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Yes it's pushed by those people, but does inflation really benefit them? I mean whether a currency deflates or inflates, it's not like it matters to the guys wh

by Rury 4y ago

Yes it's pushed by those people, but does inflation really benefit them? I mean whether a currency deflates or inflates, it's not like it matters to the guys who have the money printer, as after all, they can at any time, make themselves more or less money, inflation/deflation be damned. Additionally, supposedly at some level the currency would be abandoned by the markets, if either inflation or deflation became too bad, so they actually don't benefit from too much inflation, but instead from a stable value which creates a need for their currency. Anyhow, as far as I can see, inflation mainly benefits those who own assets, and disadvantages those who don't (ie people hoarding cash or the young & working poor who have few assets). Deflation is the opposite. It advantages those who hoard cash and those who have few assets, and disadvantages people who own many assets.

WalterBright 4y ago
> Yes it's pushed by those people, but does inflation really benefit them? The inflation is a side effect of the benefit they get by printing money to spend. In effect, the value that others see as inflation is the value the printer gets by printing it. Counterfeiting works the same way. Inflation benefits people who have borrowed money at fixed rates. Owning assets does not inure one against inflation, because one gets to pay capital gains tax on the inflated value of the asset. (Another reason the government loves inflation, as we get to pay taxes on illusory "capital gains".) This is why the government tries so hard to blame inflation on Putin, greedy corporations, supply chain disruptions, anything but the real cause. It always does this, remember Gerald Ford with his WIN buttons (Whip Inflation Now), where he pushed the complete nonsense that inflation could be stopped if merchants would just stop raising prices?
- Rury 4y ago
  Do you look at what the Fed actually spends their printed money on? Almost all of it is financial contracts which simply yield them their money back, which if defaulted on, have no repercussions on them since they own a money printer that makes what the contracts yield in the first place. So to say they're benefiting in some way by printing and spending money on such things, is kind of like saying, a car manufacturer benefits when they manufacture a car, lend it out for someone to use, simply in exchange for getting their car back in the future. I mean I guess, but not really since they could also save themselves some hassle, by manufacturing themselves the thing and not lending it out in the first place? But sure, the people at the Fed also pay themselves a nice wage which they spend in exchange for personal goods and services and to live and stuff, but to the extent they do is not anything like you think it is. Heck, there are people elsewhere which make more money. And considering it takes work to manufacture dollars, and lend it to other in need of having some stable metric to do trade with, do they not deserve a wage in exchange for the work involved for doing such a service? > Inflation benefits people who have borrowed money at fixed rates Agreed, such as everyone who has borrowed money from the Fed, and almost all money is borrowed from the Fed. (Now do you see why they might push the argument that inflation is good for the economy?) > Owning assets does not inure one against inflation, because one gets to pay capital gains tax on the inflated value of the asset The problem with this argument, is twofold. One is in assuming taxes completely negate gains on capital. Obviously taxes are a drag on gains, but it is a fractional amount of the gains. Meaning, you still make some gains. So in this sense, it still does insure you from inflation, just not completely. But the second and real issue, is that you don't have to realize gains and incur taxes to benefit from owning assets during inflation. If you already own and still need, say a truck, and inflation has caused trucks to appreciate in value, you simply benefit from not needing to purchase another truck at now inflated prices.
  - WalterBright 4y ago
    > One is in assuming taxes completely negate gains on capital Inflationary gains on capital assets are NOT gains in real value. Capital gains taxes from inflation are a wealth tax, not an income tax.

by Rury 4y ago

WalterBright 4y ago

> Yes it's pushed by those people, but does inflation really benefit them? The inflation is a side effect of the benefit they get by printing money to spend. In effect, the value that others see as inflation is the value the printer gets by printing it. Counterfeiting works the same way. Inflation benefits people who have borrowed money at fixed rates. Owning assets does not inure one against inflation, because one gets to pay capital gains tax on the inflated value of the asset. (Another reason the government loves inflation, as we get to pay taxes on illusory "capital gains".) This is why the government tries so hard to blame inflation on Putin, greedy corporations, supply chain disruptions, anything but the real cause. It always does this, remember Gerald Ford with his WIN buttons (Whip Inflation Now), where he pushed the complete nonsense that inflation could be stopped if merchants would just stop raising prices?

Rury 4y ago
Do you look at what the Fed actually spends their printed money on? Almost all of it is financial contracts which simply yield them their money back, which if defaulted on, have no repercussions on them since they own a money printer that makes what the contracts yield in the first place. So to say they're benefiting in some way by printing and spending money on such things, is kind of like saying, a car manufacturer benefits when they manufacture a car, lend it out for someone to use, simply in exchange for getting their car back in the future. I mean I guess, but not really since they could also save themselves some hassle, by manufacturing themselves the thing and not lending it out in the first place? But sure, the people at the Fed also pay themselves a nice wage which they spend in exchange for personal goods and services and to live and stuff, but to the extent they do is not anything like you think it is. Heck, there are people elsewhere which make more money. And considering it takes work to manufacture dollars, and lend it to other in need of having some stable metric to do trade with, do they not deserve a wage in exchange for the work involved for doing such a service? > Inflation benefits people who have borrowed money at fixed rates Agreed, such as everyone who has borrowed money from the Fed, and almost all money is borrowed from the Fed. (Now do you see why they might push the argument that inflation is good for the economy?) > Owning assets does not inure one against inflation, because one gets to pay capital gains tax on the inflated value of the asset The problem with this argument, is twofold. One is in assuming taxes completely negate gains on capital. Obviously taxes are a drag on gains, but it is a fractional amount of the gains. Meaning, you still make some gains. So in this sense, it still does insure you from inflation, just not completely. But the second and real issue, is that you don't have to realize gains and incur taxes to benefit from owning assets during inflation. If you already own and still need, say a truck, and inflation has caused trucks to appreciate in value, you simply benefit from not needing to purchase another truck at now inflated prices.
- WalterBright 4y ago
  > One is in assuming taxes completely negate gains on capital Inflationary gains on capital assets are NOT gains in real value. Capital gains taxes from inflation are a wealth tax, not an income tax.