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Inflationary monetary policy is wealth transfer into the upper class without most people realizing it. Wealth, be it institutions or individuals, will always p

Inflationary monetary policy is wealth transfer into the upper class without most people realizing it. Wealth, be it institutions or individuals, will always push for central banking as it entrenches their power.

imtringued 5y ago
You mean interest is a wealth transfer into the upper class. The more you have, the more you get. Inflation increases interest rates which makes it even worse because it not only attacks incomes but also existing savings.
wizzwizz4 5y ago
“Inflationary monetary policy” is wealth transfer to the government (which they're then supposed to spend on common infrastructure, and other collaborative projects that everybody agrees on but nobody wants to shell out for unless everyone else is too). If the government is supporting the upper class and leaving everyone else to rot, no monetary policy will fix the issue.
- queuebert 5y ago
  I think this is supposed to be true, but nowadays when the wealthy mostly hold assets that have real value, like real estate and equities, as opposed to USD in a bank account, I'm not sure how well it works.
  - wizzwizz4 5y ago
    That's what tax is for. Sadly, my internet degree in armchair economics doesn't give me the ability to come up with a functioning tax system (however much I think I can beat the status quo) so I have no further pearls of wisdom.
wbsss4412 5y ago
> inflationary monetary policy is wealth transfer to the upper class without people realizing it. Going to need some evidence to back up that statement. Without centralized banking you essentially have no set policy one way other the other. I can understand why one would take issue with the current governance structure, but I don’t agree that letting money randomly fluctuate with no mechanisms for intervention to be a good thing.
- thegrimmest 5y ago
  > no set policy one way other the other Isn't that the idea of liberty though? No central authority deciding what is a "good thing" - just keeping the peace.
  - joshuamorton 5y ago
    That's one definition of liberty, but not the only one. I'd propose the alternative: Liberty is the freedom to take actions in society as it exists. Therefore a society that had greater prosperity has greater Liberty. You sort of admit as much, what is keeping the piece but ultimately deciding which things are good things or not?
    - thegrimmest 5y ago
      Keeping the peace means enforcing nonviolent interaction and providing due process for conflict resolution. Liberty isn't the same thing as prosperity/economic power. They are different words for a reason. You can be very poor and very free, or very comfortably enslaved. Liberty is fundamentally your relationship with those who can use legitimate force against you.
      - wbsss4412 5y ago
        Your definition of liberty here is getting really tangled. If liberty is “fundamentally your relationship with those who can use legitimate force against you” then how is having a set monetary policy incompatible with liberty as long as it comes from a “legitimate” source of power?
        thegrimmest 5y ago
        Because compliance with that monetary policy is enforced with.. force? You must pay taxes in USD, and if you don't you go to jail. The government also conveniently controls the USD supply, which allows the to debase it as they see fit, forcing you to obtain a set amount of USD per year to pay taxes. If the government accepted tax revenue in gold or bitcoin or anything else they don't totally control, you'd be absolutely right.
Spooky23 5y ago
That’s why the regulatory environment of the 20th century is important… Monetary policy that includes full employment provides benefits to the broader population. “Hard money”, gold, Bitcoin, land, etc focused policy only benefits the return on assets for the people with those assets. What we have now is the worst of both worlds.
Manuel_D 5y ago
Is this really the case? Inflation favors debtors over creditors, the upper class tends to be the latter not the former. While it is the case that the value of savings goes down, the lower class are much less likely to save.
- vkou 5y ago
  It's not the case, but people keep wringing their hands about how inflation robs the poor of the ~$500 they have in their savings accounts, while ignoring how much it helps the middle-class mortgage owner who is in fixed-rate debt for a million dollars. They get away with it because they don't make the distinction between price inflation and asset inflation. The cost of bread doubling is a huge problem for the poor, but means little to everyone else. The cost of assets doubling doesn't matter to the poor, because they have never, and will never save enough money to buy assets. The cost of assets doubling matters greatly against a yuppie who is trying to buy a home. The cost of assets doubling matters greatly in favor of someone who bought a home last week. Inflation sucks for you if you earn minimum wage, because half the country thinks that raising the minimum wage to keep up with inflation means will bring about the apocalypse. Inflation doesn't matter much to you if you're in a high-demand industry, with wages rising to match it. Inflation sucks for you if you're not working, but doesn't matter to you if you are, and there's a labour shortage, which increases your wage bargaining power.
  - imtringued 5y ago
    Deflation and inflation are bad because they make people speculate on the currency in either way. Inflation discourages paying off debt. Deflation encourages hoarding. Both of them are harmful because they create a self reinforcing feedback loop. A negative interest rate forces money to circulate and it encourages you to pay off debts. Thereby it eliminates both inflation and deflation.
  - VirusNewbie 5y ago
    Let's use an example that might look familiar. If inflation robs the poor person of the $500 and helps the middle class person with a mortgage.... all other things being equal, we transferred wealth from the poor person to the middle class person. yay, with me so far? By the same account, if the middle class person is helped a little bit by inflation, (but also has some cash) the rich person who is leveraged many times over into 10 properties, and has most of their wealth in equities (which themselves are leveraged because of corporate debt) is going to be even better off after the increase in money supply. Their share of the pie grew and the middle class persons maybe grew, but not relative to the rich person. Therefore, that is wealth transfer. The majority of US equities is held by the upper class and corporate debt dwarfs consumer debt (including mortgages).
whakim 5y ago
Inflation is super complicated because it depends on what types of assets are held by whom and how susceptible those assets are to inflation. For example, high rates of inflation during/after WWII were a large contributing factor in a net reduction in wealth inequality, because much of the wealthy was heavily invested in fixed-return war bonds. Much of the rentier economy of the 19th century elite depended on predictably low (almost nonexistant) inflation in order to sustain their fortunes. Theoretically, the financial assets of today's wealthy should be somewhat less vulnerable to inflation (real returns over the last ~80 years seem to be lower during periods of high inflation but it's also sometimes hard to untangle inflation from the overall state of the economy). Ultimately, inflation is a pretty crude instrument in terms of who it affects; I think it's hard to make sweeping statements about who it's "good" for that hold up well over time.
WalterBright 5y ago
> Inflationary monetary policy is wealth transfer into the upper class No, it is a means of wealth transfer to the government without raising taxes. Where does the trillions in deficit spending come from? Inflation! The politicians, of course, know this. But they keep up the misdirection by blaming it on greedy capitalists and/or unions. The notion that it is for monetary stability is also propaganda. Milton Friedman in "Monetary History" showed that instability increased after the creation of the Fed.
- imtringued 5y ago
  >No, it is a means of wealth transfer to the government without raising taxes. Where does the trillions in deficit spending come from? Inflation! Saving creates a hole in the economy, the trillions of deficit spending are a very stupid way of filling that hole. It works better than doing nothing which is why we do it. >The notion that it is for monetary stability is also propaganda. Milton Friedman in "Monetary History" showed that instability increased after the creation of the Fed. Uh, that is a property of capitalism. It's great at first when debts are low then it gets worse and worse.

