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What are you talking about? The point of inflation is to encourage the spending and investment of money. It doesn’t really have anything to do with unemployment

by mruts 8y ago

What are you talking about? The point of inflation is to encourage the spending and investment of money. It doesn’t really have anything to do with unemployment.

dnautics 8y ago
Fine, if that's what you believe is the point of inflation. Whom does "investment" benefit? Go down to the tenderloin in SF, look around, and ask yourself if these people are benefitted by 'investment'. And the mechanism, as indicated in the quote, has at least a side effect of lowering the real value of workers (his words, not mine) wages. Inflation is exactly stealing from the poor to give to the wealthy. There's a reason why the income gap turned in mid 70s when Nixon closed the gold window; we can never hope to fix income inequality with linear downward redistributive policy until the compounding, upward redistribution is stopped.
- mruts 8y ago
  You’re getting this backwards. Inflation helps the poor because the rich are much more likely to invest in job creation (by spending money and hiring people), when we have inflation. deflation is terrible for the poor, unemployment goes up and job creation goes down. If you look at historical data of inflation vs unemployment I’m sure you’ll come to the same conclusion. If the money supply doesn’t increase, it’s actually deflationary, due to population growth. If inflation is 0, it means that the money supply is increasing at the same rate as production. To provide good incentives, you want the money supply to slightly outpace the growth in production. Which is what 1-2% inflation precisely does. Clearly, super inflation is distinctly bad for the poor, but that’s different from inflation that slightly out paces population growth. Almost all economists are of the same opinion.
  - mindslight 8y ago
    > deflation is terrible for the poor, unemployment goes up and job creation goes down Yes, this is the standard assertion that is continually repeated to justify the state policy of overwhelming monetary inflation. But it presupposes that what makes people poor is simply a lack of employment, rather than being unable to keep up with their essential expenses. Of course if you personally benefit from there being more minimum wage workers, this makes perfect sense to you - if 40 hours a week at minimum wage is not enough for someone to pay their bills, they can simply find another job and work 80! But if you instead consider someone who does have a constant job that we accept as "full time", then having the real purchasing power of their salary generally trending down is certainly doing them no favors. That is the wage theft of inflation.
    - mruts 8y ago
      That someone will get raises, assuming they are doing something in which their skills matter. A checkout cashier probably won't, because their job is a commodity, i.e, it doesn't matter if they are good or bad at their job, the results will be the same. If someone has skills in which there is competition, lets say a factory workers (there is a tangible difference between the best factory worker and the worst), they will see their wages rise due to inflation. Because of inflation more investment capital will flow into the factory company, and the company will have more money to try and select the "best" factory workers. The competition for labor will then drive up the wages up the factory worker .
      - mindslight 8y ago
        You've laid out a long chain of handwaving causality, stated as if each link happens automatically. But the market is not fully efficient, so default states matter. What you're effectively arguing is that only the direct upsides matter, as the direct downsides will be erased by market feedback. Surely you can appreciate that the dynamics of the situation are quite different when a person has to rely on continually getting raises just for their financial situation to remain the same. Tangentially, the productivity difference between a good worker and an average worker is exactly what businesses have worked to eliminate over the past few decades - via moving intelligence to larger processes, with individuals treated as cogs. And they've been quite successful at it.
iooi 8y ago
I recommend taking an Economics course. https://en.wikipedia.org/wiki/Phillips_curve https://en.wikipedia.org/wiki/Phillips_curve

by mruts 8y ago

What are you talking about? The point of inflation is to encourage the spending and investment of money. It doesn’t really have anything to do with unemployment.

dnautics 8y ago

Fine, if that's what you believe is the point of inflation. Whom does "investment" benefit? Go down to the tenderloin in SF, look around, and ask yourself if these people are benefitted by 'investment'. And the mechanism, as indicated in the quote, has at least a side effect of lowering the real value of workers (his words, not mine) wages. Inflation is exactly stealing from the poor to give to the wealthy. There's a reason why the income gap turned in mid 70s when Nixon closed the gold window; we can never hope to fix income inequality with linear downward redistributive policy until the compounding, upward redistribution is stopped.

mruts 8y ago
You’re getting this backwards. Inflation helps the poor because the rich are much more likely to invest in job creation (by spending money and hiring people), when we have inflation. deflation is terrible for the poor, unemployment goes up and job creation goes down. If you look at historical data of inflation vs unemployment I’m sure you’ll come to the same conclusion. If the money supply doesn’t increase, it’s actually deflationary, due to population growth. If inflation is 0, it means that the money supply is increasing at the same rate as production. To provide good incentives, you want the money supply to slightly outpace the growth in production. Which is what 1-2% inflation precisely does. Clearly, super inflation is distinctly bad for the poor, but that’s different from inflation that slightly out paces population growth. Almost all economists are of the same opinion.
- mindslight 8y ago
  > deflation is terrible for the poor, unemployment goes up and job creation goes down Yes, this is the standard assertion that is continually repeated to justify the state policy of overwhelming monetary inflation. But it presupposes that what makes people poor is simply a lack of employment, rather than being unable to keep up with their essential expenses. Of course if you personally benefit from there being more minimum wage workers, this makes perfect sense to you - if 40 hours a week at minimum wage is not enough for someone to pay their bills, they can simply find another job and work 80! But if you instead consider someone who does have a constant job that we accept as "full time", then having the real purchasing power of their salary generally trending down is certainly doing them no favors. That is the wage theft of inflation.
  - mruts 8y ago
    That someone will get raises, assuming they are doing something in which their skills matter. A checkout cashier probably won't, because their job is a commodity, i.e, it doesn't matter if they are good or bad at their job, the results will be the same. If someone has skills in which there is competition, lets say a factory workers (there is a tangible difference between the best factory worker and the worst), they will see their wages rise due to inflation. Because of inflation more investment capital will flow into the factory company, and the company will have more money to try and select the "best" factory workers. The competition for labor will then drive up the wages up the factory worker .
    - mindslight 8y ago
      You've laid out a long chain of handwaving causality, stated as if each link happens automatically. But the market is not fully efficient, so default states matter. What you're effectively arguing is that only the direct upsides matter, as the direct downsides will be erased by market feedback. Surely you can appreciate that the dynamics of the situation are quite different when a person has to rely on continually getting raises just for their financial situation to remain the same. Tangentially, the productivity difference between a good worker and an average worker is exactly what businesses have worked to eliminate over the past few decades - via moving intelligence to larger processes, with individuals treated as cogs. And they've been quite successful at it.

iooi 8y ago

I recommend taking an Economics course. https://en.wikipedia.org/wiki/Phillips_curve https://en.wikipedia.org/wiki/Phillips_curve