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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

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.
        skookumchuck 9y ago
        If you've studied interest rates on loans, the interest rate charged is X+Y, where X is the "real" interest rate, and Y is the inflation rate. I.e. people who loan money are not stupid, and you're not getting any bargain because of inflation.
    - ianai 9y ago
      Real estate is not the clear asset you assume it to be. RE gets taxed regardless of whether it produces revenue or not. Ie simply holding RE is costly. Further, RE values rely on externalities and (if the land is improved with buildings) maintence and repair costs. It’s also highly illiquid.
  - coconutrandom 9y ago
    https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 "..forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 and/or up to five to ten years imprisonment. The main rationale behind the order was actually to remove the constraint on the Federal Reserve which prevented it from increasing the money supply during the depression" https://en.wikipedia.org/wiki/The_Gold_(Control)_Act,_1968 https://en.wikipedia.org/wiki/The_Gold_(Control)_Act,_1968 "Desai finally introduced the Gold Control Act, on 24 August 1968, which prohibited citizens from owning gold in the form of bars and coins. All existing holding of gold coins and bars had to be converted to jewellery and declared to the authorities. Goldsmiths were not allowed to own more than 100 gms of gold."
    - verylittlemeat 9y ago
      I don't quite see your point both of those pieces of legislation were repealed 3+ decades ago.
      - nkurz 9y ago
        Presumably he's pointing out that colanderman's use of "always" in the phrase "always free to buy gold" is suspect. A better word might be "currently". Currently, one can buy gold freely in most countries. In the 1930's this was not the case in the US. As recently as the 1960's this was not the case in India. Investors in gold should probably be aware of these precedents.
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.

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.
        skookumchuck 9y ago
        If you've studied interest rates on loans, the interest rate charged is X+Y, where X is the "real" interest rate, and Y is the inflation rate. I.e. people who loan money are not stupid, and you're not getting any bargain because of inflation.
  - ianai 9y ago
    Real estate is not the clear asset you assume it to be. RE gets taxed regardless of whether it produces revenue or not. Ie simply holding RE is costly. Further, RE values rely on externalities and (if the land is improved with buildings) maintence and repair costs. It’s also highly illiquid.
- coconutrandom 9y ago
  https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 "..forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 and/or up to five to ten years imprisonment. The main rationale behind the order was actually to remove the constraint on the Federal Reserve which prevented it from increasing the money supply during the depression" https://en.wikipedia.org/wiki/The_Gold_(Control)_Act,_1968 https://en.wikipedia.org/wiki/The_Gold_(Control)_Act,_1968 "Desai finally introduced the Gold Control Act, on 24 August 1968, which prohibited citizens from owning gold in the form of bars and coins. All existing holding of gold coins and bars had to be converted to jewellery and declared to the authorities. Goldsmiths were not allowed to own more than 100 gms of gold."
  - verylittlemeat 9y ago
    I don't quite see your point both of those pieces of legislation were repealed 3+ decades ago.
    - nkurz 9y ago
      Presumably he's pointing out that colanderman's use of "always" in the phrase "always free to buy gold" is suspect. A better word might be "currently". Currently, one can buy gold freely in most countries. In the 1930's this was not the case in the US. As recently as the 1960's this was not the case in India. Investors in gold should probably be aware of these precedents.

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.