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> Inflation makes it harder for the current generation Inflation benefits borrowers and penalizes lenders. I would posit that younger people tend to be borrow

• caseysoftware 2y ago
  > Final note, inflation helps encourage people to use their money and keep the economy moving. Short term thinking in itself is damaging. But then thinking something is "worth more" because it costs more dollars a year from now is deceptive.. how much did its value increase vs the dollar decrease? But it's convenient for tax authorities as you're taxed on the gains, regardless of the why/how it changed.
  • deleted 2y ago
    [deleted]
  • drdec 2y ago
    > But then thinking something is "worth more" because it costs more dollars a year from now is deceptive.. how much did its value increase vs the dollar decrease? You have missed the point. Inflation encourages activity because your money is worth less a year from now. Better to get something for it, or invest it.
    • chgs 2y ago
      Let’s say you have an economy of 100,000 units of work done in a year and thus is backed by a fixed supply of $100,000 You do enough work for 1/100th of the economy and receive $1000. You keep this in a box and do nothing for years. In years time the work done in the economy is 1 million units, but money hasn’t changed. Your $1000 can no purchase 1:100th of the economy you haven’t built, or 1,000 units of work You receive 900 units of work for free. That’s immoral.
      • kortilla 2y ago
        > That’s immoral. You’re gonna need to back this up with some reasoning. That’s exactly how every asset works when demand outpaces supply.
• cma 2y ago
  > Final note, inflation helps encourage people to use their money and keep the economy moving. The government offers inflation protected securities, matching inflation plus some usually minimal interest.
  • drdec 2y ago
    What does the government do with the monies they receive from said securities? They use it to fund programs, pay salaries, etc.
• bormaj 2y ago
  > Final note, inflation helps encourage people to use their money and keep the economy moving. That also means that costs are increasing, which may have the opposite effect
• zhzjzjzbB 2y ago
  > Inflation benefits borrowers and penalizes lenders. That occurs after the primary beneficiaries of inflation (those who receive freshly printed dollars) take their cut. > Final note, inflation helps encourage people to use their money and keep the economy moving. This is just something people say. Programming equivalent of a factory class. Sure, it makes sense given Java’s language design, but when you realize the underlying design is awful and (at least for the modern US economy) out to hurt you, you look at things a little differently. Inflation is just the rate which the population will accept without revolting. Constant inflation is not good nor needed, but we’d have to change a lot of our monetary policy in a way that results in a much smaller wealth gap (and military).
  • drdec 2y ago
    >> Final note, inflation helps encourage people to use their money and keep the economy moving. > This is just something people say. Do you keep your savings under a mattress? Or do you put it someplace where the money can do work in the economy, like a bank account or bonds or stocks?
• rvba 2y ago
  What you write is theory from economic books. Reality is that the bank just indexes your loan with inflation, so you have to pay more. Inflation is just a hidden tax on everyone - and people should protest against it. Great way of the rich (who are heavily invested in assets, not cash) and government (who gets cash inflows from the central bank - and central bank makes money by printing money) to screw the poor.
  • ff317 2y ago
    The hole in the system, though, is fixed-rate loans over the long term, and the ability to refinance relatively-cheaply. If you buy a house when rates and inflation are low, then over the life of the loan you'll win on inflation. All you have to do is hang on to that low-interest loan. If you happen to buy when rates are high, then you refinance the next time they're low and hold that loan. It's the ability to (worst-case, "eventually") lock in a low rate for decades that lets you win from inflation in the long term. There are a lot of people that were holding onto real estate loans at ~2-4% throughout the pandemic monetary+housing inflation cycle that made out very well. They didn't have to predict it or time it, they just grabbed a low-rate loan some time back whenever they could, and then waited for the inevitable to eventually happen.
  • wqaatwt 2y ago
    How is it much worse than other indirect taxes? At least it provides benefits that VAT or sales taxes don’t like allows central banks to stabilize the financial system and reduce the outfall from boom and bust cycles (which were much worse pre 1830s). Also if we look back price stability under the gold standard is a myth. Prices might have been broadly similar in 1800 and 1900 but there were some massive ups and downs in between that lasted decades. Predictable and stable inflation seems like a much smaller issue
    • rvba 2y ago
      Inflation does not provide any benefit.
      • 2y ago
• Aeolun 2y ago
  > Inflation benefits borrowers and penalizes lenders. How does that follow? The only reason I can afford a house is because the interest rate is near zero. At a 5% rate I’d be priced out of the market, and pay 2x more money eventually.
  • drdec 2y ago
    To clarify, it benefits people who have previously borrowed.