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This is ass backwards. Central bank/fed policy in the US, Europe, and Japan has consistently been to keep inflation low on behalf of the investor class for a lo

This is ass backwards. Central bank/fed policy in the US, Europe, and Japan has consistently been to keep inflation low on behalf of the investor class for a long, long time now.

dnautics 9y ago
inflation is good for the investor class. The investor class has access to relatively low and importantly, fixed rate, interest rates, so having high inflation relative to interest rate allows them to take out leveraged investments and make multipliers on their investments, while inflation erodes the real value out from under those loans. https://en.wikipedia.org/wiki/Lost_Decade_(Japan) https://en.wikipedia.org/wiki/Lost_Decade_(Japan) "Trying to deflate speculation and keep inflation in check, the Bank of Japan sharply raised inter-bank lending rates in late 1989." If you want to "keep inflation low" you'd be crazy to drop interest rates, which is what japan and the US have been doing over the last 30 and 40 years, respectively. The whole point of fiscal stimulus is to try to goose the economy under the threat of impending inflation.
princeb 9y ago
the Fed has an explicit dual mandate [1]. the two mandates are inflation AND employment. not all CBs have two mandates, and if they only have one, not all CBs target inflation. [1] https://www.google.com.sg/search?q=dual+mandate https://www.google.com.sg/search?q=dual+mandate
matt4077 9y ago
Investors and the Government are the first in line to profit from inflation, since it devalues the one thing only they can afford: debt. And investments in the stock market, real estate or anything else than actual money are at least protected by usually rising with inflation. The one group that suffers disproportionally from inflation are the elderly, who receive a fixed pension (/social security) based on their lifetime dues. Right after that are employees, because wages typically lag behind when inflation picks up.
- imtringued 9y ago
  >And investments in the stock market, real estate or anything else than actual money are at least protected by usually rising with inflation. Quantiative Easing is used as a tool to increase inflation by the central bank through buying stock. Of course this means stock keeps it's value with increasing inflation while everything else doesn't keep up with inflation. Obviously this is bad for those who don't own stock.

This is ass backwards. Central bank/fed policy in the US, Europe, and Japan has consistently been to keep inflation low on behalf of the investor class for a long, long time now.

dnautics 9y ago

inflation is good for the investor class. The investor class has access to relatively low and importantly, fixed rate, interest rates, so having high inflation relative to interest rate allows them to take out leveraged investments and make multipliers on their investments, while inflation erodes the real value out from under those loans. https://en.wikipedia.org/wiki/Lost_Decade_(Japan) https://en.wikipedia.org/wiki/Lost_Decade_(Japan) "Trying to deflate speculation and keep inflation in check, the Bank of Japan sharply raised inter-bank lending rates in late 1989." If you want to "keep inflation low" you'd be crazy to drop interest rates, which is what japan and the US have been doing over the last 30 and 40 years, respectively. The whole point of fiscal stimulus is to try to goose the economy under the threat of impending inflation.

princeb 9y ago

the Fed has an explicit dual mandate [1]. the two mandates are inflation AND employment. not all CBs have two mandates, and if they only have one, not all CBs target inflation. [1] https://www.google.com.sg/search?q=dual+mandate https://www.google.com.sg/search?q=dual+mandate

matt4077 9y ago

Investors and the Government are the first in line to profit from inflation, since it devalues the one thing only they can afford: debt. And investments in the stock market, real estate or anything else than actual money are at least protected by usually rising with inflation. The one group that suffers disproportionally from inflation are the elderly, who receive a fixed pension (/social security) based on their lifetime dues. Right after that are employees, because wages typically lag behind when inflation picks up.

imtringued 9y ago
>And investments in the stock market, real estate or anything else than actual money are at least protected by usually rising with inflation. Quantiative Easing is used as a tool to increase inflation by the central bank through buying stock. Of course this means stock keeps it's value with increasing inflation while everything else doesn't keep up with inflation. Obviously this is bad for those who don't own stock.