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> Depreciating currency causes those assets to go up in nominal terms That does not increase the real value of those assets, and it does not have any distribut

> Depreciating currency causes those assets to go up in nominal terms That does not increase the real value of those assets, and it does not have any distributional consequences. > Thats a theory-laden and motivated explanation You could go read like, any of the vast literature on the great depression, the things that caused it and the things that made it worse. But you'd rather expose your ignorance on the Internet for us to see. > discover that the central bank is very much fact and not at all theory. I happen to know a lot about central banking, actually. You might be pulling a Dunning-Kruger on this one.

chordalkeyboard 6y ago
> That does not increase the real value of those assets, Exactly correct. It decreases the value of the money use to pay for them, resulting in a higher nominal price and fewer people in society who are able to afford them, resulting in less access to capital for the majority of society. > and it does not have any distributional consequences. False. When assets go up relative to currency, fewer buyers can compete for those assets, leading to the wealthy owning more and the poor getting poorer. > But you'd rather expose your ignorance on the Internet for us to see. I’m quite sure I’ve acquitted myself satisfactorily in this discussion, if you feel the same about yourself, perhaps you’re the one who needs to peruse the literature. > I happen to know a lot about central banking, actually. You might be pulling a Dunning-Kruger on this one. Then how could you have been ignorant of Krugman’s statements to the effect that inflation was necessary because workers’ make too much money? Did you know he had said that? If so, why ask me for a source? If not, how much do you really know about central banks? Especially if you think that the words of several economists are evidence of some conspiracy?
- AngrySkillzz 6y ago
  "Low, stable inflation increases inequality" is not a statement that you could find much agreement on from economists. Also, Krugman is just a pop-econ writer at this point. He is not a big deal in the economics profession. Yes, I am sure he understands how inflation and sticky wages interact. I am not so convinced that you understand it. Just going to repost my other comment for you to puzzle over: "You are purposefully ignoring the normal explanation, which is this: because wages are sticky, firms that need to cut costs in a recession are more likely to lay off people than they are to give pay cuts. Inflation helps to weaken that rigidity so that job losses are not as large. Maybe you know that. You claim that central banks depreciate the currency because they "think wages among the working class are too high." But rhetorically, you are doing more than just referring to the explanation I gave above. You are implying that central banks "think" working class wages are too high, and want to lower them to hurt working class people. Which is the opposite of the standard explanation - the purpose of inflation in that instance is to implicitly reduce the downward rigidity of wages so that employment does not contract as much in a downturn. Presumably you, champion of the working class, would rather more people be unemployed?"
  - chordalkeyboard 6y ago
    > You claim that central banks depreciate the currency because they "think wages among the working class are too high." But rhetorically, you are doing more than just referring to the explanation I gave above. You are implying that central banks "think" working class wages are too high, and want to lower them to hurt working class people. Oh I know it does seem like the banks “want to hurt working class people” when you look at what they are doing and why. But thats an unnecessary hypothesis. They don’t need to care about working class people at all, just the financial interests of the oligarchs. > Which is the opposite of the standard explanation - the purpose of inflation in that instance is to implicitly reduce the downward rigidity of wages so that employment does not contract as much in a downturn. In other words, trick the workers into taking a pay cut, because they make too much money. “For their own good” and how convenient that it happens to pump up the assets that the wealthy own. > Presumably you, champion of the working class, would rather more people be unemployed? I want them to be unemployed the same way you want them to make less money in real terms.
