5 ms·

IANAE, but I'll say it's mostly seigniorage to fill up for the fiscal deficit. And if you try to cut the money printer (without taking some.huge debt), you hav

by ajot 5y ago

IANAE, but I'll say it's mostly seigniorage to fill up for the fiscal deficit. And if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit, which is mostly subsidies to electricity, gas and public transport, and non-contributive retirements. You can't, politically speaking (and maybe legally too), cut the retirements, so you have to cut the subsidies, which will increase the measured inflation, at least for a few months.

Izikiel43 5y ago
> You can't, politically speaking (and maybe legally too), cut the retirements Funny enough, that's what the current government did. They removed a law from the previous government which ensured that pensioners would be paid inflation + x% so that their real income won't decrease, and now the government decides on a whim what the pension raise would be (the pensions have been increased by very little very sparsely), effectively cutting retirements, as inflation eats through them. They can't cut subsidies because most of their voters are poor, and if they touch that, shit hits the fan, whereas they don't give a shit about old people, since they lose them money and don't vote for them. I'm so happy to have moved to the us and have a 401k and ira accounts the government can't touch.
- ajot 5y ago
  Well, I meant cut them in a "LOL, no more pensions for you, starve to death or something". But you're right, the use-the-LELIQs-to-increase-retirements plan is marching as intended.
  - Izikiel43 5y ago
    > "LOL, no more pensions for you, starve to death or something". Yeah, they won't say they are doing that, but they are doing that.
ephbit 5y ago
> ... if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit ... Right. Governments would have to do sound budgeting. But people who advocate for a balanced budget typically get laughed out of the room. The way I see it, the real reason why governments most often need ever increasing debt-based budgets is: a growing proportion of the circulating money gets continuously redirected into (and by) the financial sector which puts most of the money in the hands of say the richest 10 %. Because these rich people know best how to avoid/minimize taxation this leads to a lack of tax revenue for the government. Which in turn compels governments to seek other ways to remain capable of acting (deciding how much money for what is one of the key ways of acting out political decisions for every government). So in order to still be able to act, there's only two possibilities left: A) taking on more debt. B) raising taxes. The latter is spectacularly unpopular with most voters (even though additional taxation ought to hit the most wealthy anyway) so it's hardly surprising that most governments prefer taking on more debt. Usually it works "well" because with today's mainstream opinion it's seen as almost natural to take on more debt, whenever big expenses need to be taken care of. Hardly anyone questions the principle, except for Austrian economics proponents, who aren't really taken seriously.

by ajot 5y ago

Izikiel43 5y ago

> You can't, politically speaking (and maybe legally too), cut the retirements Funny enough, that's what the current government did. They removed a law from the previous government which ensured that pensioners would be paid inflation + x% so that their real income won't decrease, and now the government decides on a whim what the pension raise would be (the pensions have been increased by very little very sparsely), effectively cutting retirements, as inflation eats through them. They can't cut subsidies because most of their voters are poor, and if they touch that, shit hits the fan, whereas they don't give a shit about old people, since they lose them money and don't vote for them. I'm so happy to have moved to the us and have a 401k and ira accounts the government can't touch.

ajot 5y ago
Well, I meant cut them in a "LOL, no more pensions for you, starve to death or something". But you're right, the use-the-LELIQs-to-increase-retirements plan is marching as intended.
- Izikiel43 5y ago
  > "LOL, no more pensions for you, starve to death or something". Yeah, they won't say they are doing that, but they are doing that.

ephbit 5y ago

> ... if you try to cut the money printer (without taking some.huge debt), you have to squash the deficit ... Right. Governments would have to do sound budgeting. But people who advocate for a balanced budget typically get laughed out of the room. The way I see it, the real reason why governments most often need ever increasing debt-based budgets is: a growing proportion of the circulating money gets continuously redirected into (and by) the financial sector which puts most of the money in the hands of say the richest 10 %. Because these rich people know best how to avoid/minimize taxation this leads to a lack of tax revenue for the government. Which in turn compels governments to seek other ways to remain capable of acting (deciding how much money for what is one of the key ways of acting out political decisions for every government). So in order to still be able to act, there's only two possibilities left: A) taking on more debt. B) raising taxes. The latter is spectacularly unpopular with most voters (even though additional taxation ought to hit the most wealthy anyway) so it's hardly surprising that most governments prefer taking on more debt. Usually it works "well" because with today's mainstream opinion it's seen as almost natural to take on more debt, whenever big expenses need to be taken care of. Hardly anyone questions the principle, except for Austrian economics proponents, who aren't really taken seriously.