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The opposite is true: inflation takes away the hard earned value that could otherwise be invested.

smorephism 6y ago
Yes, that's the idea: the price of sitting on a dragon's hoard of cash that's not doing anything is that its value decreases over time, so you are incentivized to actually do something with it.
- megous 6y ago
  Your economics are weird. Making a stupid analogy doesn't help it. There are no dragons, just individual people making decisions about how much to save and for what purpose, and when to spend it, based on their individual circumstances. Holding on to savings is neither positive nor negative, and should be a personal decision based on individual's circumstances (that's where the most detailed information are available about what's good for the individual), not something forced/influenced from the top by blunt whole market manipulation via forced depreciation of value of money, by some committee. All you've achieved by forced depreciation is forcing people to make needless risks, just to keep value of their savings, while they're trying to save up for something (like starting a business, or buying a flat, or safety of mind). Whole class of brokers, and traders, and lenders, who pray on this situation benefit, of course.
  - deleted 6y ago
    [deleted]
arcticbull 6y ago
No, lol, the opposite is not true. At an inflation rate of 2% per annum, if your wages keep pace with in inflation as they historically have, it's not stealing anything from anyone. You take the money as you receive it, and you invest it. It's a forcing function. You can invest it in something as simple as a savings account if you believe that's the right approach. Even in a savings account it's collateralizing loans. The only place your actual cash is at real risk from inflation is under your mattress. That's the point.
- andrewjl 6y ago
  The real yield for USD Treasury is currently negative across all maturities, this means that your cash has a negative real return in a savings account at a bank. [1] [1] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
- nybble41 6y ago
  > …if your wages keep pace with in inflation as they historically have… If we're speaking historically, under inflation the prices of consumer goods have tended to rise faster than wages. Under deflation the opposite has been true. Of course lately we have massive improvements in technology to thank for boosting productivity in almost every field, which somewhat masks the negative effects of the inflation. If it weren't for that there probably wouldn't be much of an economy left by this point. Cash has no utility on its own. It's just a placeholder. Take some out of circulation and the purchasing power of the remaining cash will automatically adjust to match the value of everything available for trade. Stuffing cash in your mattress hurts no one. Inexpertly dumping it into the market to avoid inflation, on the other hand, might well bring down the average rate of return. The natural rate of inflation or deflation is a key economic indicator which reflects the expected average rate of return. Only ventures with expected returns above this rate (the deflation rate) are economically productive. Messing with the money supply distorts this signal and, though excess inflation, encourages investment in less ventures which divert resources away from the more productive ones. Of course artificial deflation is no better; the ideal is not forced deflation but rather a currency whose supply is not subject to manipulation.
  - arcticbull 6y ago
    > If we're speaking historically, under inflation the prices of consumer goods have tended to rise faster than wages. Inflation is defined in terms of the price of consumer goods, and in the US, wages have kept pace with inflation. > Of course lately we have massive improvements in technology to thank for boosting productivity in almost every field, which somewhat masks the negative effects of the inflation. If it weren't for that there probably wouldn't be much of an economy left by this point. That's a non sequitur, as inflation is actively managed with a goal target rate. Had it started to drift, the rates that govern inflation would have been adjusted. > Of course artificial deflation is no better; the ideal is not forced deflation but rather a currency whose supply is not subject to manipulation. This does not follow either as the currency supply needs to be able to respond to external factors, such as increases or decreases in population. In an increasing population, a currency with no new coins is deflationary. In a decreasing population, it is inflationary. Money supply needs to be able to respond to externalities.

Yes, that's the idea: the price of sitting on a dragon's hoard of cash that's not doing anything is that its value decreases over time, so you are incentivized to actually do something with it.

megous 6y ago
Your economics are weird. Making a stupid analogy doesn't help it. There are no dragons, just individual people making decisions about how much to save and for what purpose, and when to spend it, based on their individual circumstances. Holding on to savings is neither positive nor negative, and should be a personal decision based on individual's circumstances (that's where the most detailed information are available about what's good for the individual), not something forced/influenced from the top by blunt whole market manipulation via forced depreciation of value of money, by some committee. All you've achieved by forced depreciation is forcing people to make needless risks, just to keep value of their savings, while they're trying to save up for something (like starting a business, or buying a flat, or safety of mind). Whole class of brokers, and traders, and lenders, who pray on this situation benefit, of course.
- deleted 6y ago
  [deleted]

arcticbull 6y ago

No, lol, the opposite is not true. At an inflation rate of 2% per annum, if your wages keep pace with in inflation as they historically have, it's not stealing anything from anyone. You take the money as you receive it, and you invest it. It's a forcing function. You can invest it in something as simple as a savings account if you believe that's the right approach. Even in a savings account it's collateralizing loans. The only place your actual cash is at real risk from inflation is under your mattress. That's the point.

andrewjl 6y ago
The real yield for USD Treasury is currently negative across all maturities, this means that your cash has a negative real return in a savings account at a bank. [1] [1] https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield https://www.treasury.gov/resource-center/data-chart-center/i...
nybble41 6y ago
> …if your wages keep pace with in inflation as they historically have… If we're speaking historically, under inflation the prices of consumer goods have tended to rise faster than wages. Under deflation the opposite has been true. Of course lately we have massive improvements in technology to thank for boosting productivity in almost every field, which somewhat masks the negative effects of the inflation. If it weren't for that there probably wouldn't be much of an economy left by this point. Cash has no utility on its own. It's just a placeholder. Take some out of circulation and the purchasing power of the remaining cash will automatically adjust to match the value of everything available for trade. Stuffing cash in your mattress hurts no one. Inexpertly dumping it into the market to avoid inflation, on the other hand, might well bring down the average rate of return. The natural rate of inflation or deflation is a key economic indicator which reflects the expected average rate of return. Only ventures with expected returns above this rate (the deflation rate) are economically productive. Messing with the money supply distorts this signal and, though excess inflation, encourages investment in less ventures which divert resources away from the more productive ones. Of course artificial deflation is no better; the ideal is not forced deflation but rather a currency whose supply is not subject to manipulation.
- arcticbull 6y ago
  > If we're speaking historically, under inflation the prices of consumer goods have tended to rise faster than wages. Inflation is defined in terms of the price of consumer goods, and in the US, wages have kept pace with inflation. > Of course lately we have massive improvements in technology to thank for boosting productivity in almost every field, which somewhat masks the negative effects of the inflation. If it weren't for that there probably wouldn't be much of an economy left by this point. That's a non sequitur, as inflation is actively managed with a goal target rate. Had it started to drift, the rates that govern inflation would have been adjusted. > Of course artificial deflation is no better; the ideal is not forced deflation but rather a currency whose supply is not subject to manipulation. This does not follow either as the currency supply needs to be able to respond to external factors, such as increases or decreases in population. In an increasing population, a currency with no new coins is deflationary. In a decreasing population, it is inflationary. Money supply needs to be able to respond to externalities.