4 ms·

> I don’t particularly want my dollars to “hold value” Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods

by lowkey 5y ago

> I don’t particularly want my dollars to “hold value” Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? How does that benefit you personally?

tylerhou 5y ago
How much money do you have in dollars? I have an emergency fund — 6 months of expenses. Everything else is in other assets that store value after inflation (e.g. stocks, bonds, housing). > How does that benefit you personally? A little bit of inflation means more economic growth in the long run. That benefits me because services and goods will get cheaper and/or better.
- reedjosh 5y ago
  > How much money do you have in dollars? Not much, in fact I try to remain leveraged via debts to hedge against inflation. But my salary is measured in dollars. I fought hard to get the salary I have today, but I must continue to ratchet up as my employment deal looks worse every year. I believe the Cantillion effect is largely why the average peasant's wages have not kept up with asset prices. https://www.adamsmith.org/blog/the-cantillion-effect https://www.adamsmith.org/blog/the-cantillion-effect Inflation means wealthy (with assets) get wealthier. > A little bit of inflation means more economic growth in the long run. When you play tricks with the CPI it does look that way. It's easy to say there's growth when revenues grow beyond a poor measure of inflation. Inflation discourages savings and thus makes money look easy. As such, it actually encourages bad investment. Further, the business cycle that Kaynsians say are just a natural part of a large economy are really caused by over leveraged banking credit bursts. If half of the dollars in circulation are just debts owed between banks, then that bubble bursts, it's no surprise that asset prices would fall--there's literally fewer dollars in circulation. It's no big deal for those involved in fed policy making as they are usually the first to see it coming (and or instigate it with higher interest rates) and generally move their positions back to dollars just prior to a credit bubble burst. But for those of us that leverage ourselves to hedge against inflation (buying a house), we get caught with a heavy loan on an asset that's no longer worth as much as the loan on it. One should be open to viewpoints external to those provided by the people in charge of and profiting from the system.
  - tylerhou 5y ago
    Your salary is measured in dollars, but inflation affects your salary as well. When companies charge more for products, where do you think (some of) that extra money goes? The rest of your comment has some interesting hypotheses (Cantillon effect, inflation encouraging bad investment) but in practice, you have to make measurements to see whether those effects actually happen. I haven't seen any empirical evidence for the Cantillon effect, and empirically we have evidence that a small amount of inflation does not decrease output (and can increase output in some cases). http://www.sciencedirect.com/science/article/pii/0304-3932(95)01227-3 http://www.sciencedirect.com/science/article/pii/0304-3932(9... > It's no big deal for those involved in fed policy making as they are usually the first to see it coming Even if this is true, the amount of money owned by the people controlling the Fed is miniscule.
dragonwriter 5y ago
> Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? Yes. Mostly, because of systemic effects on the broader economy I need to have functioning to earn a living, but also because of more direct personal benefits. > How does that benefit you personally? Because other than a small share in cash and the bank for liquidity, my assets aren’t dollar denominated, but my debts — which, while smaller than my total assets, are much larger than my dollar-denominated assets — are almost entirely dollar-denominated.
- reedjosh 5y ago
  I agree that it's nice if you have assets, but I believe for most people we can't have nearly as many assets and or connections as the wealthy. And for young people, they're basically priced out of assets by this system. _This_ literally is the reason owning a home is next to impossible for millennials and gen-zs. Further, this encourages a debt based society that may encourage growth in the short run (debt giveth first), but then when the debts are due it holds the economy back. Typically this looks like the 2008 crash and is coined the `business cycle` by modern economists.
  - bun_at_work 5y ago
    > when the debts are due it holds the economy back. This is just wrong. The only debt that holds the economy back is debt that didn't actually generate growth. If you borrow to start a business, you are stimulating the economy with growth, through debt. If you rack up credit debt at the bar every weekend, you're going to cause yourself problems. The topic is just more nuanced than you're implying. Debt is very good for the economy overall, as long as you're not overdoing it or taking on frivolous debts that don't let you grow. Student loans seem relevant here. I take out 50k of student loans. The degree I earn empowers me to make 50k/year. After 2 years that debt has been turned into profit, and that's only for me personally, ignoring the value my education will bring to my employer, the community, and the economy at large. Another example of good debt can be a car. I purchase a 20k car, with credit, which allows me to make 70k instead of 50k, in the next town over. After a year, that debt has paid itself off and is now earning for me, despite the fact that the value of the car instantly dropped 20+% as soon as I purchased it. The idea that debt holds the economy back is terribly misinformed and over simplified. It's literally how we grow, and how the US has become the economic powerhouse it is. The most wealthy nation in the history of the world (what we do with the money is a different topic).

