6 ms·

Total currency supply is the only metric that really matters in terms of true inflation. Velocity of money is a mostly useless metric in our current highly uneq

Total currency supply is the only metric that really matters in terms of true inflation. Velocity of money is a mostly useless metric in our current highly unequal society. High currency supply and low velocity means high fragility... That money is just waiting in people's pockets to be released back into the market. The more money there is sitting around in everyone's pockets, the more prices are going to fall when that money finally comes out of their pockets (and panic means it tends to be all at once)... We have a tiny number of massive pockets. The entire financial order ends up depending on the reliability of a handful of high net worth individuals to play along with the current scheme. It's no surprise then that governments ends up wanting to control and limit how these high net worth individuals spend or invest their money. If you get an unlimited amount of something without having to work for it, of course it becomes worthless to you. What's happening in the economy today is like what would happen if we played a game of monopoly and one player ended up with all the money and the bank started loaning people new money to keep everyone playing... So the richest player would just keep getting more money because the dynamics of the game cannot change... In the meantime, fairness is thrown out the window - Money loses all correlation with value creation. Then there is a point when one of the players grabs the board and flips it over.

arcticbull 6y ago
No. Citation needed. Seriously this is why the money supply is actively managed. When people aren't spending, more is created. When people spend a lot, it gets removed from circulation. > We have a tiny number of massive pockets. The entire financial order ends up depending on the reliability of a handful of high net worth individuals to play along with the current scheme. High net worth individuals by the way? They're absolutely not sitting on dollars, they own assets. Real estate, stocks, bonds, and some nutters, crypto. That means inflation is irrelevant to them, and all that matters is the performance of their investments relative to the benchmark rates. > It's no surprise then that governments ends up wanting to control and limit how these high net worth individuals spend or invest their money. Not really, no. Fiscal and social policy control the distribution of wealth. Progressive taxation and redistribution reduces inequality. This applies equally no matter what we're using as currency. If we switched to BTC, to sea shells, to zombie killing ammunition, fiscal and social policy would apply just as it does now. Monetary policy operates on a lower level, it controls only the supply.
- cryptica 6y ago
  >> When people aren't spending, more is created. There is a point when people have gotten wealthy to the point that they have bought everything that they could possibly want but the money keeps coming anyway. Wealthy people will question whether or not they're actually 'earning' their passive income. The most objective ones will realize that passive income can never be risk-free; it it appears that way, then it means that the risk is systemic. For these people, it actually makes a lot of sense to hedge against systemic risk.
  - arcticbull 6y ago
    You're not supposed to hold dollars. Dollars are not an investment, they're a short term, intentionally lossy store of value designed to incentivize their movement within an economy.
    - cryptica 6y ago
      That's right, you're not supposed to, but some very wealthy people do it anwyay to prevent inflation from skyrocketing whenever the banks increase the money supply. The people who are at the front of the line for the money printers the ones who decide the money velocity and it's based on how much of the new money they decide to keep in their own pockets. They're doing it at a loss to themselves. Just to help maintain the current financial order.
      - xur17 6y ago
        Are you really saying that some wealthy people specifically choose to hold extra cash at a loss to themselves to prevent inflation from occuring? It seems like this would easily fall into a tragedy of the commons situation - do you have any citations to back up the enormous claim?
      - grey-area 6y ago
        I have an alternative explanation for you which is much simpler and in their interests. Cash is more liquid than assets and since in the short term inflation is a mild penalty and there is negligible return for risk free assets any more (nor are they as risk free as before), they keep large proportions in cash for the short term while waiting for assets that present a good return. It is entirely rational to hold some proportion of wealth cash for the short term.

arcticbull 6y ago

No. Citation needed. Seriously this is why the money supply is actively managed. When people aren't spending, more is created. When people spend a lot, it gets removed from circulation. > We have a tiny number of massive pockets. The entire financial order ends up depending on the reliability of a handful of high net worth individuals to play along with the current scheme. High net worth individuals by the way? They're absolutely not sitting on dollars, they own assets. Real estate, stocks, bonds, and some nutters, crypto. That means inflation is irrelevant to them, and all that matters is the performance of their investments relative to the benchmark rates. > It's no surprise then that governments ends up wanting to control and limit how these high net worth individuals spend or invest their money. Not really, no. Fiscal and social policy control the distribution of wealth. Progressive taxation and redistribution reduces inequality. This applies equally no matter what we're using as currency. If we switched to BTC, to sea shells, to zombie killing ammunition, fiscal and social policy would apply just as it does now. Monetary policy operates on a lower level, it controls only the supply.

cryptica 6y ago
>> When people aren't spending, more is created. There is a point when people have gotten wealthy to the point that they have bought everything that they could possibly want but the money keeps coming anyway. Wealthy people will question whether or not they're actually 'earning' their passive income. The most objective ones will realize that passive income can never be risk-free; it it appears that way, then it means that the risk is systemic. For these people, it actually makes a lot of sense to hedge against systemic risk.
- arcticbull 6y ago
  You're not supposed to hold dollars. Dollars are not an investment, they're a short term, intentionally lossy store of value designed to incentivize their movement within an economy.
  - cryptica 6y ago
    That's right, you're not supposed to, but some very wealthy people do it anwyay to prevent inflation from skyrocketing whenever the banks increase the money supply. The people who are at the front of the line for the money printers the ones who decide the money velocity and it's based on how much of the new money they decide to keep in their own pockets. They're doing it at a loss to themselves. Just to help maintain the current financial order.
    - xur17 6y ago
      Are you really saying that some wealthy people specifically choose to hold extra cash at a loss to themselves to prevent inflation from occuring? It seems like this would easily fall into a tragedy of the commons situation - do you have any citations to back up the enormous claim?
    - grey-area 6y ago
      I have an alternative explanation for you which is much simpler and in their interests. Cash is more liquid than assets and since in the short term inflation is a mild penalty and there is negligible return for risk free assets any more (nor are they as risk free as before), they keep large proportions in cash for the short term while waiting for assets that present a good return. It is entirely rational to hold some proportion of wealth cash for the short term.