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Referencing the advancement of technology is doubly tone deaf, as tech points out the fundamental problem with the artificial inflation aspect of their mandate.
by mindslight 3y ago
Referencing the advancement of technology is doubly tone deaf, as tech points out the fundamental problem with the artificial inflation aspect of their mandate. If you had $3000 in the 1990's, you could buy a 33MHz 486 with a 14" CRT. Or you could have buried the money as cash under a rock, dug it out in 2024, and bought a desktop, laptop, tablet, and phone that each dwarfed the capabilities of the 486. Yet you would have been utterly stupid do the latter, considering all you would have missed out on. Technology is the glaring example that shows today's consumption does not depend on the threat of prices being higher tomorrow.
But sure, if one still wants to toe the party line that artificial inflation is necessary, that still doesn't justify all of the resulting newly created money having been given to the financial sector as low interest loans just to bid up an asset bubble and create a bunch of make-work white collar jobs shuffling the paperwork. That money could have instead been spent for deliberate purposes, like infrastructure and mitigating the societal damage from offshoring (yet another thing that would have caused natural deflation had it been allowed). But all that wealth was basically looted under the auspices of "fiscal responsibility", leaving Wall Street incredibly rich (and bloated), while continually turning the financial screws on Main Street.
- AlexandrB 3y agoCan you explain what you mean by "artificial inflation"? For example, much of the 1970s inflation was caused by a spike in energy prices because of an oil embargo from OPEC countries. Is this artificial inflation (because it was precipitated by political decisions) or real inflation (because a necessary commodity got more expensive)?
- mindslight 3y agoI would call that real inflation, as it's the market responding to an external event, even though that event is human-made. Artificial inflation is what we had for the past three decades where even though resources were plentiful and things were getting less expensive to produce (eg offshoring, technology), prices were still going up a few percent per year because the Fed's mandate is to artificially create even more new money to prevent the deflation bogeyman. In other words "moving production to Mexico/China may cost us some jobs but will be made up for by lower prices for everyone" was ultimately a lie due to Fed policy making lower prices impossible.
- maxsilver 3y agoMost people use the term "artificial inflation" to reference the price of products going up for no real-world reason, or when the company lies about the reason. (As in, the price increase is explainable entirely -- or almost entirely, in higher margins for the company), but that the company blames on "inflation" anyway. If "Company X" is publicly saying "our prices are higher because of inflation", but you can also clearly see that their costs are not meaningfully different and their margins are higher, simply because the market has no alternative but to eat them, that's "artificial inflation".