7 ms·

Overlooking that the value of the dollar stayed about the same from 1800 to 1914, and is now 1/25th of that value: http://www.usinflationcalculator.com/ http:/

Overlooking that the value of the dollar stayed about the same from 1800 to 1914, and is now 1/25th of that value: http://www.usinflationcalculator.com/ http://www.usinflationcalculator.com/ There's also all the relentless propaganda saying that inflation is a good thing, and if it isn't, it's caused by speculators & greed, not the government. I don't invest in anything denoted in dollars (such as bonds).

colanderman 9y ago
Who cares that the dollar gradually declines in value? Only fools literally invest long-term in the dollar itself (the "under the mattress" approach). And if you're investing in any productive asset of actual value, inflation doesn't matter. (I can understand being leery of non-inflation-adjusted bonds.) All that really matters is that the dollar doesn't significantly lose value between payday and tax time – which by definition, it doesn't, since tax rates are fixed in dollars a year ahead of time anyway. I won't bother to argue the virtues of inflation with you, since it seems clear you've made up your mind about that "propaganda". But to claim that controlled inflation is inherently a "bad" thing – for no reason other than that it causes a thing with no inherent value to decrease in perceived value – belies a misunderstanding of value.
- freejulian 9y ago
  People want to store the value they’ve earned. If you don’t provide that functionality in your currency people will simply find an alternative. Today people use real estate to park their money. Personally I’d rather money provide that store of value.
  - colanderman 9y ago
    You're always free to buy gold with your money, if you think that's a better store of value. I don't think the government cares. (Personally I invest in productive assets and bettering my standard of living, but to each their own.)
    - freejulian 9y ago
      As I said, if you're wealthy, you buy real estate to park your wealth. If you're poor, you just watch your savings wither away. Heck of a system you're supporting.
      - colanderman 9y ago
        Poor people don't have savings. (If they do, it's in a 401k, which is a productive asset and not tied to the whims of fiat currency.) Poor people have debt. (Actually, I think most people in the US have net debt. (EDIT: Actually it's 20%; 30% if you're a minority [1].)) Inflation is good if you have net debt. It means the principal of your debt decreases in real terms each year. I keep bringing up gold because this whole thread is about metal-backed currencies. Poor people can – and do – buy gold just as easily as rich people can. Pawn shops are rife with the stuff. The problem isn't that they must "watch their savings wither". It's that they don't have savings; they have debt. [1] https://www.marketwatch.com/story/one-in-five-american-households-have-zero-or-negative-wealth-2017-11-11 https://www.marketwatch.com/story/one-in-five-american-house...
        freejulian 9y ago
        > Poor people don't have savings. What sort of nonsense is that? A lot of people don't have savings, sure, but there's also a lot of working class individuals who are financially responsible enough to save. > If they do, it's in a 401k Exactly my point -- the only way to save money is to risk handing it over to a corporation and crossing your fingers. Never mind that the general advice is not to invest money you plan on needing within the next 6 years. > Inflation is good if you have net debt. Not when the interest rate on your debt is higher than the rate of inflation. You've done a sad job making any case at all for inflation.
        colanderman 9y ago
        > [inflation is not good] when the interest rate on your debt is higher than the rate of inflation. Yes, it's still good. It still decreases the real value of your principal. Deflation does the opposite.
- tobmlt 9y ago
  The ill which inflation brings does not manifest itself in the short run. Inflation is a hidden transfer of wealth from everyone to first receivers, and first users of the new money. When the money is loaned into existance, the first recipients of the new money get to make purchases based on the old price point. By the time the money spreads throughout the system to everyone else, it manifests as mere (generalized) price increase. This is a slow and steady siphon which in practical effect takes wealth from the "have nots" and gives it to the "haves". To argue pro inflation based only on the short run view is missing the point.
  - colanderman 9y ago