    - deleted 6y ago
      [deleted]
- arcticbull 6y ago
  > When assets go up relative to currency, fewer buyers can compete for those assets, leading to the wealthy owning more and the poor getting poorer. Boy are you going to freak out when you learn about stock splits and fractional share investing.
  - chordalkeyboard 6y ago
    > Boy are you going to freak out when you learn about stock splits and fractional share investing. You really must be confused if you think thats a rebuttal.
    - arcticbull 6y ago
      Absolute value of assets doesn't matter. What matters is future appreciation potential of those assets. That's my point. You can infinitely subdivide them and see the same appreciation potential recognized over a greater number of units. Yes people who got in before you may have done better than you. They may not have. But the absolute price isn't relevant since owning AAPL shares isn't a necessity for life. On the other hand the absolute affordability of elements of the CPI basket does matter, which is why the CPI basket includes actual apples and not AAPL shares. Remember when you invest in something what you want is for it to become less affordable. That decrease in affordability is called an "ROI" or return on investment.
      - chordalkeyboard 6y ago
        > Absolute value of assets doesn't matter. What matters is future appreciation potential of those assets. That's my point. Someones ability to buy in to those assets is relevant for their ability to realize that appreciation. > You can infinitely subdivide them and see the same appreciation potential recognized over a greater number of units. So? The units here don’t matter. The fact that the central bank policy resulted in real wage decrease and nominal asset price increase means that central bank policy benefitted the asset seller at the expense of the asset buyer. Playing fast and loose with units doesn’t change this. > Remember when you invest in something what you want is for it to become less affordable. That decrease in affordability is called an "ROI" or return on investment. This is a revealing statement and is actually good example of how central bank policy has distorted even the way people think about assets. You only want your investments to increase in price if you intend to sell or collateralize them. As investments proper, you want to earn dividends. But inflation has driven the prices of assets far out of proportion to their returns, so now people think of r.o.i. as something that happens when you sell.
- AngrySkillzz 6y ago
  > It decreases the value of the money use to pay for them That is meaningless, though. Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead, to argue that the other person is worse off. That is also wrong - the issue here is holding cash, not the wealth disparity. Don't hold cash if you are worried about inflation. Mutual funds have low minimums, and you can buy fractional ETF shares at this point. You have no argument here.
  - chordalkeyboard 6y ago
    > Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I am better off if the nominal value of that asset matters, which it does if I want to sell it or leverage it. And anyone on a dollar denominated income is worse off. > I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead, to argue that the other person is worse off. You misunderstand, they don’t need to “keep their money in cash”. The asset price increased. Thats all. They are paid less in real terms, by design, therefore the asset costs more to them, because of inflation. > the issue here is holding cash, not the wealth disparity. This applies to people who are paid in dollars, it does not require them to hold them. > Don't hold cash if you are worried about inflation. Obviously the wealthy are in much better position to take this advice than the middle class, the working class, and the poor. Therefore inflation benefits the wealthy disproportionately.
    - arcticbull 6y ago
      > Obviously the wealthy are in much better position to take this advice than the middle class, the working class, and the poor. Therefore inflation benefits the wealthy disproportionately. If the poor don't have cash, and their wages keep pace with inflation (they do) then how are they harmed by inflation?
      - chordalkeyboard 6y ago

