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Excessive inflation is destructive but it requires a better explanation than that. In a vacuum, if we all have 3-10% more money and things are 3-10% more expen
by cynicalkane 1y ago
Excessive inflation is destructive but it requires a better explanation than that.
In a vacuum, if we all have 3-10% more money and things are 3-10% more expensive, we're not poorer unless there are secondary effects that make us poorer. It's the secondary effects that inflation has on investment, markets, and transfer of wealth that are negative. The effects of debt collapse during economic crisis is a considerably more expensive effect, and not one that's good for the poor, or the rich, or the middle class or anyone.
If you "genuinely cannot understand this", consider that the traditional perspective is that the point of an economy is to produce useful goods and services, not to produce an aesthetically pleasing inflation number. Recall that, in early 2020, markets were facing the greatest panic since the 1929 crash. The debt collapse and deflation that followed then precipitated an enormous amount of misery. I'm personally pretty happy we didn't get another Great Depression; Covid was bad enough without that happening.
- cowpig 1y ago> if we all have 3-10% more money and things are 3-10% more expensive Who has 3-10% more money, exactly?
- yread 1y agoNot the people with savings account
- pmg101 1y agoAnyway with money invested in inflation-hedged assets. Also anyone with a wage since wages rise with inflation too (not always and not always immediately, but generally correlated).
- cowpig 1y agoNot abstractly. Specifically, in the United States, since COVID. The parent reply hand-waves away a point about bad policy by making an abstract point about inflation from money-printing, as if citizens of the United States are molecules in a thought experiment about the laws of physics, as opposed to individual people affected in specific (differing) ways by policies.
- lesuorac 1y agoTo piggy-back, the economy runs on the re-circulation of money and the reluctant to spend/lend money in 1929 contributed to why it was so bad (This is what Bernake got a nobel prize for showing [1]). So you really want the government to synthetically make the money supply larger so that the lower velocity of money ends up being the "correct" velocity. Its like ordering 2 sides of fries at a restaurant so when somebody takes one of your sides you still end up with the desired amount. However, since the government doesn't turn off the money printing when the shock is over there really is strong argument that they shouldn't turn it on during the shock because it just makes the next shock even worse. [1]: https://en.wikipedia.org/wiki/Ben_Bernanke#Nobel_Prize https://en.wikipedia.org/wiki/Ben_Bernanke#Nobel_Prize