    > Inflation is a hidden transfer of wealth from everyone to first receivers, and first users of the new money. It's funny, that's exactly what I was going to say about deflation. I hear Mr. Nakamoto is worth a lot these days. The rest of your argument doesn't make sense to me, as the only effect inflation has on anyone is the price increase in a good between the time you receive the money and the time you spend it. Not the price increase since the money first came into existence. It doesn't matter when I get money, so long (a) I am paid according to the current worth of the currency (i.e., in real terms) and (b) as I spend (or invest) it quickly. I mentioned in another comment that inflation does have the negative effect of masking wage stagnation, which causes exactly condition (a) above to be violated. This is ultimately a problem with people's understanding of money. It would be great if employers were forced to announce a lack of yearly pay increase as a pay cut in real terms. Condition (b) on the other hand. That's more a problem for the wealthy. Personally (as an upper-middle class tech worker) I'd love it if I could just shove my savings under a mattress and have it increase in value. It's those living paycheck to paycheck – which, if I recall correctly, is the vast majority of Americans – who don't have to worry about spending their cash before inflation gets to it.
    - psyc 9y ago
      In this context, Nakamoto would be a first hodler, which doesn't contradict the parent comment.
    - tobmlt 9y ago
- skookumchuck 9y ago
  > Who cares that the dollar gradually declines in value? Anyone who holds a dollar in their hands. Anyone who invests in assets that are taxed on the inflationary "gains" in value. Anyone who has to wait months/years for a raise to catch up with the intervening inflation. Anyone on a fixed income. Anyone who's inflation rise in wages gets taxed at their highest marginal tax bracket, or even pushes them into a higher bracket.
ucaetano 9y ago
Inflation is good. Too much inflation is bad. Not because of inflation per se, but because of what inflation measures. Inflation comes from a imbalance in supply and demand. If demand in an economy is growing in a healthy way, you'll have some inflation as investments in production will take time to result in increased production. This increase in prices serve as signaling to determine where to invest in capacity. Prices is how agents communicate in open markets, a slight inflation is a message that there is unmet demand. But this is all basic economics...
- tensor_rank_0 9y ago
  > Inflation is good. inflation is good for net debtors and bad for savers. > Inflation comes from a imbalance in supply and demand price inflation is a necessary consequence of monetary inflation. > This increase in prices serve as signaling to determine where to invest in capacity. thats actually how malinvestment occurs. people see a lot of money flooding in, and think that is a demand for capital investment, but then when their customer base dries up they realize it was an artificial stream of money that shifted with the political winds. > Prices is how agents communicate in open markets this is true > a slight inflation is a message that there is unmet demand. a gradual increase in prices is a sign that more dollars are chasing the same amount of goods, ceteris paribus. > But this is all basic economics... not sure that condescension is warranted. basic economics distinguishes between price inflation as a result of monetary inflation and price increases due to other reasons.
  - crdoconnor 9y ago
    >inflation is good for net debtors and bad for savers. With "savers" being a close approximation of "the rich" and debtors being another word for "the poor". >price inflation is a necessary consequence of monetary inflation. Counter-intuitively, it actually isn't a necessary consequence - not if velocity of the new money grinds to a halt after creation. Newly created has to be spent and respent and respent and so on for it to cause price inflation. There are many ways that this can happen - e.g. if the money just ends up parked in a bank account or if the dampening effect of industrial slack offsets the creation of new money (i.e. a glut of inventory soaks up the excess cash). >basic economics distinguishes between price inflation as a result of monetary inflation and price increases due to other reasons. Economists actually get this wrong all the damn time. Monetarists (like Milton Friedman) attributed price inflation due to the 1970s oil shock to a so called excess expansion in the money supply that didn't happen. Essentially, Saudi princes siphoning off more wealth via higher oil prices was blamed on money printing rather than cartelization, and it was decided that "debtors" should be the ones to take the financial hit for that by jacking up interest rates.