imtringued 5y ago

You mean interest is a wealth transfer into the upper class. The more you have, the more you get. Inflation increases interest rates which makes it even worse because it not only attacks incomes but also existing savings.

wizzwizz4 5y ago

“Inflationary monetary policy” is wealth transfer to the government (which they're then supposed to spend on common infrastructure, and other collaborative projects that everybody agrees on but nobody wants to shell out for unless everyone else is too). If the government is supporting the upper class and leaving everyone else to rot, no monetary policy will fix the issue.

queuebert 5y ago
I think this is supposed to be true, but nowadays when the wealthy mostly hold assets that have real value, like real estate and equities, as opposed to USD in a bank account, I'm not sure how well it works.
- wizzwizz4 5y ago
  That's what tax is for. Sadly, my internet degree in armchair economics doesn't give me the ability to come up with a functioning tax system (however much I think I can beat the status quo) so I have no further pearls of wisdom.

wbsss4412 5y ago

> inflationary monetary policy is wealth transfer to the upper class without people realizing it. Going to need some evidence to back up that statement. Without centralized banking you essentially have no set policy one way other the other. I can understand why one would take issue with the current governance structure, but I don’t agree that letting money randomly fluctuate with no mechanisms for intervention to be a good thing.

thegrimmest 5y ago
> no set policy one way other the other Isn't that the idea of liberty though? No central authority deciding what is a "good thing" - just keeping the peace.
- joshuamorton 5y ago
  That's one definition of liberty, but not the only one. I'd propose the alternative: Liberty is the freedom to take actions in society as it exists. Therefore a society that had greater prosperity has greater Liberty. You sort of admit as much, what is keeping the piece but ultimately deciding which things are good things or not?
  - thegrimmest 5y ago
    Keeping the peace means enforcing nonviolent interaction and providing due process for conflict resolution. Liberty isn't the same thing as prosperity/economic power. They are different words for a reason. You can be very poor and very free, or very comfortably enslaved. Liberty is fundamentally your relationship with those who can use legitimate force against you.
    - wbsss4412 5y ago
      Your definition of liberty here is getting really tangled. If liberty is “fundamentally your relationship with those who can use legitimate force against you” then how is having a set monetary policy incompatible with liberty as long as it comes from a “legitimate” source of power?
      - thegrimmest 5y ago
        Because compliance with that monetary policy is enforced with.. force? You must pay taxes in USD, and if you don't you go to jail. The government also conveniently controls the USD supply, which allows the to debase it as they see fit, forcing you to obtain a set amount of USD per year to pay taxes. If the government accepted tax revenue in gold or bitcoin or anything else they don't totally control, you'd be absolutely right.

