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Inflation is a tax on hoarding. If you buy assets, they'll generally keep pace with inflation (with some fluctuation, depending on which assets you've bought.)
by mschy 17y ago
Inflation is a tax on hoarding.
If you buy assets, they'll generally keep pace with inflation (with some fluctuation, depending on which assets you've bought.)
If you engage in productive investment of some sort, you'll generally beat inflation and acquire wealth, which is certainly a desired effect.
If you try to sit on your money, investing in nothing, doing nothing, it will dwindle away. And most people in society are pretty happy with that, because it really means "if you're rich, that's fine... but if you want to stay rich you need to continue contributing to society, if only by loaning others your money for a return."
- Lendal 17y agoWhat about your income? Is that keeping pace as well? I know mine surely isn't.
- mschy 17y agoIf your real income is decreasing, then your real income is decreasing, no matter what currency is in use. They're essentially unrelated. The only "benefit" of inflation to employers is that it makes it easier to implement wage cuts without facing resistance. That said, if you took away inflation as a way to hide wage cuts, nominal wage cuts would be the new normal in a lot of fields.