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Inflation (but not hyperinflation) benefits people in debt, and hurts people with savings. Is having savings nowadays considered intrinsically less moral or som

Inflation (but not hyperinflation) benefits people in debt, and hurts people with savings. Is having savings nowadays considered intrinsically less moral or something? Inflation targeting of, say, 2%, is the balance that takes into account the sometimes competing interests of all these groups (savers, borrowers, wage earners, people who live off investments, etc). Deviation into either direction causes long-term structural problems.

harimau777 4y ago
In my experience, service sector working class people generally have no savings due to low wages and high cost of housing. I think it's not that people view saving as immoral; rather they view it as a class indicator. It appears that if the lower class starts seeing wage increases, then our economy falls apart and/or the Fed steps in to stop it. That suggests that our economy is broken with respect to the lower class.
- PragmaticPulp 4y ago
  > In my experience, service sector working class people generally have no savings due to low wages and high cost of housing. Statistically, a lot of middle class people save their wealth in their houses, which are bought via mortgages. Inflation benefits those people significantly by raising the value of their house and making their 30-year fixed mortgages (in the US) easier to pay off. It's not so great for people in other countries with variable rate mortgages, though.
  - harimau777 4y ago
    I agree that's the case for people who own homes. However, many (most?) lower class people do not own homes. Even the lower side of middle class can't afford homes in much of the country.
- refurb 4y ago
  No, what happens is wage pressure translates into higher input costs and higher prices thus fueling inflation. And that hurts low wage workers because any wage increase gets eaten up by inflation and cycle continues. If we were in a low inflation environment then the fed wouldnt be concerned about low unemployment and rising wages at all.
  - harimau777 4y ago
    I don't think that's different than what I said. Wages started increasing and the economy started to fall apart prompting the Fed to step in. That means that the system is broken. There is no way for the lower class to get ahead. If they make higher wages then prices will simply increase so that they aren't actually ahead.
    - refurb 4y ago
      Of course there are ways for the lower class to get ahead - economic growth without high inflation. Like I said in another comment, if wages were going up in a low inflation environment, the fed wouldn't be concerned at all.
mempko 4y ago
Savings and Debt are two sides of the same coin. The savings in your bank account is someone else's debt. The Bank of England has a great explanation of this here: https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... In other words, loans create deposits, not the other way around. Savers are hoarding cash which leads to a decrease in aggregate demand, and also ironically their ability to save in the future.
bjourne 4y ago
Yes, savings are "intrinsically less moral" as savings are money not being used. And since wealth accumulates itself the more savings the more income inequality. It is intrinsically immoral that the wealth controlled by two dozen Western families is larger than the wealth of three billion people.
- 988747 4y ago
  Yes, God forbid that people have savings and be able to survive hard times by themselves, we should all be neck deep in debt, and rely on our wonderful government to take care of us. Financial independence makes you a public enemy and potential terrorist. /s
- bluefirebrand 4y ago
  > It is intrinsically immoral that the wealth controlled by two dozen Western families is larger than the wealth of three billion people. I think many people would agree. But there's a huge difference between people who are sitting like dragons on hoards of money, and your average person saving money for emergencies, for retirement, for a home down payment, for vacations, whatever else. Most people are not behaving immorally by saving money. Some people who are absolutely hoarding money absolutely are behaving immorally.
- kspacewalk2 4y ago
  >Yes, savings are "intrinsically less moral" as savings are money not being used. Incorrect. Savings (i.e. bank deposits, financial instruments of various degrees of risk, from GICs to junk bonds) are very much being used, they are lent to other entities. Few people "save" by stuffing pieces of paper or gold coins under a mattress. >And since wealth accumulates itself the more savings the more income inequality. The logical error here is to think of savers and borrowers as permanent classes. In fact most people's life trajectory starts out as them borrowing more (for education, house, etc) and gradually transitions into them saving more (for retirement, inheritance). You need a healthy mix of borrowers and savers in a healthy economy. They help each other by participating on the opposite ends of a transaction from which they both benefit (i.e. not zero sum). And, as an aside, wealth/income inequality is not somehow intrinsically negative, like for example poverty would be. Poor or middle-class people in a rich but very unequal society may very well be much better off than poor or middle-class people in a poor but more equal one. >It is intrinsically immoral that the wealth controlled by two dozen Western families is larger than the wealth of three billion people. It is not. Let's say there's a policy which raises the standard of living (or amount of wealth) of the bottom 3 billion people by 1.2x, but raises the amount of wealth of the top two dozen dastardly Western families by 1.3x. This increases wealth inequality, and yet it is intrinsically moral to pursue this policy.

harimau777 4y ago

In my experience, service sector working class people generally have no savings due to low wages and high cost of housing. I think it's not that people view saving as immoral; rather they view it as a class indicator. It appears that if the lower class starts seeing wage increases, then our economy falls apart and/or the Fed steps in to stop it. That suggests that our economy is broken with respect to the lower class.

