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>High inflation destroys savings This is not true. When the inflation is high, normal savings accounts pay interest rate that protects from inflation. Besides

by nabla9 5y ago

>High inflation destroys savings This is not true. When the inflation is high, normal savings accounts pay interest rate that protects from inflation. Besides if you are saving a lots of money you should invest it for something. Like government bonds at least. > High inflation is rarely if ever matched by wages going up. This is not true. Inflation and real wages are not connected. Why would they? See for example: https://en.wikipedia.org/wiki/Real_wages#/media/File:United_States_real_wages_(red,_in_constant_2017_dollars).png https://en.wikipedia.org/wiki/Real_wages#/media/File:United_... What high inflation does in some jobs, it allows employers not to lay off people by not increasing their wages (when their productivity is not increasing). > Inflation penalizes anyone who isn't invested in things that hold their value versus the value of the money And this is how it should be. Money should not be good store of value in long term. And as I said before, savings account interest rates are not zero when inflation gets going. https://www.finder.com/history-of-savings-account-interest-rates https://www.finder.com/history-of-savings-account-interest-r... https://www.bankrate.com/banking/cds/historical-cd-interest-rates/ https://www.bankrate.com/banking/cds/historical-cd-interest-...

randomhodler84 5y ago
We have lived in a time of very low interest rates for a long time, if they ramp it up; the leveraged real estate market will collapse. Repeat the money printing to bail them out. A hole cannot be escaped by digging deeper.
- simplemts 5y ago
  This comment is spot on. Interest rates are not in line with inflation, therefore, savers are being eaten alive. Those on fixed income (retirees, disabled) are getting absolutely screwed.
- dnautics 5y ago
  I dont think economics works that way. You absolutely can escape a hole by digging deeper. "Escaping" including mechanisms such as trigger a revolution, pogroms, world wars etc.
dnautics 5y ago
> normal savings accounts pay interest rate that protects from inflation Pray tell which banks are you banking with? > What high inflation does in some jobs, it allows employers not to lay off people by not increasing their wages shorter: "Let's screw the labor class over so that their managers don't have to fire themselves." > Money should not be good store of value in long term. "it is important to encourage consumption at all cost in the long term"
- doubled112 5y ago
  It's definitely not a bank in Canada. A TD High Interest bank account has a 0.050% interest rate after $5,000. Before that the interest rate is 0.000%. Don't worry, as long as you have $25,000 dollars in there, they'll waive the transaction fees every month ($5 per transaction). I might as well stick it under the mattress and pretend I don't have it at those rates.
  - deleted 5y ago
    [deleted]
sjg007 5y ago
Inflation and wages are in fact connected.
- nabla9 5y ago
  real wages and inflation are not (this is what I said) Wages follow inflation, of course.
  - sjg007 5y ago
    Not entirely true.. https://www.investopedia.com/terms/w/wage-push-inflation.asp https://www.investopedia.com/terms/w/wage-push-inflation.asp
  - dnautics 5y ago
    THIS IS WHAT THEY BELIEVE https://youtu.be/QsAnssN1cxM https://youtu.be/QsAnssN1cxM
    - sjg007 5y ago
      Is it wrong?
      - dnautics 5y ago
        In short, yes. The part where the professor says "jobs will catch up" is naive at best, dangerous in reality.
simplemts 5y ago
You are discussing a theoretical world. In the real world, interest rates are 0. I can't find a SINGLE savings account over 1%, while inflation is over 5%: https://www.bankrate.com/banking/savings/rates/ https://www.bankrate.com/banking/savings/rates/ Treasury bonds are barely better -- 10yr < 2% (!)
UncleEntity 5y ago
> And this is how it should be. Money should not be good store of value in long term. Other than the last hundred or so years (and a few historical fiat currencies) money has always been a good store of value. Or I should really say ‘specie’ instead of ‘money’.
RedBeetDeadpool 5y ago
> And this is how it should be. Money should not be good store of value in long term. LOL. If money isn't a good store of value, the market will find something else that is.

by nabla9 5y ago

randomhodler84 5y ago

We have lived in a time of very low interest rates for a long time, if they ramp it up; the leveraged real estate market will collapse. Repeat the money printing to bail them out. A hole cannot be escaped by digging deeper.

simplemts 5y ago
This comment is spot on. Interest rates are not in line with inflation, therefore, savers are being eaten alive. Those on fixed income (retirees, disabled) are getting absolutely screwed.
dnautics 5y ago
I dont think economics works that way. You absolutely can escape a hole by digging deeper. "Escaping" including mechanisms such as trigger a revolution, pogroms, world wars etc.

dnautics 5y ago

> normal savings accounts pay interest rate that protects from inflation Pray tell which banks are you banking with? > What high inflation does in some jobs, it allows employers not to lay off people by not increasing their wages shorter: "Let's screw the labor class over so that their managers don't have to fire themselves." > Money should not be good store of value in long term. "it is important to encourage consumption at all cost in the long term"

doubled112 5y ago
It's definitely not a bank in Canada. A TD High Interest bank account has a 0.050% interest rate after $5,000. Before that the interest rate is 0.000%. Don't worry, as long as you have $25,000 dollars in there, they'll waive the transaction fees every month ($5 per transaction). I might as well stick it under the mattress and pretend I don't have it at those rates.
- deleted 5y ago
  [deleted]

sjg007 5y ago

Inflation and wages are in fact connected.

nabla9 5y ago
real wages and inflation are not (this is what I said) Wages follow inflation, of course.
- sjg007 5y ago
  Not entirely true.. https://www.investopedia.com/terms/w/wage-push-inflation.asp https://www.investopedia.com/terms/w/wage-push-inflation.asp
- dnautics 5y ago
  THIS IS WHAT THEY BELIEVE https://youtu.be/QsAnssN1cxM https://youtu.be/QsAnssN1cxM
  - sjg007 5y ago
    Is it wrong?
    - dnautics 5y ago
      In short, yes. The part where the professor says "jobs will catch up" is naive at best, dangerous in reality.

simplemts 5y ago

You are discussing a theoretical world. In the real world, interest rates are 0. I can't find a SINGLE savings account over 1%, while inflation is over 5%: https://www.bankrate.com/banking/savings/rates/ https://www.bankrate.com/banking/savings/rates/ Treasury bonds are barely better -- 10yr < 2% (!)

UncleEntity 5y ago

> And this is how it should be. Money should not be good store of value in long term. Other than the last hundred or so years (and a few historical fiat currencies) money has always been a good store of value. Or I should really say ‘specie’ instead of ‘money’.

RedBeetDeadpool 5y ago

> And this is how it should be. Money should not be good store of value in long term. LOL. If money isn't a good store of value, the market will find something else that is.