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A free market knows who needs and deserves money better than the government. Government handouts go always to the wrong people, making the problem worse. This h
by Geee 5y ago
A free market knows who needs and deserves money better than the government. Government handouts go always to the wrong people, making the problem worse. This happens because government has less information than local actors on a free market.
Rich people own assets, not money. Rich people have debt collateralized by their assets, so they get double benefit from inflation. Their debt gets wiped off, and their asset prices increase. And because they are the ones who get low interest rate debt first, they also benefit from the Cantillion effect, which means that they're not hurt by inflated prices, so much as those who try to buy assets later with their wages.
Inflation hurts workers and entrepreneurs most because their savings are wiped off, and their income or revenue lags behind inflated prices. There is no way to save and use the savings to plan and invest in a better future. The ability to save and invest later is the base of a prosperous economy. Inflation also destroys reliable price signals, which makes it very difficult for an economy to work.
- imtringued 5y ago>The ability to save and invest later is the base of a prosperous economy. I don't know who told you this but it's completely wrong. People invest first and then tell others to save. Just think about it. You build a factory and tell everyone you will produce more cars in 5 years. You pay interest because you know you can sell them more cars in the future and therefore you can pay more interest than the kebab shop down the street. This means growth of demand is the primary driver of economic growth because growth in demand also results in growth of demand for investments and investments drive demand for savings. If people just save money without any future demand it's the same thing as choosing to be poor. You have money because you didn't buy a house. You have money because you didn't buy a car. You have money because you didn't buy clothes. You have money because you are poor in real terms.