PragmaticPulp 4y ago
> In my experience, service sector working class people generally have no savings due to low wages and high cost of housing. Statistically, a lot of middle class people save their wealth in their houses, which are bought via mortgages. Inflation benefits those people significantly by raising the value of their house and making their 30-year fixed mortgages (in the US) easier to pay off. It's not so great for people in other countries with variable rate mortgages, though.
- harimau777 4y ago
  I agree that's the case for people who own homes. However, many (most?) lower class people do not own homes. Even the lower side of middle class can't afford homes in much of the country.
refurb 4y ago
No, what happens is wage pressure translates into higher input costs and higher prices thus fueling inflation. And that hurts low wage workers because any wage increase gets eaten up by inflation and cycle continues. If we were in a low inflation environment then the fed wouldnt be concerned about low unemployment and rising wages at all.
- harimau777 4y ago
  I don't think that's different than what I said. Wages started increasing and the economy started to fall apart prompting the Fed to step in. That means that the system is broken. There is no way for the lower class to get ahead. If they make higher wages then prices will simply increase so that they aren't actually ahead.
  - refurb 4y ago
    Of course there are ways for the lower class to get ahead - economic growth without high inflation. Like I said in another comment, if wages were going up in a low inflation environment, the fed wouldn't be concerned at all.

mempko 4y ago

Savings and Debt are two sides of the same coin. The savings in your bank account is someone else's debt. The Bank of England has a great explanation of this here: https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... In other words, loans create deposits, not the other way around. Savers are hoarding cash which leads to a decrease in aggregate demand, and also ironically their ability to save in the future.

bjourne 4y ago

Yes, savings are "intrinsically less moral" as savings are money not being used. And since wealth accumulates itself the more savings the more income inequality. It is intrinsically immoral that the wealth controlled by two dozen Western families is larger than the wealth of three billion people.

988747 4y ago
Yes, God forbid that people have savings and be able to survive hard times by themselves, we should all be neck deep in debt, and rely on our wonderful government to take care of us. Financial independence makes you a public enemy and potential terrorist. /s
bluefirebrand 4y ago
> It is intrinsically immoral that the wealth controlled by two dozen Western families is larger than the wealth of three billion people. I think many people would agree. But there's a huge difference between people who are sitting like dragons on hoards of money, and your average person saving money for emergencies, for retirement, for a home down payment, for vacations, whatever else. Most people are not behaving immorally by saving money. Some people who are absolutely hoarding money absolutely are behaving immorally.
kspacewalk2 4y ago
>Yes, savings are "intrinsically less moral" as savings are money not being used. Incorrect. Savings (i.e. bank deposits, financial instruments of various degrees of risk, from GICs to junk bonds) are very much being used, they are lent to other entities. Few people "save" by stuffing pieces of paper or gold coins under a mattress. >And since wealth accumulates itself the more savings the more income inequality. The logical error here is to think of savers and borrowers as permanent classes. In fact most people's life trajectory starts out as them borrowing more (for education, house, etc) and gradually transitions into them saving more (for retirement, inheritance). You need a healthy mix of borrowers and savers in a healthy economy. They help each other by participating on the opposite ends of a transaction from which they both benefit (i.e. not zero sum). And, as an aside, wealth/income inequality is not somehow intrinsically negative, like for example poverty would be. Poor or middle-class people in a rich but very unequal society may very well be much better off than poor or middle-class people in a poor but more equal one. >It is intrinsically immoral that the wealth controlled by two dozen Western families is larger than the wealth of three billion people. It is not. Let's say there's a policy which raises the standard of living (or amount of wealth) of the bottom 3 billion people by 1.2x, but raises the amount of wealth of the top two dozen dastardly Western families by 1.3x. This increases wealth inequality, and yet it is intrinsically moral to pursue this policy.