4 ms·

Inflation is boiled frog style taxation. Unfortunately, it's taxation that makes the weakest suffer the most. Oh, and the govt would like you to believe they

Inflation is boiled frog style taxation. Unfortunately, it's taxation that makes the weakest suffer the most. Oh, and the govt would like you to believe they have a way to control it. Yeah sure, I'm going to turn that knob that is one input of a perfectly chaotic system, and I know what is going to happen. Let's see how that empty promise actually turns out.

jstx1 5y ago
Taxation is deliberate and easily measured. Inflation is much more difficult to measure and it results from many parts of a complex system interacting with each other. The only thing in common is that people end up with less money.
- edmcnulty101 5y ago
  Poor people and the middle class who deal in cash day to day to pay bills, seem to end up with less money. The rich seem to be asset heavy so are buffeted against inflation.
  - noduerme 5y ago
    This is a foreign concept, but Americans have caught on just fine: When the currency is inflating, people buy hard physical goods or whatever they can get their hands on now before the price goes up. Cars, white goods, remodels, houses, jewelry. It's funny to watch the whole universe of punditry wring its hands over the supply chain crisis when in fact what we're seeing is Americans attempting to cash out of the dollar (wittingly or by brute instinct), and China narrowing the umbilical by which those dollars can be redeemed for goods.
    - edmcnulty101 5y ago
      > in fact what we're seeing is Americans attempting to cash out of the dollar Interesting! Did not look at it like that. I've had that subconscious instinct as well to purchase important things I need now because tomorrow feels so unstable.
  - ericd 5y ago
    Keep in mind that nominal inflation-driven gains are taxed, so even perfectly inflation hedged investors (not many are) end up behind in real terms.
    - edmcnulty101 5y ago
      Investments have to meet an estimated inflation barrier of 6% right now just to break even with inflation THEN they get taxed as well on that 6% gain! And 6% isn't an easy target to reach for safe conservative investments like a retirement account. So the gov't borrows money, has the power to make the money they borrowed worth less to pay back, then taxes everyone on earnings on this newly inflated money. What a racket!
neximo64 5y ago
And also in a way the opposite. If there was a scale of value in terms of being between the borrower (people in debt) and people lending (people with cash). It swings heavily in favour of people in debt.
- metafunctor 5y ago
  Are you assuming interest rates and inflation are somehow uncoupled?
  - jtsiskin 5y ago
    They’re referring to people with existing, fixed interest rate debt. My student loans for example are 5%
    - metafunctor 5y ago
      Still not uncoupled, but rather an estimate of future reference interest rates (which is strongly coupled to inflation).
- blatchcorn 5y ago
  I see your point in theory but in practice: - poor people have less money to repay interest on the debt after buying necessities at an inflated price - interest rates rise following inflation which will increase debt repayment costs and likely offset any benefits gained from debt being inflated away - it is very rare for 'people' to actually issue loans, I imagine 99.99% of loans are issued by banks
  - noduerme 5y ago
    Nonetheless, it's a great time to take on debt. (if you can get a fixed rate)
- noduerme 5y ago
  This. Let's not discount the fact that this is why I've been loading up on everything I always wanted to buy on 2-3% APR for the past year. I'm a person who never had any debt or credit for the last 25 years. But now's the time. Me and everyone else in America. That's the demand spike. Everyone wants to lock in the rate before the party stops.
pa7x1 5y ago
Inflation does not affect (relatively speaking) the poorest more. On the contrary, it's a tax on people that have a lot of cash or cash-equivalent assets. That's not the poor. The poor have either very little cash or even negative (via debt), so inflation benefits them. And you can see this historically, too: Historical inflation rate chart: http://www.aboutinflation.com/_/rsrc/1369736825466/inflation-rate-historical/us-inflation-rate-historical-chart/US_Inflation_Rate_Historical_1956_2012.png http://www.aboutinflation.com/_/rsrc/1369736825466/inflation... Wealth gap inequality: https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2Fdaraalbrightmedia.com%2Fwp-content%2Fuploads%2F2016%2F08%2FHistory-of-US-Wealth-Disparity-final.jpg&f=1&nofb=1 https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2F... You can literally see how the wealth gap inequality nose dives in the high-inflation environment of the 70s and then continually increases after low-inflation rates become the norm for decades after around 1982. Inflation is a tax, should be seen as such but is a tax on the rich in cash (I keep insisting on the term cash because that's what inflation taxes, if you are rich in other assets inflation may or may not result in an effective taxation of your wealth). Monetary and fiscal policy should be designed with this in mind.
- noduerme 5y ago
  "rich in cash"? No. Just those without other assets. Are you rich in cash if all $100 you have is in cash? Inflation is the most regressive tax possible on the poor.
  - skohan 5y ago
    Only if wage inflation doesn't keep up with price inflation. If wage inflation keeps pace, it's actually a fairly progressive result since debt loses value relative to wages. For people without income or assets it's a disaster.
    - noduerme 5y ago
      Minimum wage is always going to lag way behind inflation. In practice, almost all wages lag behind inflation. But "people without income or assets" is my definition of "poor" and ...yeah, inflation basically takes a meager $1200/mo government check and makes it worthless. they're already on the brink of starvation.

