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Of course, no mention of inflation, the policy choice which robs from the poor and gives to the rich. How does it rob from the poor? https://krugman.blogs.nyt

Of course, no mention of inflation, the policy choice which robs from the poor and gives to the rich. How does it rob from the poor? 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... "when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts." In other words, inflation is a policy choice to combat sticky wages, which (if you think that's a problem), the solution is to, apparently, screw labor by devaluing their wages from under them. How does it give to the rich? The eroding value of the currency all but forces individuals and, e.g. pension funds, to dump resources into the stock market, venture investments, etc, which are largely playgrounds of the economically advantaged. It also has unfortunate side effects like consumerism and environmental destruction, but that's outside of the scope of the OP. The timing lines up, too. What happened 50 years ago that caused the divergence? With the ending of Bretton Woods, Nixon closed the gold window which was the last thing holding back policy from rampant inflation.

RobertoG 7y ago
The article tell us: "You had the same thing with the Industrial Revolution that concentrated more and more wealth into the hands of capital. " So, your identification of causation with the end of the gold standard it's not at all clear. In a way, inflation can be re-distributive because is good for the debtor and bad for the lender. Maybe, is time to accept that wealth accumulates, money call money, and the leveler are wars and disasters or some kind of political action. In other words, the system is not stable.
- dnautics 7y ago
  > is good for the debtor and bad for the lender. This is a huge myth propagated by economic planners who have never been poor. Typically, the poor don't have debt at all due to no access to banking services, and when they do have access to debt it's a double digit interest rates on short-term revolving basis. Inflation does not help that situation at all. The idea that the rich have no debt is total nonsense. Most of the wealthy make money off of debt-based instruments. For example, trading on margin, shorting, options calls and puts, forex trading, all depend on low interest rates/expanding money supply to make long-term speculative adventures worthwhile. It is, indeed, low interest loans, over the long term, which are the most helped by inflation.
nabla9 7y ago
> In other words, inflation is a policy choice to combat sticky wages, which (if you think that's a problem), the solution is to, apparently, screw labor by devaluing their wages from under them. This is complete misunderstanding of how this works. Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still. Inflation or not, the wages reach equilibrium. You can't improve the aggregate sum of wages by deceasing inflation. If nominal wages are too high the equilibrium is found trough periods of unemployment. Small inflation keeps unemployment and friction in job markets in check. Small inflation keeps income inequality in check. https://www.cepweb.org/wp-content/uploads/2014/05/CEP_WP_Inflation_and_Income_Inequality.pdf https://www.cepweb.org/wp-content/uploads/2014/05/CEP_WP_Inf... >Inflation and Income Inequality in Developed Economies >We find a U-shaped link between long-run inflation and income inequality. Low inflation rates are associated with higher income inequality. As inflation goes up, inequality decreases, reaches a minimum with an inflation rate of about 13%, and then starts rising again
- roenxi 7y ago
  > Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still. Actually, it is not so. What we call 'real return' in the stock market is stock prices as a percentage less consumer price inflation as a percentage. If inflation causes stocks prices to inflate more quickly than wages, then it will appear to boost real returns in the stock market because we aren't very good at measuring such things. To state the same thing in a different way, there is no special reason why consumer price inflation and asset price inflation should be the same thing. Modern methods of money creation (ie, post what has been happening post 1970) focus on money creation by lending people money to buy assets. It seems quite unlikely that the inflation indexes in common use are the right adjustments to make to the stock market, house prices, etc, etc. Look at the price of gold for example - according to the BLS [0] $165 dollars of gold in 1975 should be worth about $811 today. It is actually worth double that. Gold is a pet rock with no prospect of a real return, and also out of fashion as an asset. It is certainly not the sort of thing people borrow money to purchase - and that makes it a great indicator that asset prices are inflating much faster than the official inflation statistics, because even with those headwinds it is acting as though owning a pet rock is a productive long-term decision. It is quite likely that inflation is reallocating resources from workers to owners of assets. [0] https://www.bls.gov/data/inflation_calculator.htm https://www.bls.gov/data/inflation_calculator.htm [1] https://goldprice.org/gold-price-history.html https://goldprice.org/gold-price-history.html

RobertoG 7y ago

The article tell us: "You had the same thing with the Industrial Revolution that concentrated more and more wealth into the hands of capital. " So, your identification of causation with the end of the gold standard it's not at all clear. In a way, inflation can be re-distributive because is good for the debtor and bad for the lender. Maybe, is time to accept that wealth accumulates, money call money, and the leveler are wars and disasters or some kind of political action. In other words, the system is not stable.

dnautics 7y ago
> is good for the debtor and bad for the lender. This is a huge myth propagated by economic planners who have never been poor. Typically, the poor don't have debt at all due to no access to banking services, and when they do have access to debt it's a double digit interest rates on short-term revolving basis. Inflation does not help that situation at all. The idea that the rich have no debt is total nonsense. Most of the wealthy make money off of debt-based instruments. For example, trading on margin, shorting, options calls and puts, forex trading, all depend on low interest rates/expanding money supply to make long-term speculative adventures worthwhile. It is, indeed, low interest loans, over the long term, which are the most helped by inflation.

nabla9 7y ago

> In other words, inflation is a policy choice to combat sticky wages, which (if you think that's a problem), the solution is to, apparently, screw labor by devaluing their wages from under them. This is complete misunderstanding of how this works. Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still. Inflation or not, the wages reach equilibrium. You can't improve the aggregate sum of wages by deceasing inflation. If nominal wages are too high the equilibrium is found trough periods of unemployment. Small inflation keeps unemployment and friction in job markets in check. Small inflation keeps income inequality in check. https://www.cepweb.org/wp-content/uploads/2014/05/CEP_WP_Inflation_and_Income_Inequality.pdf https://www.cepweb.org/wp-content/uploads/2014/05/CEP_WP_Inf... >Inflation and Income Inequality in Developed Economies >We find a U-shaped link between long-run inflation and income inequality. Low inflation rates are associated with higher income inequality. As inflation goes up, inequality decreases, reaches a minimum with an inflation rate of about 13%, and then starts rising again

roenxi 7y ago
> Inflation does not increase the real return from stock markets. Inflation erodes also capital. Capital must work just to stay still. Actually, it is not so. What we call 'real return' in the stock market is stock prices as a percentage less consumer price inflation as a percentage. If inflation causes stocks prices to inflate more quickly than wages, then it will appear to boost real returns in the stock market because we aren't very good at measuring such things. To state the same thing in a different way, there is no special reason why consumer price inflation and asset price inflation should be the same thing. Modern methods of money creation (ie, post what has been happening post 1970) focus on money creation by lending people money to buy assets. It seems quite unlikely that the inflation indexes in common use are the right adjustments to make to the stock market, house prices, etc, etc. Look at the price of gold for example - according to the BLS [0] $165 dollars of gold in 1975 should be worth about $811 today. It is actually worth double that. Gold is a pet rock with no prospect of a real return, and also out of fashion as an asset. It is certainly not the sort of thing people borrow money to purchase - and that makes it a great indicator that asset prices are inflating much faster than the official inflation statistics, because even with those headwinds it is acting as though owning a pet rock is a productive long-term decision. It is quite likely that inflation is reallocating resources from workers to owners of assets. [0] https://www.bls.gov/data/inflation_calculator.htm https://www.bls.gov/data/inflation_calculator.htm [1] https://goldprice.org/gold-price-history.html https://goldprice.org/gold-price-history.html