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The idea that the Fed would replace the USD with a decaying digital currency in order to disincentivize saving is pretty wild. People would be furious that thei
by bccdee 6y ago
The idea that the Fed would replace the USD with a decaying digital currency in order to disincentivize saving is pretty wild. People would be furious that their ability to save for retirement is being sabotaged in order to strong-arm them into higher levels of spending as a form of economic stimulus. People barely tolerate tax increases — imagine how angry they'd be if the government literally started taking money right out of their account purely as a way of manipulating their behaviour.
- BobbyJo 6y agoIts called inflation. They do that already, just less honestly.
- didericis 6y agoExactly. It’s exacerbated by stimulus spending. Money is printed and spent in areas meant to stimulate more spending. That devalues the dollar and diminishes the value of savings.
- JamesBarney 6y agoWhat's dishonest about inflation?
- whatshisface 6y agoInflation is slightly less upfront than a wealth tax on dollars that would involve you sending in a form every year. Generally speaking anything less than the most upfront option will result in large numbers of people not realizing what's going on.
- JamesBarney 6y agoUpfront? We've had inflation for the last 100 years, almost everyone knows what inflation is. And even if they don't know the term they are probably familiar with the concept that their grandfather could buy more with a nickel than you could today. I really can't see how inflation is in any way dishonest. Not to mention the amount of money maid via taxes(1.5 trillion) absolutes dwarfs any revenue from seigniorage(65 billion). https://economics.stackexchange.com/questions/16075/usa-seigniorage-revenue#:~:text=At%20an%20average%20inflation%20rate,of%20seignorage%20revenue%20per%20year https://economics.stackexchange.com/questions/16075/usa-seig....
- BobbyJo 6y agoInflation is highly variable, and the body that can turn the most knobs (the Fed) doesn't have a good track record of predicting what the effect of that knob turning will do lately. Also, when the government borrows money and the fed buys notes to keep borrowing rates low, that still produces inflation. The fed is sitting on about 4T$ in bonds as of now.
- JamesBarney 6y ago> Also, when the government borrows money and the fed buys notes to keep borrowing rates low, that still produces inflation. Assuming interest rates aren't 0 or near 0 that's true. But recently inflation has been consistently lower than historical norms.
- BobbyJo 6y agoWhich the fed itself has attributed to fluke changes in the market they couldn't foresee.
- sparkie 6y agoIt's taxation without representation. You don't get a vote. You get increased prices and reduced purchasing power whether you like it or not.
- JamesBarney 6y agoI imagine the majority of dollars are held by Americans who can vote, and most non-Americans could always choose not to hold onto dollars.
- ur-whale 6y agoFirst, a large fraction of Americans can't even understand the rule of 3, much less how they are being milked by their own government via (among many, many other mechanisms) inflation. Second, this is a typical "boiling the frog" type of taxation, which is slow and spread over long periods of time (typically portions of whole lifetimes) and even people with enough brains to understand the problem don't really pay attention because it's never felt as an immediate pain.
- Torwald 6y agoThe grandparent did not say that inflation is dishonest. He said that the political class is dishonest, because they do take money out of the taxpayer's pocket via inflation. Presumably the grandparent sees this conduct as more dishonest than what was discussed earlier, because it does not require a accompanying public statement, which states explicitly that money is taken out of taxpayer's pockets.
- Raidion 6y agoIt's not less honest, the federal reserve literally sets targets for inflation and publishes them. Everyone railing against fiat money while loving bitcoin have the exact same views as a government economist. The only difference is that the bitcoin/gold side keeps on trying to think of US Dollars as a store of value while the government and economists know it's a medium of exchange. The fact that people keep money under mattresses is a failure of the educational system, not a failure of monetary policy.
- id02009 6y agoIt is dishonest. The liquidity is not being injected everywhere at once. Those who get to spend it first enjoy the full purchasing power at the expense of everybody else. Also imagine a person keeping 3000$ for a rainy day. He can't buy stocks, because rainy day could come at a stock dip. Losing 23% of that money in 5 years (assuming 5% inflation). How is it a failure of an educational system, not monetary policy?
- krupan 6y ago"It's not less honest [of the government]...[it] is a failure of the [government run] educational system" Think about that for a minute
- id02009 6y agoOMG, excellent catch!
- alfiedotwtf 6y ago> The only difference is that the bitcoin/gold side keeps on trying to think of US Dollars as a store of value while the government and economists know it's a medium of exchange. Both. In the end, everything is a commodity — Apologies to Baudrillard
- InvaderFizz 6y agoThen remember the double whammy of inflation and fixed tax brackets. Tax brackets do not increase with inflation. So eventually we'll all be in the highest bracket, the change is just so slow that no one really realizes what is happening.
- siwatanejo 6y agoYou're referring to something called "demurrage", which is the fair way to disincentivize saving. What the government(s) would do, though, is inflate the currency (print more tokens of it) so that your balance feels to stay "intact" (but the value of it isn't). By the way, this is what happens today with the USD (or any fiat currency). It doesn't need to be "digital" (it already is).
- Barrin92 6y ago>People would be furious that their ability to save for retirement is being sabotaged Unless your retirement savings is literal cash stuffed under your mattress I have trouble imagining how inflation sabotages it
- runawaybottle 6y agoOnly half of Americans have a 401k, and apparently only a little over half of that half use it. Savings accounts also give 0 interest, and most Americans aren’t dumping their earnings into equities. Most Americans can’t buy a home either, so no real estate investment. Wages are not correlating to inflation either, so that fact is particularly hilarious too. So, case study, Uber/Lyft fucked drivers out of employee status, thus fucking the need to offer a retirement fund. Real piece of shit companies. Hopefully those people can store their money in a 0 interest rate Savings account, or get smart and dump their entire diddly squat income into AAPL for decades (you know lock up their capital and live frugally). This stuffs gonna come back on us if we’re doing this across industries. There is no retirement, there is only social security realistically speaking for the majority. It is what it is. Gotta love the new gig economy too, those people are truly fucked. Everyone’s going to work until they die basically. We see that current retirement age generation is fixated on social security/medicare (literal single issue voters, don’t touch their retirement cash flow), but I don’t think anyone in Gen X/Millennial/Z realizes just how much more obsessed they will all be about those two funds going forward. You’ll have three generations that will literally only care about that, just like their grandparents before them. Oh, and it’s going to be three generations worth of old people that will need a massive fund to finance all of those social security checks because we fucked them out of realistically keeping up with inflation.
- Barrin92 6y agoWages are correlated with inflation, in fact wages push inflation, given that they're the largest cost for most businesses. It's relatively hard to imagine how you'd have widespread increase in price without increase in cost of labour. As to your case study of a low wage worker, if he doesn't have any assets, inflation doesn't mean much. If he has debt, which he likely has, student debt say in the US, inflation is a good thing. The (correct) conventional wisdom is that debtors benefit from inflation and creditors don't. And if you've got money in a pension fund like many Americans, or you have index funds, or you have anything else that broadly represents the economy, cash flowing into the economy rises prices but it also appreciates assets. There really isn't any point to fear moderate inflation from the standpoint of a worker. If anything the opposite is true. I agree with the fact that gig work is terrible and lots is wrong with economic insecurity, but steady inflation isn't an issue.
- jiveturkey 6y agoi think this is sarcasm? but not sure.
- noodles_nomore 6y agoImagine how furious they would be if that applied not only to savings but also to wages.