jstx1 5y ago

Taxation is deliberate and easily measured. Inflation is much more difficult to measure and it results from many parts of a complex system interacting with each other. The only thing in common is that people end up with less money.

edmcnulty101 5y ago
Poor people and the middle class who deal in cash day to day to pay bills, seem to end up with less money. The rich seem to be asset heavy so are buffeted against inflation.
- noduerme 5y ago
  This is a foreign concept, but Americans have caught on just fine: When the currency is inflating, people buy hard physical goods or whatever they can get their hands on now before the price goes up. Cars, white goods, remodels, houses, jewelry. It's funny to watch the whole universe of punditry wring its hands over the supply chain crisis when in fact what we're seeing is Americans attempting to cash out of the dollar (wittingly or by brute instinct), and China narrowing the umbilical by which those dollars can be redeemed for goods.
  - edmcnulty101 5y ago
    > in fact what we're seeing is Americans attempting to cash out of the dollar Interesting! Did not look at it like that. I've had that subconscious instinct as well to purchase important things I need now because tomorrow feels so unstable.
- ericd 5y ago
  Keep in mind that nominal inflation-driven gains are taxed, so even perfectly inflation hedged investors (not many are) end up behind in real terms.
  - edmcnulty101 5y ago
    Investments have to meet an estimated inflation barrier of 6% right now just to break even with inflation THEN they get taxed as well on that 6% gain! And 6% isn't an easy target to reach for safe conservative investments like a retirement account. So the gov't borrows money, has the power to make the money they borrowed worth less to pay back, then taxes everyone on earnings on this newly inflated money. What a racket!

neximo64 5y ago

And also in a way the opposite. If there was a scale of value in terms of being between the borrower (people in debt) and people lending (people with cash). It swings heavily in favour of people in debt.

metafunctor 5y ago
Are you assuming interest rates and inflation are somehow uncoupled?
- jtsiskin 5y ago
  They’re referring to people with existing, fixed interest rate debt. My student loans for example are 5%
  - metafunctor 5y ago
    Still not uncoupled, but rather an estimate of future reference interest rates (which is strongly coupled to inflation).
blatchcorn 5y ago
I see your point in theory but in practice: - poor people have less money to repay interest on the debt after buying necessities at an inflated price - interest rates rise following inflation which will increase debt repayment costs and likely offset any benefits gained from debt being inflated away - it is very rare for 'people' to actually issue loans, I imagine 99.99% of loans are issued by banks
- noduerme 5y ago
  Nonetheless, it's a great time to take on debt. (if you can get a fixed rate)
noduerme 5y ago
This. Let's not discount the fact that this is why I've been loading up on everything I always wanted to buy on 2-3% APR for the past year. I'm a person who never had any debt or credit for the last 25 years. But now's the time. Me and everyone else in America. That's the demand spike. Everyone wants to lock in the rate before the party stops.

pa7x1 5y ago

Inflation does not affect (relatively speaking) the poorest more. On the contrary, it's a tax on people that have a lot of cash or cash-equivalent assets. That's not the poor. The poor have either very little cash or even negative (via debt), so inflation benefits them. And you can see this historically, too: Historical inflation rate chart: http://www.aboutinflation.com/_/rsrc/1369736825466/inflation-rate-historical/us-inflation-rate-historical-chart/US_Inflation_Rate_Historical_1956_2012.png http://www.aboutinflation.com/_/rsrc/1369736825466/inflation... Wealth gap inequality: https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2Fdaraalbrightmedia.com%2Fwp-content%2Fuploads%2F2016%2F08%2FHistory-of-US-Wealth-Disparity-final.jpg&f=1&nofb=1 https://external-content.duckduckgo.com/iu/?u=https%3A%2F%2F... You can literally see how the wealth gap inequality nose dives in the high-inflation environment of the 70s and then continually increases after low-inflation rates become the norm for decades after around 1982. Inflation is a tax, should be seen as such but is a tax on the rich in cash (I keep insisting on the term cash because that's what inflation taxes, if you are rich in other assets inflation may or may not result in an effective taxation of your wealth). Monetary and fiscal policy should be designed with this in mind.

noduerme 5y ago
"rich in cash"? No. Just those without other assets. Are you rich in cash if all $100 you have is in cash? Inflation is the most regressive tax possible on the poor.
- skohan 5y ago
  Only if wage inflation doesn't keep up with price inflation. If wage inflation keeps pace, it's actually a fairly progressive result since debt loses value relative to wages. For people without income or assets it's a disaster.
  - noduerme 5y ago
    Minimum wage is always going to lag way behind inflation. In practice, almost all wages lag behind inflation. But "people without income or assets" is my definition of "poor" and ...yeah, inflation basically takes a meager $1200/mo government check and makes it worthless. they're already on the brink of starvation.