4 ms·

And simply live with high inflation? Sound great, I'm sure the poor will have a great time.

bolanyo 4y ago
The poor are not necessarily the most affected by inflation, and can be among the least affected. Being poor means having around no dollar-denominated wealth, and usually less than zero.
- weatherlite 4y ago
  Rent, food and energy gets more expensive with higher inflation. That's not a picnic for poor people with low incomes. The rich are affected as well but not in any way that actually hurts their lifestyle. Instead of having X million dollars they will have 0.8X million dollars.
  - deleted 4y ago
    [deleted]
  - bolanyo 4y ago
    Wages also go up with higher inflation.
    - weatherlite 4y ago
      Not as fast. Also unemployment goes up, and if we're talking about the poor (which I am) there's a lot of unemployment.
      - bolanyo 4y ago
        I think both those claims are significantly at odds with the overwhelming consensus of both mainstream and heterodox economic thought.
        weatherlite 4y ago
        That's interesting actually, everyone I read says inflation is worst for the poor (is this surprising?). Where are you getting this from?
        bolanyo 4y ago
        The definition of inflation is a deterioration of the value of money. Nothing about this requires or suggests that it affects the prices of some goods more than others, or prices more than wages. If there is relative movement between distinct prices, or between prices and wages, this is an orthogonal phenomenon to "inflation", by definition. The idea that inflation and unemployment move inversely and (broadly speaking) represent a policy trade-off is literally the first chapter of Macro 101. With all respect, I see it as very difficult to discuss economics on any serious level with someone who is not aware of this notion, or who believes the opposite is true (as opposed to someone who has a critique or a nuanced view of it).
        weatherlite 4y ago
        I have only two points, both are very well supported. 1) Inflation (high, not the good kind of 2%) hurts the poor more than the rich https://www.dallasfed.org/research/economics/2023/0110#:~:text=Low%2Dincome%20households%20most%20stressed,few%20ways%20to%20reduce%20spending%20 https://www.dallasfed.org/research/economics/2023/0110#:~:te.... 2) To tame high inflation central banks need to raise interest rates, thus creating unemployment and economic slowdown in general https://rsmus.com/insights/economics/how-high-must-unemployment-rise-to-tame-inflation.html https://rsmus.com/insights/economics/how-high-must-unemploym.... That's also much worse for the poor than the rich (who can afford not to work a few years without being thrown to the streets) But honestly, you're right, we are talking past each other here there is nothing to be gained.
jarsin 4y ago
I believe deflation death spiral is coming due to the fed drastically over tightening. It will be worse for the poor than inflation.
- weatherlite 4y ago
  I agree with you that's worse. Hopefully these are not our only two options. Anyway in the first signs of a true depression (which we are nowhere near at as unemployment is at a historic low) the Fed will likely lower interest rates. But I agree things are difficult. There's a huge amount of debt in the system, the highest its ever been, and growth is low and inflation is rather high. Seems like every generation insists on leaving the young with higher debt and worse off ecological ecosystem. We'll likely do the same to our kids until something truly collapses.

The poor are not necessarily the most affected by inflation, and can be among the least affected. Being poor means having around no dollar-denominated wealth, and usually less than zero.

weatherlite 4y ago
Rent, food and energy gets more expensive with higher inflation. That's not a picnic for poor people with low incomes. The rich are affected as well but not in any way that actually hurts their lifestyle. Instead of having X million dollars they will have 0.8X million dollars.
- deleted 4y ago
  [deleted]
- bolanyo 4y ago
  Wages also go up with higher inflation.
  - weatherlite 4y ago
    Not as fast. Also unemployment goes up, and if we're talking about the poor (which I am) there's a lot of unemployment.
    - bolanyo 4y ago
      I think both those claims are significantly at odds with the overwhelming consensus of both mainstream and heterodox economic thought.
      - weatherlite 4y ago
        That's interesting actually, everyone I read says inflation is worst for the poor (is this surprising?). Where are you getting this from?
        bolanyo 4y ago
        The definition of inflation is a deterioration of the value of money. Nothing about this requires or suggests that it affects the prices of some goods more than others, or prices more than wages. If there is relative movement between distinct prices, or between prices and wages, this is an orthogonal phenomenon to "inflation", by definition. The idea that inflation and unemployment move inversely and (broadly speaking) represent a policy trade-off is literally the first chapter of Macro 101. With all respect, I see it as very difficult to discuss economics on any serious level with someone who is not aware of this notion, or who believes the opposite is true (as opposed to someone who has a critique or a nuanced view of it).
        weatherlite 4y ago
        I have only two points, both are very well supported. 1) Inflation (high, not the good kind of 2%) hurts the poor more than the rich https://www.dallasfed.org/research/economics/2023/0110#:~:text=Low%2Dincome%20households%20most%20stressed,few%20ways%20to%20reduce%20spending%20 https://www.dallasfed.org/research/economics/2023/0110#:~:te.... 2) To tame high inflation central banks need to raise interest rates, thus creating unemployment and economic slowdown in general https://rsmus.com/insights/economics/how-high-must-unemployment-rise-to-tame-inflation.html https://rsmus.com/insights/economics/how-high-must-unemploym.... That's also much worse for the poor than the rich (who can afford not to work a few years without being thrown to the streets) But honestly, you're right, we are talking past each other here there is nothing to be gained.

jarsin 4y ago

I believe deflation death spiral is coming due to the fed drastically over tightening. It will be worse for the poor than inflation.

weatherlite 4y ago
I agree with you that's worse. Hopefully these are not our only two options. Anyway in the first signs of a true depression (which we are nowhere near at as unemployment is at a historic low) the Fed will likely lower interest rates. But I agree things are difficult. There's a huge amount of debt in the system, the highest its ever been, and growth is low and inflation is rather high. Seems like every generation insists on leaving the young with higher debt and worse off ecological ecosystem. We'll likely do the same to our kids until something truly collapses.