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This is an horrible example given that since 71 the este of inflation in the US has gone down, not up, while at the same time during the post warn, and during t

This is an horrible example given that since 71 the este of inflation in the US has gone down, not up, while at the same time during the post warn, and during the strong keynesian period it is considered to be a golden age where anyone could buy a house, while at the same time the inflation rates where the highest What op doesn't mention is that high inflation doesn't per se desincentivize saving, rather it encourages to invest in high returns endeavors, or in assets which don't strongly devaluate, as for example housing, of which most people on the planet being able to own their own small home is their biggest investment of their lifetimes, and again, part of what made "the American dream" what it was, sadly all of that is dead now, so we have millions living in tents in Cali

imtringued 5y ago
The problem with Keynes is that he dismissed Silvio Gesell's idea of having expiring bank notes. Yes, a modern implementation will probably look very different, no stupid stamps but the principle is much better than attempting to eliminate liquidity preference with inflation.
BirAdam 5y ago
You’re missing the long term. The inflation went down after having changed buying patterns, and that inflation didn’t disappear. Hence, it is (in general) always better to operate on debt than on cash as long as your interest rate is low (which has been the case for 30 years now). This drives up consumption patterns over-all. Next, while this does drive the purchasing of investment class assets, those are not necessarily high-return. The reason the stock market keeps going up is not that everyone is suddenly making double the revenue. The stock market has turned into a ponzy-esque scheme where the higher and higher valuations are driven only by people seeing the numbers go up. The actual returns per share are not rising as quickly as the share prices. Funny you should mention housing, as the housing market predictably crashed in 2008 (Ron Paul called it quite well, as did those who bet against the market). It will happen again as many of the same mistakes have been made. Even without derivatives on property, or even the easy lending, people have been taking massive loans due to interest rates, and this has driven a dramatic rise in housing costs. As more and more people are priced out, and rents continue to increase the potential buying/renting pool shrinks which will eventually cause another crash even if nothing else does.
- imtringued 5y ago
  Actually, 2008 was supposed to be the end of the economic system. It should have resulted in a great depression and a massive increase in political polarization and violence. Yet for some strange reason, we are merely limping away from it and that event is becoming a faint memory in another decade. People didn't take on massive loans due to interest rates, banks were handing out massive loans and this forced them to lower interest rates. People save first, then the money must be invested, either directly in stocks or indirectly through loans where the borrower invests in his company. If there is a flood of savings, then there will be a flood of loans as well.
- eli_gottlieb 5y ago
  >Funny you should mention housing, as the housing market predictably crashed in 2008 (Ron Paul called it quite well, as did those who bet against the market). It will happen again as many of the same mistakes have been made. Even without derivatives on property, or even the easy lending, people have been taking massive loans due to interest rates, and this has driven a dramatic rise in housing costs. As more and more people are priced out, and rents continue to increase the potential buying/renting pool shrinks which will eventually cause another crash even if nothing else does. If you want to avoid housing bubbles and crashes, you have to legalize building more houses.
  - another_story 5y ago
    Also building up. Higher density housing should be the norm in most places. In the US it's the exception and leads to poor public transport, the need for a car, long commutes, etc...
- nly 5y ago
  2008 barely touched to the UK property market. It was a mostly US phenomenon.

imtringued 5y ago

The problem with Keynes is that he dismissed Silvio Gesell's idea of having expiring bank notes. Yes, a modern implementation will probably look very different, no stupid stamps but the principle is much better than attempting to eliminate liquidity preference with inflation.

BirAdam 5y ago

You’re missing the long term. The inflation went down after having changed buying patterns, and that inflation didn’t disappear. Hence, it is (in general) always better to operate on debt than on cash as long as your interest rate is low (which has been the case for 30 years now). This drives up consumption patterns over-all. Next, while this does drive the purchasing of investment class assets, those are not necessarily high-return. The reason the stock market keeps going up is not that everyone is suddenly making double the revenue. The stock market has turned into a ponzy-esque scheme where the higher and higher valuations are driven only by people seeing the numbers go up. The actual returns per share are not rising as quickly as the share prices. Funny you should mention housing, as the housing market predictably crashed in 2008 (Ron Paul called it quite well, as did those who bet against the market). It will happen again as many of the same mistakes have been made. Even without derivatives on property, or even the easy lending, people have been taking massive loans due to interest rates, and this has driven a dramatic rise in housing costs. As more and more people are priced out, and rents continue to increase the potential buying/renting pool shrinks which will eventually cause another crash even if nothing else does.

imtringued 5y ago
Actually, 2008 was supposed to be the end of the economic system. It should have resulted in a great depression and a massive increase in political polarization and violence. Yet for some strange reason, we are merely limping away from it and that event is becoming a faint memory in another decade. People didn't take on massive loans due to interest rates, banks were handing out massive loans and this forced them to lower interest rates. People save first, then the money must be invested, either directly in stocks or indirectly through loans where the borrower invests in his company. If there is a flood of savings, then there will be a flood of loans as well.
eli_gottlieb 5y ago
>Funny you should mention housing, as the housing market predictably crashed in 2008 (Ron Paul called it quite well, as did those who bet against the market). It will happen again as many of the same mistakes have been made. Even without derivatives on property, or even the easy lending, people have been taking massive loans due to interest rates, and this has driven a dramatic rise in housing costs. As more and more people are priced out, and rents continue to increase the potential buying/renting pool shrinks which will eventually cause another crash even if nothing else does. If you want to avoid housing bubbles and crashes, you have to legalize building more houses.
- another_story 5y ago
  Also building up. Higher density housing should be the norm in most places. In the US it's the exception and leads to poor public transport, the need for a car, long commutes, etc...
nly 5y ago
2008 barely touched to the UK property market. It was a mostly US phenomenon.