chordalkeyboard 6y ago

> That does not increase the real value of those assets, Exactly correct. It decreases the value of the money use to pay for them, resulting in a higher nominal price and fewer people in society who are able to afford them, resulting in less access to capital for the majority of society. > and it does not have any distributional consequences. False. When assets go up relative to currency, fewer buyers can compete for those assets, leading to the wealthy owning more and the poor getting poorer. > But you'd rather expose your ignorance on the Internet for us to see. I’m quite sure I’ve acquitted myself satisfactorily in this discussion, if you feel the same about yourself, perhaps you’re the one who needs to peruse the literature. > I happen to know a lot about central banking, actually. You might be pulling a Dunning-Kruger on this one. Then how could you have been ignorant of Krugman’s statements to the effect that inflation was necessary because workers’ make too much money? Did you know he had said that? If so, why ask me for a source? If not, how much do you really know about central banks? Especially if you think that the words of several economists are evidence of some conspiracy?

AngrySkillzz 6y ago
"Low, stable inflation increases inequality" is not a statement that you could find much agreement on from economists. Also, Krugman is just a pop-econ writer at this point. He is not a big deal in the economics profession. Yes, I am sure he understands how inflation and sticky wages interact. I am not so convinced that you understand it. Just going to repost my other comment for you to puzzle over: "You are purposefully ignoring the normal explanation, which is this: because wages are sticky, firms that need to cut costs in a recession are more likely to lay off people than they are to give pay cuts. Inflation helps to weaken that rigidity so that job losses are not as large. Maybe you know that. You claim that central banks depreciate the currency because they "think wages among the working class are too high." But rhetorically, you are doing more than just referring to the explanation I gave above. You are implying that central banks "think" working class wages are too high, and want to lower them to hurt working class people. Which is the opposite of the standard explanation - the purpose of inflation in that instance is to implicitly reduce the downward rigidity of wages so that employment does not contract as much in a downturn. Presumably you, champion of the working class, would rather more people be unemployed?"
- chordalkeyboard 6y ago
  > You claim that central banks depreciate the currency because they "think wages among the working class are too high." But rhetorically, you are doing more than just referring to the explanation I gave above. You are implying that central banks "think" working class wages are too high, and want to lower them to hurt working class people. Oh I know it does seem like the banks “want to hurt working class people” when you look at what they are doing and why. But thats an unnecessary hypothesis. They don’t need to care about working class people at all, just the financial interests of the oligarchs. > Which is the opposite of the standard explanation - the purpose of inflation in that instance is to implicitly reduce the downward rigidity of wages so that employment does not contract as much in a downturn. In other words, trick the workers into taking a pay cut, because they make too much money. “For their own good” and how convenient that it happens to pump up the assets that the wealthy own. > Presumably you, champion of the working class, would rather more people be unemployed? I want them to be unemployed the same way you want them to make less money in real terms.
  - deleted 6y ago
    [deleted]
arcticbull 6y ago
> When assets go up relative to currency, fewer buyers can compete for those assets, leading to the wealthy owning more and the poor getting poorer. Boy are you going to freak out when you learn about stock splits and fractional share investing.
- chordalkeyboard 6y ago
  > Boy are you going to freak out when you learn about stock splits and fractional share investing. You really must be confused if you think thats a rebuttal.
  - arcticbull 6y ago
    Absolute value of assets doesn't matter. What matters is future appreciation potential of those assets. That's my point. You can infinitely subdivide them and see the same appreciation potential recognized over a greater number of units. Yes people who got in before you may have done better than you. They may not have. But the absolute price isn't relevant since owning AAPL shares isn't a necessity for life. On the other hand the absolute affordability of elements of the CPI basket does matter, which is why the CPI basket includes actual apples and not AAPL shares. Remember when you invest in something what you want is for it to become less affordable. That decrease in affordability is called an "ROI" or return on investment.
    - chordalkeyboard 6y ago
      > Absolute value of assets doesn't matter. What matters is future appreciation potential of those assets. That's my point. Someones ability to buy in to those assets is relevant for their ability to realize that appreciation. > You can infinitely subdivide them and see the same appreciation potential recognized over a greater number of units. So? The units here don’t matter. The fact that the central bank policy resulted in real wage decrease and nominal asset price increase means that central bank policy benefitted the asset seller at the expense of the asset buyer. Playing fast and loose with units doesn’t change this. > Remember when you invest in something what you want is for it to become less affordable. That decrease in affordability is called an "ROI" or return on investment. This is a revealing statement and is actually good example of how central bank policy has distorted even the way people think about assets. You only want your investments to increase in price if you intend to sell or collateralize them. As investments proper, you want to earn dividends. But inflation has driven the prices of assets far out of proportion to their returns, so now people think of r.o.i. as something that happens when you sell.
AngrySkillzz 6y ago
> It decreases the value of the money use to pay for them That is meaningless, though. Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead, to argue that the other person is worse off. That is also wrong - the issue here is holding cash, not the wealth disparity. Don't hold cash if you are worried about inflation. Mutual funds have low minimums, and you can buy fractional ETF shares at this point. You have no argument here.
- chordalkeyboard 6y ago
  > Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I am better off if the nominal value of that asset matters, which it does if I want to sell it or leverage it. And anyone on a dollar denominated income is worse off. > I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead, to argue that the other person is worse off. You misunderstand, they don’t need to “keep their money in cash”. The asset price increased. Thats all. They are paid less in real terms, by design, therefore the asset costs more to them, because of inflation. > the issue here is holding cash, not the wealth disparity. This applies to people who are paid in dollars, it does not require them to hold them. > Don't hold cash if you are worried about inflation. Obviously the wealthy are in much better position to take this advice than the middle class, the working class, and the poor. Therefore inflation benefits the wealthy disproportionately.
  - arcticbull 6y ago
    > Obviously the wealthy are in much better position to take this advice than the middle class, the working class, and the poor. Therefore inflation benefits the wealthy disproportionately. If the poor don't have cash, and their wages keep pace with inflation (they do) then how are they harmed by inflation?
    - chordalkeyboard 6y ago