's through tax free consumer savings accounts like ISAs, but also pensions. Savings that are invested do work in the economy fund businesses, promote economic activity and aid job and wealth creation. Stuffed mattresses are a boat anchor on the economy. Having s…

Lol, here: https://news.ycombinator.com/item?id=31539114

you say "I don’t want to devalue their savings" yet above you say

"Devaluing in-the-mattress savings is a good thing".

Either your thinking has changed or, you're trying to cause confusion or, maybe confused yourself, or are trolling. At this point I suspect I may even be chatting with an ELIZA... so what else is there for me to say? Think whatever you want.

¯\_(ツ)_/¯

Re: Inflation is differential and restructuring (2021)

#207

Post by simonh »

bko wrote: post #128
simonh wrote: post #109

Earlier quoted context omitted.

So you seem to be adding your voice in support for the article which, er, directly contradicts your views about money printing and current inflation. Right now we know for a fact that current inflation is a genuine global shortage of actual stuff. Crude oil, cooking oil, wheat, Chinese products. Plus American government overspending, to be fair, but that's just a US phenomenon. Of course that's inconvenient if you re…

> Plus American government overspending, to be fair, but that's just a US phenomenon. That's not true. US spent the most, but Europe spent €3.2 trillion. US spent $12 trillion but they had to "shore up" a lot of global banks because that's just what they do. About half went into asset purchases and liquidity measures. I take a simple approach. What would you expect to happen if you just created trillions out of thin…

The excess inflation in the US (above that in Europe) isn’t due to pandemic spending or increased money supply, it’s demand driven due to the Biden infrastructure bill. The supply side can’t meet the increased demand, leading to excess inflation.

Look, I’d have voted for him too given the options, and probably still would, but his economic policy is ill advised.

Re: Inflation is differential and restructuring (2021)

#208

Post by someguydave »

actionablefiber wrote: post #155
someguydave wrote: post #110

Earlier quoted context omitted.

Yeah that decreasing price for silicon chips over the past decades has been a real disaster.

There's a difference between decreases in the price of specific goods that comes about due to technology, and deflation that comes about due to monetary policy. That I can think of, the obvious difference is that the second one almost definitionally means a steady decrease in nominal wages. This seems like a perverse incentive - if I sock away my first paycheck flipping burgers under my mattress and do nothing with i…

> the obvious difference is that the second one almost definitionally

People said similar stuff about negative interest rates, yet they were rolled out and kind of worked around the world. I'm not buying this defense of inflationism.

Re: Inflation is differential and restructuring (2021)

#209

Post by Terry_Roll »

throw0101a wrote: post #174
Terry_Roll wrote: post #160

Earlier quoted context omitted.

Oh goodie we have an outlier of a country which we can hold as an example of the majority of the world. So if Canada is so good at testing and knowing the change in quality they must be able to predict when something is going to fail. Right? So why do things pack up in Canada then?

> Oh goodie we have an outlier of a country which we can hold as an example of the majority of the world. "Addressing the Quality Change Issue in the ConsumerPrice Index" by US BLS (1997): * https://www.brookings.edu/bpea-articles/addressing-the-quali... "On quality bias and inflation targets" in Journal of Monetary Economics (2014): * http://www.columbia.edu/~mu2166/quality_bias/quality_bias.pd... I'm sure all these…

> The other possibility is that perhaps the professionals know what they're measuring and the pros-and-cons of various metrics.

Well if they are right, how come they cant stop recessions then?

> I'm sure all these peer-reviewed folks are wrong about calculating the CPI and measuring inflation,

Peer review is just group think. Thats what education is about, brainwashing people in subtle ways, its the next step up from believing in God, whilst not recognising chaos theory.

And if they are all correct, why do different countries do their own thing? IF the theory is sound, then everyone would be doing it, but like we see with law, different groups of people have different ideas of what is right and wrong, and its always, history doesnt lie about this, violence always wins out. You might know it simply as "Survival of the fittest"?

Re: Inflation is differential and restructuring (2021)

#210

Post by mrow84 »

ibeckermayer wrote: post #101
klipt wrote: post #86

Earlier quoted context omitted.

> the value of each coupon becomes more, not less, over time Deflation has historically been a bad thing every time it's happened.

Nonsense. Sure, deflationary shocks can be calamitous, like the Great Depression or the GFC. But steady deflation over time is logically the natural and good outcome of improvement over time—as technology advances and we get better at producing things, they should get cheaper, on average. Instead, our savings are buying us LESS over time, so that government can buy votes, fund wars, bail out defense contractors, phar…

Goods getting cheaper broadly means that supply is going up relative to demand - we call this deflation.

If the supply of money goes up relative to demand then we call that inflation.

It seems like you are conflating the two categories.

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