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> the [sovereign] debt treadmill enslaves the poorest the in the heaviest shackles I hear this frequently stated as fact but I've seen no evidence for it, and

> the [sovereign] debt treadmill enslaves the poorest the in the heaviest shackles I hear this frequently stated as fact but I've seen no evidence for it, and it doesn't make intuitive sense to me. Sovereign debt is serviced either through taxation or through inflation. It's the rich who pay a majority of the taxes, and rich creditors also suffer the most from inflation. So how, exactly, are the poor on the hook for national debt?

dnautics 8y ago
> rich creditors also suffer the most from inflation. > Most of the rich are net debtors. 1) Have you ever traded options? You are borrowing. Have you ever taken out an inverse ETF? You are borrowing. Have you ever traded Forex? You are borrowing. Have you never participated directly or indirectly in those instruments? You are not rich. 2) Just do the math. If you're poor, and spending 90% of your day to day on inflation sensitive expenses, and there is x% inflation (let's plug in x=10, because it's easy, but it applies at all percentages, an exercise to the reader) then your margin of living will be impacted by 90%. Note if you were spending 95% of your day to day on inflation sensitive expenses, you would be underwater after 10% inflation. By contrast, if you were spending 20% of your day to day on inflation sensitive expenses, your margin of survival would only decrease by ~3%. The typical retort that I am going to anticipate is that wages keep track with inflation. They don't and, that's by design. I will quote the great liberal economist here: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Just to be clear that we understand the policy here in blunt terms: The point of inflation is to cheat the working classes out of their income so that the ruling class can lay claim to high employment metrics.

dnautics 8y ago

> rich creditors also suffer the most from inflation. > Most of the rich are net debtors. 1) Have you ever traded options? You are borrowing. Have you ever taken out an inverse ETF? You are borrowing. Have you ever traded Forex? You are borrowing. Have you never participated directly or indirectly in those instruments? You are not rich. 2) Just do the math. If you're poor, and spending 90% of your day to day on inflation sensitive expenses, and there is x% inflation (let's plug in x=10, because it's easy, but it applies at all percentages, an exercise to the reader) then your margin of living will be impacted by 90%. Note if you were spending 95% of your day to day on inflation sensitive expenses, you would be underwater after 10% inflation. By contrast, if you were spending 20% of your day to day on inflation sensitive expenses, your margin of survival would only decrease by ~3%. The typical retort that I am going to anticipate is that wages keep track with inflation. They don't and, that's by design. I will quote the great liberal economist here: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Just to be clear that we understand the policy here in blunt terms: The point of inflation is to cheat the working classes out of their income so that the ruling class can lay claim to high employment metrics.