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Ask HN: Is somewhat high inflation a net good for the U.S. longterm?
I understand that economics is a rather complex subject and this isn't exactly the place for a non-technical discussion, but I greatly enjoy the insights of the HN crowd so thought I'd post this. In July of 2021 I had an interesting conversation with a former investment banker about economics and he made the claim that inflation would be necessary for the U.S. to basically inflate away a good portion of its debt (and of course, erode the savings of dollar holders at the same time). Given U.S. debt levels and still relatively high employment levels domestically, could high(ish) inflation in the U.S. be a net good? I understand the dramatic ramifications on prices for things like homes, but maybe in the end a little pain in that area means that local/state govts will finally engage in permitting reform and help bring down prices in other ways.
- deleted 4y ago[deleted]
- f1shy 4y agoI've no idea of economics. But I lived in a country where for a decade we had deflation. Let me tell you: not a good thing! At the beginning, seems good, each time you buy something, is cheaper as before... but that has the down side: people start to speculate: they do not buy what they need, they wait until the very last moment. Moreover, the money in the bank, is a good thing, each time it is more value... so "don't spend". May seem a little thing, but when the whole economy goes in that train, it starts to stop everything, which in turn makes more deflation... you get the idea. It was explained to me, at that time, that a little bit of inflation is a good thing, and keeps the wheel turning. Maybe somebody who really knows about economics may laugh...
- ephbit 4y ago> ... they do not buy what they need, they wait until the very last moment. If someone is waiting to buy a thing not because they can't get the thing but because they want it cheaper, do they _really_ need the thing? I'd say no, not really. Just a few examples of things where people tolerate very little waiting for: food, shelter / warm home, communication with others, transport to work place, and so on. There's plenty of things in the economy, that people basically don't wait for, just because they might become cheaper. This part of the economy is what I would call the essentials and it won't be harmed by some deflation. Let's be honest. We live in times where people are addicted to consuming too much of the non-essentials, which is why our ecosphere is literally disintegrating beneath our feet and above our heads. It's a good thing when people find new ways to spend their time other than buying and using stuff they don't really need. People can get back to their misuse of consumption as a drug as soon as production and use of the non-essentials will in some distant future finally have become sustainable/green.
- PaulHoule 4y agoSee https://www.federalreserve.gov/faqs/economy_14400.htm https://www.federalreserve.gov/faqs/economy_14400.htm