Spooky23 5y ago

That’s why the regulatory environment of the 20th century is important… Monetary policy that includes full employment provides benefits to the broader population. “Hard money”, gold, Bitcoin, land, etc focused policy only benefits the return on assets for the people with those assets. What we have now is the worst of both worlds.

Manuel_D 5y ago

Is this really the case? Inflation favors debtors over creditors, the upper class tends to be the latter not the former. While it is the case that the value of savings goes down, the lower class are much less likely to save.

vkou 5y ago
It's not the case, but people keep wringing their hands about how inflation robs the poor of the ~$500 they have in their savings accounts, while ignoring how much it helps the middle-class mortgage owner who is in fixed-rate debt for a million dollars. They get away with it because they don't make the distinction between price inflation and asset inflation. The cost of bread doubling is a huge problem for the poor, but means little to everyone else. The cost of assets doubling doesn't matter to the poor, because they have never, and will never save enough money to buy assets. The cost of assets doubling matters greatly against a yuppie who is trying to buy a home. The cost of assets doubling matters greatly in favor of someone who bought a home last week. Inflation sucks for you if you earn minimum wage, because half the country thinks that raising the minimum wage to keep up with inflation means will bring about the apocalypse. Inflation doesn't matter much to you if you're in a high-demand industry, with wages rising to match it. Inflation sucks for you if you're not working, but doesn't matter to you if you are, and there's a labour shortage, which increases your wage bargaining power.
- imtringued 5y ago
  Deflation and inflation are bad because they make people speculate on the currency in either way. Inflation discourages paying off debt. Deflation encourages hoarding. Both of them are harmful because they create a self reinforcing feedback loop. A negative interest rate forces money to circulate and it encourages you to pay off debts. Thereby it eliminates both inflation and deflation.
- VirusNewbie 5y ago
  Let's use an example that might look familiar. If inflation robs the poor person of the $500 and helps the middle class person with a mortgage.... all other things being equal, we transferred wealth from the poor person to the middle class person. yay, with me so far? By the same account, if the middle class person is helped a little bit by inflation, (but also has some cash) the rich person who is leveraged many times over into 10 properties, and has most of their wealth in equities (which themselves are leveraged because of corporate debt) is going to be even better off after the increase in money supply. Their share of the pie grew and the middle class persons maybe grew, but not relative to the rich person. Therefore, that is wealth transfer. The majority of US equities is held by the upper class and corporate debt dwarfs consumer debt (including mortgages).

whakim 5y ago

Inflation is super complicated because it depends on what types of assets are held by whom and how susceptible those assets are to inflation. For example, high rates of inflation during/after WWII were a large contributing factor in a net reduction in wealth inequality, because much of the wealthy was heavily invested in fixed-return war bonds. Much of the rentier economy of the 19th century elite depended on predictably low (almost nonexistant) inflation in order to sustain their fortunes. Theoretically, the financial assets of today's wealthy should be somewhat less vulnerable to inflation (real returns over the last ~80 years seem to be lower during periods of high inflation but it's also sometimes hard to untangle inflation from the overall state of the economy). Ultimately, inflation is a pretty crude instrument in terms of who it affects; I think it's hard to make sweeping statements about who it's "good" for that hold up well over time.

WalterBright 5y ago

> Inflationary monetary policy is wealth transfer into the upper class No, it is a means of wealth transfer to the government without raising taxes. Where does the trillions in deficit spending come from? Inflation! The politicians, of course, know this. But they keep up the misdirection by blaming it on greedy capitalists and/or unions. The notion that it is for monetary stability is also propaganda. Milton Friedman in "Monetary History" showed that instability increased after the creation of the Fed.

imtringued 5y ago
>No, it is a means of wealth transfer to the government without raising taxes. Where does the trillions in deficit spending come from? Inflation! Saving creates a hole in the economy, the trillions of deficit spending are a very stupid way of filling that hole. It works better than doing nothing which is why we do it. >The notion that it is for monetary stability is also propaganda. Milton Friedman in "Monetary History" showed that instability increased after the creation of the Fed. Uh, that is a property of capitalism. It's great at first when debts are low then it gets worse and worse.