by lowkey 5y ago

tylerhou 5y ago

How much money do you have in dollars? I have an emergency fund — 6 months of expenses. Everything else is in other assets that store value after inflation (e.g. stocks, bonds, housing). > How does that benefit you personally? A little bit of inflation means more economic growth in the long run. That benefits me because services and goods will get cheaper and/or better.

reedjosh 5y ago
> How much money do you have in dollars? Not much, in fact I try to remain leveraged via debts to hedge against inflation. But my salary is measured in dollars. I fought hard to get the salary I have today, but I must continue to ratchet up as my employment deal looks worse every year. I believe the Cantillion effect is largely why the average peasant's wages have not kept up with asset prices. https://www.adamsmith.org/blog/the-cantillion-effect https://www.adamsmith.org/blog/the-cantillion-effect Inflation means wealthy (with assets) get wealthier. > A little bit of inflation means more economic growth in the long run. When you play tricks with the CPI it does look that way. It's easy to say there's growth when revenues grow beyond a poor measure of inflation. Inflation discourages savings and thus makes money look easy. As such, it actually encourages bad investment. Further, the business cycle that Kaynsians say are just a natural part of a large economy are really caused by over leveraged banking credit bursts. If half of the dollars in circulation are just debts owed between banks, then that bubble bursts, it's no surprise that asset prices would fall--there's literally fewer dollars in circulation. It's no big deal for those involved in fed policy making as they are usually the first to see it coming (and or instigate it with higher interest rates) and generally move their positions back to dollars just prior to a credit bubble burst. But for those of us that leverage ourselves to hedge against inflation (buying a house), we get caught with a heavy loan on an asset that's no longer worth as much as the loan on it. One should be open to viewpoints external to those provided by the people in charge of and profiting from the system.
- tylerhou 5y ago
  Your salary is measured in dollars, but inflation affects your salary as well. When companies charge more for products, where do you think (some of) that extra money goes? The rest of your comment has some interesting hypotheses (Cantillon effect, inflation encouraging bad investment) but in practice, you have to make measurements to see whether those effects actually happen. I haven't seen any empirical evidence for the Cantillon effect, and empirically we have evidence that a small amount of inflation does not decrease output (and can increase output in some cases). http://www.sciencedirect.com/science/article/pii/0304-3932(95)01227-3 http://www.sciencedirect.com/science/article/pii/0304-3932(9... > It's no big deal for those involved in fed policy making as they are usually the first to see it coming Even if this is true, the amount of money owned by the people controlling the Fed is miniscule.

dragonwriter 5y ago

> Sure, but would you really rather your dollars "lose value" as in they can purchase less and less goods and services over time? Yes. Mostly, because of systemic effects on the broader economy I need to have functioning to earn a living, but also because of more direct personal benefits. > How does that benefit you personally? Because other than a small share in cash and the bank for liquidity, my assets aren’t dollar denominated, but my debts — which, while smaller than my total assets, are much larger than my dollar-denominated assets — are almost entirely dollar-denominated.

reedjosh 5y ago
I agree that it's nice if you have assets, but I believe for most people we can't have nearly as many assets and or connections as the wealthy. And for young people, they're basically priced out of assets by this system. _This_ literally is the reason owning a home is next to impossible for millennials and gen-zs. Further, this encourages a debt based society that may encourage growth in the short run (debt giveth first), but then when the debts are due it holds the economy back. Typically this looks like the 2008 crash and is coined the `business cycle` by modern economists.
- bun_at_work 5y ago
  > when the debts are due it holds the economy back. This is just wrong. The only debt that holds the economy back is debt that didn't actually generate growth. If you borrow to start a business, you are stimulating the economy with growth, through debt. If you rack up credit debt at the bar every weekend, you're going to cause yourself problems. The topic is just more nuanced than you're implying. Debt is very good for the economy overall, as long as you're not overdoing it or taking on frivolous debts that don't let you grow. Student loans seem relevant here. I take out 50k of student loans. The degree I earn empowers me to make 50k/year. After 2 years that debt has been turned into profit, and that's only for me personally, ignoring the value my education will bring to my employer, the community, and the economy at large. Another example of good debt can be a car. I purchase a 20k car, with credit, which allows me to make 70k instead of 50k, in the next town over. After a year, that debt has paid itself off and is now earning for me, despite the fact that the value of the car instantly dropped 20+% as soon as I purchased it. The idea that debt holds the economy back is terribly misinformed and over simplified. It's literally how we grow, and how the US has become the economic powerhouse it is. The most wealthy nation in the history of the world (what we do with the money is a different topic).