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> absent corresponding wage inflation - which lags, but I'll omit it to keep things simple It doesn't just keep things simple, it changes things. You can't le

> absent corresponding wage inflation - which lags, but I'll omit it to keep things simple It doesn't just keep things simple, it changes things. You can't leave out wage inflation. Of course inflation is bad if your wages don't keep up, but what if they do? That's the actual question. Inflation also lags, printing money doesn't instantly create inflation, it takes time for the market to adjust to the new circulation.

dnautics 16y ago
Omitting it only changes the 'relative magnitude'. So, what let's say wage inflation is 5%. So then there's effectively a 5% inflation. The poor person goes from 90% to 94.5%, rich person 20% to 21%. Are you seriously going to argue that you'll take 10% inflation with a 5% wage inflation over a general 45% decrease in ability to pay debts off? i don't know anyone who claims that wages don't lag behind inflation. Even Krugman argues that that's the whole point of inflation - to make it easier for employers to stealthily get around that pesky problem of sticky wages, make the relative cost of labor cheaper and keep the rubes employed. http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/ http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation... Also please consider that I'm not taking into account the mechanism of inflation, just inflation as a policy. I don't care if it's done by printing money or by relaxing reserve requirements, or by smelting impurities into the gold.
- sethg 16y ago
  Returning to my earlier example: suppose I spend 30% of my income on a mortgage with fixed payments, and 70% on Stuff. If I have wage inflation of 7%, and the price of Stuff goes up by 10%, then I have to spend a higher proportion of my income on Stuff, but I am spending a lower proportion of my income on my mortgage, so it precisely balances.
  - dnautics 16y ago
    No doubt, you are okay in that scenario. But people spending more than 70% on Stuff (i.e. people marginally poorer than you) are still screwed, and furthermore, the poorer they are relative to you the more screwed they will be.
- gnaritas 16y ago
  Yea, but the question is what's better, continual slight inflation, or swinging back and forth between inflation and deflation? See, you're arguing that inflation is bad without saying what would be better; I'm saying continual slight inflation is the best option we have, so how is it bad?
  - dnautics 16y ago
    continual slight deflation is the best option. Deflation is the natural order of things, technological development is supposed to make things LESS expensive. Anything more inflationary than natural deflation (of course society will go through occasional inflationary bouts) is effectively stealing the fruits of societal progress from the poor, and reappropriating it to the rich or politically connected. Consider this: With continual slight inflation, in order to keep up, society is pressured to keep expanding exponentially. Well, I'm sorry to tell you son, but we live on a finite planet, and exponential expansion at some point is going to hit a limit.
    - gnaritas 16y ago
      Please don't call me son, I'm not your kid nor am I a kid. > With continual slight inflation, in order to keep up, society is pressured to keep expanding exponentially. True, but this assumes no corrections, like the one we're currently in. Ideally there'd be no inflation or deflation, but that's just not practical as wealth is not fixed nor can the money supply be. So the balancing act either tries to stay centered or slightly to one side or the other. > continual slight deflation is the best option. Deflation increases the value of my debt load putting me in deeper and deeper and reduces the value of my assets; how is that good? Deflation increases the value of saved cash. If anything, that sounds way worse for the poor than slight inflation. If I'm rich I just keep all my wealth in cash and steal from the poor via deflation. Under continual inflation, I can't do that, I have to convert my wealth into hopefully appreciating assets-and I could easily bet wrong-and the poor have continually decreasing debt as long salaries keep up with inflation. Sounds like a better deal to me. > Deflation is the natural order of things, That's not an argument, being natural doesn't equal being good. > Anything more inflationary than natural deflation (of course society will go through occasional inflationary bouts) is effectively stealing the fruits of societal progress from the poor, and reappropriating it to the rich or politically connected. You assert that, but I don't see any proof or evidence of it. You've shown me why you think inflation is bad, but now why you think deflation is good; you just assert it is.

dnautics 16y ago

Omitting it only changes the 'relative magnitude'. So, what let's say wage inflation is 5%. So then there's effectively a 5% inflation. The poor person goes from 90% to 94.5%, rich person 20% to 21%. Are you seriously going to argue that you'll take 10% inflation with a 5% wage inflation over a general 45% decrease in ability to pay debts off? i don't know anyone who claims that wages don't lag behind inflation. Even Krugman argues that that's the whole point of inflation - to make it easier for employers to stealthily get around that pesky problem of sticky wages, make the relative cost of labor cheaper and keep the rubes employed. http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/ http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation... Also please consider that I'm not taking into account the mechanism of inflation, just inflation as a policy. I don't care if it's done by printing money or by relaxing reserve requirements, or by smelting impurities into the gold.

sethg 16y ago
Returning to my earlier example: suppose I spend 30% of my income on a mortgage with fixed payments, and 70% on Stuff. If I have wage inflation of 7%, and the price of Stuff goes up by 10%, then I have to spend a higher proportion of my income on Stuff, but I am spending a lower proportion of my income on my mortgage, so it precisely balances.
- dnautics 16y ago
  No doubt, you are okay in that scenario. But people spending more than 70% on Stuff (i.e. people marginally poorer than you) are still screwed, and furthermore, the poorer they are relative to you the more screwed they will be.
gnaritas 16y ago
Yea, but the question is what's better, continual slight inflation, or swinging back and forth between inflation and deflation? See, you're arguing that inflation is bad without saying what would be better; I'm saying continual slight inflation is the best option we have, so how is it bad?
- dnautics 16y ago
  continual slight deflation is the best option. Deflation is the natural order of things, technological development is supposed to make things LESS expensive. Anything more inflationary than natural deflation (of course society will go through occasional inflationary bouts) is effectively stealing the fruits of societal progress from the poor, and reappropriating it to the rich or politically connected. Consider this: With continual slight inflation, in order to keep up, society is pressured to keep expanding exponentially. Well, I'm sorry to tell you son, but we live on a finite planet, and exponential expansion at some point is going to hit a limit.
  - gnaritas 16y ago
    Please don't call me son, I'm not your kid nor am I a kid. > With continual slight inflation, in order to keep up, society is pressured to keep expanding exponentially. True, but this assumes no corrections, like the one we're currently in. Ideally there'd be no inflation or deflation, but that's just not practical as wealth is not fixed nor can the money supply be. So the balancing act either tries to stay centered or slightly to one side or the other. > continual slight deflation is the best option. Deflation increases the value of my debt load putting me in deeper and deeper and reduces the value of my assets; how is that good? Deflation increases the value of saved cash. If anything, that sounds way worse for the poor than slight inflation. If I'm rich I just keep all my wealth in cash and steal from the poor via deflation. Under continual inflation, I can't do that, I have to convert my wealth into hopefully appreciating assets-and I could easily bet wrong-and the poor have continually decreasing debt as long salaries keep up with inflation. Sounds like a better deal to me. > Deflation is the natural order of things, That's not an argument, being natural doesn't equal being good. > Anything more inflationary than natural deflation (of course society will go through occasional inflationary bouts) is effectively stealing the fruits of societal progress from the poor, and reappropriating it to the rich or politically connected. You assert that, but I don't see any proof or evidence of it. You've shown me why you think inflation is bad, but now why you think deflation is good; you just assert it is.