471–480 of 619 posts
What is missing from the article (unless I missed it myself) is why inflation would be desirable in the first place. There's probably a couple of reasons, some already discussed. Like lowering wages without actually lowering wages. And inflation is a great tool for governments to "pay off" their debt. But you have to keep the rate at a level low enough not to cause upheavals. Hence the rates of like 1% or 2%.
Earlier quoted context omitted.
>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) 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 i…
An under-appreciated benefit of inflation is that it reduces the value of debts. All things being equal (and of course they aren’t), inflation is good for debtors and bad for debt-holders. If you owe $500k on your mortgage, inflation at 5% annually is reducing your debt load substantially without you needing to do anything.
Earlier quoted context omitted.
https://wtfhappenedin1971.com/ Annual wages are about 15% higher today compared to 1971 in real terms. Real terms is a bit suspect in this case as wage earners are more likely to pay nominal rent then owner equivalent rent. It may well be accurate that the average wage earner is worse off today then they were in 1971. I'd venture a speculation that this is reflected in media, sitcoms of the 70s rarely had roommates -…
> Annual wages are about 15% higher today compared to 1971 in real terms. Since 1971, the cumulative inflation rate was around 700%, with an average annual inflation being well over 3%. So while wages increased 15%, the price of everything else around us increased over 700%.
Earlier quoted context omitted.
Are you talking about a timescale of 100 years or 30? People are poorer than they were in 1990, especially the mid to lower classes.
This is not true: https://fred.stlouisfed.org/series/A939RX0Q048SBEA This is real GDP per capita
Earlier quoted context omitted.
> You need a barn built? You ask your neighbors to help you build it, and promise them some grains or something in return. Boom. Credit (i.e. money) created from thin air. And the more the economy grows, the more this kind of debt is created. You're missing the bigger picture. The difference is that banks are handing out unlimited credit notes for something they don't have, and are charging interest on them.
it's not unlimited. There's a regulated amount for which they're not allowed to go over (reserve requirement - which has since 2020 been set to zero), and they are required to have enough equity/capital (called capital requirements outlined here: https://docs.google.com/viewerng/viewer?url=https://www.fede... ) If it is indeed true that a bank could just print unlimited loan notes, then why did Silicon Valley Bank co…
The only limitation the banking system faces is excuses to loan money (one of the reason long-standing wars that last for years are increasingly common - the banking system gets to fund both sides)
Earlier quoted context omitted.
ZIRP removes the artificial intervention in the market for money by unelected individuals with no accountability to the population for their actions. The market for money then goes where it will according to free market principles and the autostabilisers operate in the market for labour instead. No point giving free money to people who already have money.
ZIRP is an artificial intervention in the market: Whenever it costs money to borrow money, the government will print some and give it for free to whoever is looking to borrow it.
Taxation and loan repayments then shred money.
There is no fixed quantity of little silver coins we pass around and never has been.
There is no need to pay a third party for an accounting credit when you run the system
Earlier quoted context omitted.
>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) 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 i…
> 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. Look, I'm sensitive to the struggles of the less well off, and that we are in a particularly rough part of a cycle. I don't believe the economy is…
But people look at other people who are visibly better off, compare themselves against those and get tricked into believing, that it is no just. How he can have more? Must be evil! Stolen from the people! Typical divide and conquer, to play with ego and greed, that causes misery and anger among our fellows. It makes me sad to see the same scheme being played out everytime.
What is missing from the article (unless I missed it myself) is why inflation would be desirable in the first place. There's probably a couple of reasons, some already discussed. Like lowering wages without actually lowering wages. And inflation is a great tool for governments to "pay off" their debt. But you have to keep the rate at a level low enough not to cause upheavals. Hence the rates of like 1% or 2%.
With >0% inflation, you now need to do something with your money or else you lose money. If my great great grandparents buried their life savings and gave I received it now, I'd get a new laptop and that's about it.
So now everyone has to invest it. 401k's, other investments, etc. This makes the economy start moving, more activity, this is the 'velocity' of money they mentioned as being a key factor in the health of an economy.
What is missing from the article (unless I missed it myself) is why inflation would be desirable in the first place. There's probably a couple of reasons, some already discussed. Like lowering wages without actually lowering wages. And inflation is a great tool for governments to "pay off" their debt. But you have to keep the rate at a level low enough not to cause upheavals. Hence the rates of like 1% or 2%.
Why is it so important to lower wages and increasing the wealth of bond holders?
in the end the economy as a whole is a setup for work and collaboration.
if the farmer does not want to work, i can't spend my earned money on their produce.
inflation has shown to be an effective tool to ensure that people partake in the workforce.
- lowering wages keeps people on the lookout for new skills and increases job mobility.
lastly, inflation does not. increase the wealth of bond holders. only when they miscalculated their rate such that interest is higher than inflation. This has certainly not been the case the pa's 6-7 years where bond holders have lost big time.
Earlier quoted context omitted.
I agree that it would increase inequality not decrease it like people would assume a wealth tax (inflation + capital gains tax) would do. The problem I see with the government having their revenue tied to wealth tax becomes incentivized to do things that will make the wealthy wealthier, like maintain a higher rate of inflation.
High inflation has a huge benefit to the government in that the government is a major borrower and inflation reduces the value of their debt.
They are at the mercy of the privately-owned Fed who could destroy them.