colanderman 9y ago

Who cares that the dollar gradually declines in value? Only fools literally invest long-term in the dollar itself (the "under the mattress" approach). And if you're investing in any productive asset of actual value, inflation doesn't matter. (I can understand being leery of non-inflation-adjusted bonds.) All that really matters is that the dollar doesn't significantly lose value between payday and tax time – which by definition, it doesn't, since tax rates are fixed in dollars a year ahead of time anyway. I won't bother to argue the virtues of inflation with you, since it seems clear you've made up your mind about that "propaganda". But to claim that controlled inflation is inherently a "bad" thing – for no reason other than that it causes a thing with no inherent value to decrease in perceived value – belies a misunderstanding of value.

freejulian 9y ago
People want to store the value they’ve earned. If you don’t provide that functionality in your currency people will simply find an alternative. Today people use real estate to park their money. Personally I’d rather money provide that store of value.
- colanderman 9y ago
  You're always free to buy gold with your money, if you think that's a better store of value. I don't think the government cares. (Personally I invest in productive assets and bettering my standard of living, but to each their own.)
  - freejulian 9y ago
    As I said, if you're wealthy, you buy real estate to park your wealth. If you're poor, you just watch your savings wither away. Heck of a system you're supporting.
    - colanderman 9y ago
      Poor people don't have savings. (If they do, it's in a 401k, which is a productive asset and not tied to the whims of fiat currency.) Poor people have debt. (Actually, I think most people in the US have net debt. (EDIT: Actually it's 20%; 30% if you're a minority [1].)) Inflation is good if you have net debt. It means the principal of your debt decreases in real terms each year. I keep bringing up gold because this whole thread is about metal-backed currencies. Poor people can – and do – buy gold just as easily as rich people can. Pawn shops are rife with the stuff. The problem isn't that they must "watch their savings wither". It's that they don't have savings; they have debt. [1] https://www.marketwatch.com/story/one-in-five-american-households-have-zero-or-negative-wealth-2017-11-11 https://www.marketwatch.com/story/one-in-five-american-house...
      - freejulian 9y ago
        > Poor people don't have savings. What sort of nonsense is that? A lot of people don't have savings, sure, but there's also a lot of working class individuals who are financially responsible enough to save. > If they do, it's in a 401k Exactly my point -- the only way to save money is to risk handing it over to a corporation and crossing your fingers. Never mind that the general advice is not to invest money you plan on needing within the next 6 years. > Inflation is good if you have net debt. Not when the interest rate on your debt is higher than the rate of inflation. You've done a sad job making any case at all for inflation.
        colanderman 9y ago
        > [inflation is not good] when the interest rate on your debt is higher than the rate of inflation. Yes, it's still good. It still decreases the real value of your principal. Deflation does the opposite.
tobmlt 9y ago
The ill which inflation brings does not manifest itself in the short run. Inflation is a hidden transfer of wealth from everyone to first receivers, and first users of the new money. When the money is loaned into existance, the first recipients of the new money get to make purchases based on the old price point. By the time the money spreads throughout the system to everyone else, it manifests as mere (generalized) price increase. This is a slow and steady siphon which in practical effect takes wealth from the "have nots" and gives it to the "haves". To argue pro inflation based only on the short run view is missing the point.
- colanderman 9y ago
  > Inflation is a hidden transfer of wealth from everyone to first receivers, and first users of the new money. It's funny, that's exactly what I was going to say about deflation. I hear Mr. Nakamoto is worth a lot these days. The rest of your argument doesn't make sense to me, as the only effect inflation has on anyone is the price increase in a good between the time you receive the money and the time you spend it. Not the price increase since the money first came into existence. It doesn't matter when I get money, so long (a) I am paid according to the current worth of the currency (i.e., in real terms) and (b) as I spend (or invest) it quickly. I mentioned in another comment that inflation does have the negative effect of masking wage stagnation, which causes exactly condition (a) above to be violated. This is ultimately a problem with people's understanding of money. It would be great if employers were forced to announce a lack of yearly pay increase as a pay cut in real terms. Condition (b) on the other hand. That's more a problem for the wealthy. Personally (as an upper-middle class tech worker) I'd love it if I could just shove my savings under a mattress and have it increase in value. It's those living paycheck to paycheck – which, if I recall correctly, is the vast majority of Americans – who don't have to worry about spending their cash before inflation gets to it.
  - psyc 9y ago
    In this context, Nakamoto would be a first hodler, which doesn't contradict the parent comment.
  - tobmlt 9y ago
skookumchuck 9y ago
> Who cares that the dollar gradually declines in value? Anyone who holds a dollar in their hands. Anyone who invests in assets that are taxed on the inflationary "gains" in value. Anyone who has to wait months/years for a raise to catch up with the intervening inflation. Anyone on a fixed income. Anyone who's inflation rise in wages gets taxed at their highest marginal tax bracket, or even pushes them into a higher bracket.

ucaetano 9y ago

Inflation is good. Too much inflation is bad. Not because of inflation per se, but because of what inflation measures. Inflation comes from a imbalance in supply and demand. If demand in an economy is growing in a healthy way, you'll have some inflation as investments in production will take time to result in increased production. This increase in prices serve as signaling to determine where to invest in capacity. Prices is how agents communicate in open markets, a slight inflation is a message that there is unmet demand. But this is all basic economics...

tensor_rank_0 9y ago
> Inflation is good. inflation is good for net debtors and bad for savers. > Inflation comes from a imbalance in supply and demand price inflation is a necessary consequence of monetary inflation. > This increase in prices serve as signaling to determine where to invest in capacity. thats actually how malinvestment occurs. people see a lot of money flooding in, and think that is a demand for capital investment, but then when their customer base dries up they realize it was an artificial stream of money that shifted with the political winds. > Prices is how agents communicate in open markets this is true > a slight inflation is a message that there is unmet demand. a gradual increase in prices is a sign that more dollars are chasing the same amount of goods, ceteris paribus. > But this is all basic economics... not sure that condescension is warranted. basic economics distinguishes between price inflation as a result of monetary inflation and price increases due to other reasons.
- crdoconnor 9y ago
  >inflation is good for net debtors and bad for savers. With "savers" being a close approximation of "the rich" and debtors being another word for "the poor". >price inflation is a necessary consequence of monetary inflation. Counter-intuitively, it actually isn't a necessary consequence - not if velocity of the new money grinds to a halt after creation. Newly created has to be spent and respent and respent and so on for it to cause price inflation. There are many ways that this can happen - e.g. if the money just ends up parked in a bank account or if the dampening effect of industrial slack offsets the creation of new money (i.e. a glut of inventory soaks up the excess cash). >basic economics distinguishes between price inflation as a result of monetary inflation and price increases due to other reasons. Economists actually get this wrong all the damn time. Monetarists (like Milton Friedman) attributed price inflation due to the 1970s oil shock to a so called excess expansion in the money supply that didn't happen. Essentially, Saudi princes siphoning off more wealth via higher oil prices was blamed on money printing rather than cartelization, and it was decided that "debtors" should be the ones to take the financial hit for that by jacking up interest rates.