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Inflation is the elephant in the room no one wants to talk about that keeps poor people poor. If you don't have any assets during the past year, I feel bad for
by fasteddie31003 5y ago
Inflation is the elephant in the room no one wants to talk about that keeps poor people poor. If you don't have any assets during the past year, I feel bad for you. You have lost so much purchasing power. I'm all for raising the minimum wage to keep up with inflation, but you never hear anyone talking about why we have to raise the minimum wage. They just want to cure a symptom and not address the root cause of why we need to raise the minimum wage. Hell, if you want to help address poverty by giving poor people more purchasing power, wouldn't you want deflation? Oh yea, people who own assets only benefit from inflation and are the ones pulling the strings on monetary policy.
- rodgerd 5y ago> Inflation is the elephant in the room no one wants to talk about that keeps poor people poor. Keeping inflation down has been the central policy of Western banks for 30 to 40 years. It absolutely absurd to claim that it is "not talked about."
- frankydp 5y agoIt is not absurd. There was little to no conversation around the impact of trillions of dollars of stimulus injection last year or the further $4 trillion injection of the current infrastructure bill. Injecting nearly the annual US GDP in 18 months has consequences, and almost none of them are positive. Especially when they are not targeted.
- seoaeu 5y ago> almost none of them are positive For you perhaps. That spending helped countless people, averted untold hardship, and for some could only be described as life changing
- frankydp 5y agoI am not against supporting those in need, but blanket unmetered injection has consequences. The IRS is capable of disbursing based on income, primarily because it is reported digitally and manually monthly via payroll taxes, and those with no or reduced reported income would be default to fund. Beyond that I am not sure the result will be worth the cost, especially for those that are the most price sensitive.
- emerged 5y agoPositive in the sense that eating a giant bag of candy and cookies is positive. Unfortunately that positivity is rather short lived as the consequences play out over time.
- ilammy 5y agoIt's not about keeping it “down”, it's about keeping it “low enough”. Which leads to understanding that there is some corridor of acceptable inflation and you have some wiggle room until Zimbabwe or Venezuela levels, when it's high and the economy is “struggling” but it's not a terrible disaster. That is, there is no talking about eliminating inflation as it were universally harmful; the general understanding is that it's actually beneficial to the economy as a whole. It may be harmful to some parts of the society but you don't go admitting that publicly, saying that won't do anything about it because someone's lives are less important than the economy.
- throwaway98797 5y agoI dont think inflation hurts the poor. It hurts the middle class with 5-15k in savings. The poor are living oaycheck to paycheck and they will continue to do so. Yet the people on the first wrung of wealth building see their progress destroyed.
- seoaeu 5y agoYeah. In fact, the poorest have a negative net worth due to owing more on debts than they hold in assets so inflation makes them wealthier
- yadaeno 5y agoThis would only be the case if wages rose with inflation which they don't.
- throwaway98797 5y agothey do at the bottom. people cant live below a certain threshold. business need employees. it is a combo of gov funds and employment that keeps them alive. see % of walmart employees on food assistance.
- javagram 5y agoThe article notes “ Inflation-adjusted compensation is down in most industries, but there is one notable exception: Leisure and hospitality. That industry's employers are scrambling to find workers, resulting in a 1.6% bump in pay and benefits since December 2019, according to Furman's analysis.” So it really depends on your industry, there are plenty of poor working class who have hospitality jobs.
- dragonwriter 5y ago> It hurts the middle class with 5-15k in savings. If you have 5-15K in dollar-denominated-fixed-interest savings you either: (1) Are in the middle class and have at least a couple orders of magnitude more than that in productive investments that aren't dollar-denominated fixed-interest assets. Or, (2) are in the working, not middle, class, and probably despite having that in gross savings, have net dollar-denominated debt.
- whakim 5y agoThis is incorrect. Historically, periods of very low inflation (such as the 19th century during which currencies were pegged to the gold standard) were great creators of inequality, because they allow the wealthy to continuously expand their capital stock through rents.
- gruez 5y ago>because they allow the wealthy to continuously expand their capital stock through rents. Is that hard to do during inflation or something? Given that asset values generally don't get inflated away, I'm not sure how inflation would be bad for them.
- whakim 5y agoAsset values do rise with inflation, and that itself doesn't make the owners of capital any better or worse off. But in an extremely low inflation environment, owners of capital can collect rents on their capital which will generate a consistent return that won't be destroyed or devalued by inflation. The relationship between inflation and inequality is pretty complicated because there are a bunch of other factors (notably growth) that play a significant role. I just wanted to point out that the economics of inequality does not support OP's argument (i.e., inflation creates inequality).
- jackcosgrove 5y agoThe money supply should track the economy. If the economy expands, the money supply should expand. If the economy contracts, in a secular way and not a cyclical way, the money supply should contract. Inflation is not bad per se. It's necessary, as others have pointed out, to prevent incumbents from being pointlessly enriched by rents. What's bad is monetary inflation that raises the prices of everything. This means the growth in the money supply is outstripping productivity growth. We appear to be tipping over into monetary inflation after four decades of good monetary policy. The last time this happened it took ten years to sort out.
- ashtonkem 5y agoWe need to raise the minimum wage because some specific items have grown much faster than inflation. Housing, healthcare, and education specifically. The idea that it’s because of inflation that we need to raise the minimum wage does not hold water when housing is increasing in cost at a much faster rate.
- babesh 5y agoHow about lowering the cost of healthcare, housing, and education instead?
- Bombthecat 5y agoHow would you decrease housing prices? Right now it's impossible, because we barely build any new homes (much less then people would need them /want to buy them)
- nradov 5y agoNew home building starts are high and have been rising for several years. https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST
- nostrademons 5y agoYou answered your own question. Build more housing. A lot more housing.
- thebooktocome 5y agoGreatly increase property taxes on second and subsequent homes. Make the tax not apply to dense multi-unit housing, only sparse single-family homes and condos. Make housing covenants illegal. Both of these ideas are super unpopular to the landlord/speculator class, but they'd certainly open up the housing market.
- ashtonkem 5y agoA land use or land efficiency tax would probably be a wise move in some metro areas.
- rat87 5y agoInflation hurts banks and helps lenders especially poor lenders A small constant rate of inflation also helps drive the economy
- imtringued 5y agoIf you truly think that you can seek salvation in deflation then you are mistaken. There is only misery there. https://www.naturalmoney.org/explanation.html https://www.naturalmoney.org/explanation.html