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The greatest deception ever is the one where individuals expect the dilution of their hard earned money as something a healthy economy must suffer. Inflation i

by maeon3 14y ago

The greatest deception ever is the one where individuals expect the dilution of their hard earned money as something a healthy economy must suffer. Inflation is stealing, the recipients of the pilfer are the ones who print the money out of thin air and spend it, and the ones who are the pilfered are the ones who work hard to save money, and store it away, and return to it to find it worthless. 60 years ago new cars cost like $300. Today they cost $20k. Had you stored "A car" in cash 60 years ago, today you would not be able to buy one. A currency is supposed to be a stable store of value, not a one in constant decline. Gold is money, it does the same thing, but in reverse, because it can't be diluted.

rayiner 14y ago
> A currency is supposed to be a stable store of value This is a fundamental misunderstanding. Currency is nothing more and nothing less than a proxy for goods and services. It simply decouples bartering transactions. Consider the scenario of saving in the present to buy a car 50 years in the future. Forget about money, and think in terms of the underlying bartering transactions. Say in the present someone will trade you a car in return for 1,000 hours of labor as a woodworker. How can you defer this bartering transaction, through a "stable store of value" without money? Nearly anything you might care to buy and save will degrade over 50 years. Meanwhile, improvements in productivity will devalue your productivity over 50 years, and improvements in technology will mean that the car you buy in 50 years will be much more intrinsically valuable than the car you would have bought now. "Saving" is not a fundamental primitive of the economy. It has no real natural analogue in the bartering economy. It's something that only seems so if you confuse money with the intrinsically valuable goods and services of the economy.
- barking 14y ago
  Except that when a government prints too much of the stuff it's diluting the value.
- pjzedalis 14y ago
  That's why I dislike the currency = proxy for goods and services. It seems more accurate to say it's debt. When a person has earned/acquired currency it does not mean anything. Proxy for goods/services only goes so far as someone accepts it. Debt feels more accurate because in order to be debt someone must owe. Collectively our society has agreed that we will exchange currency as debt. A debt that someone else will desire to exchange goods/services for. This guarantee is enforced by the central banking system. "Saving" makes much more sense when you view it as collecting debt for the future. It's in the Government's and banks best interest to inflate the currency to limit the repayment of your debts.
  - rayiner 14y ago
    The debt analogy obscures the physical nature of whats happening. Its non-intuitive how to conceptually separate the value of debts from notions of money. Though it does clarify that someone in the future must be on the other side of the transaction.
  - eli_gottlieb 14y ago
    "Saving" makes much more sense when you view it as collecting debt for the future. It's in the Government's and banks best interest to inflate the currency to limit the repayment of your debts. Other way around: inflation devalues existing debts. A small, predictable inflation is a little economic rule that says, "Actual goods and services today are this percentage better than a mere promise of goods and services one year from now." This sounds like it's immoral, in a way, encouraging consumption and profligacy. But of course, your consumption is someone else's sale; what it really encourages is the production and sale of actual goods and services that hold value better than money (anything from steel to apples to video games). Predictable inflation is a check and balance on the otherwise-natural tendency of capitalism to eat itself by valuing capital assets above all else.
    - pjzedalis 14y ago
      I don't disagree. Some get upset about governments and banks "printing money." My point was they are not upset/concerned to do so as it benefits them.
- yxhuvud 14y ago
  I actually think you are wrong here. Money does not decouple bartering transactions as bartering transactions is not what we would have without money. In practice, we'd have a society that lends services and goods in return for other services and goods. Money allows this to work a lot better and allow the creation of real markets and greatly improves the ability to set a fair price.
pjzedalis 14y ago
Cars are better today then they were 60 years ago. I would not presume that their prices should remain equal.
- maeon3 14y ago
  but an hour of toil from a human in 1950 is an hour of toil from a human in 2000. ultimately we are exchanging toil for toil, and inflation is theft from the global pool of toil. it's akin to a thief seeing two men exchange potatoes for beans and getting in the middle and taking a fraction of the potatos and beans and running off and eating them without compensating the producers. Inflation =stealing.
anigbrowl 14y ago
30 years ago a 5 gigabyte hard disk cost $250,000, now it costs about $1. You might want to read The Wealth of Nations for an in-depth explanation of how over-reliance on gold can strangle and economy; in a nutshell, those who possess it have every incentive to take it to wherever it can yield the highest return, and an economy once starved of currency rapidly grinds to a halt.
mbetter 14y ago
Gold is not money.
- maeon3 14y ago
  Gold has held it's value and increased in value since it was first recognized as a currency. Since the US Dollar was created, it has lost 99.99% of its value. Gold = Money. When you get some in your possession, you have something people will covet, and continue to covet as long as gold can't be created from thin air. USD = Not Money. It's a socialist shared bank account where others can withdraw from it without you knowing about it.
  - mbetter 14y ago
    You could have just said that you don't understand what money is.
yxhuvud 14y ago
In the great scheme of things, I'd claim that it is a much more important function of money to a: facilitate trade and b: have a predictable value in the short to medium term, compared to having a value that is stable in the really long term. The main reason we have money is not to store value, but to make the economy run as smooth as possible.
jamoes 14y ago
> Inflation is stealing This cannot be overstated. All other points the monetary scientists try to make are simply distractions from this core point. Inflating the money supply is the literal theft from everyone holding that money.
- maeon3 14y ago
  So true, The fact that smart people are defending inflation is a testament to how thorough the media machines are at tricking people into thinking theft equals productivity. I hope bit coin or something equivalent takes off. I just want to see the look on the Federal Reserve's face when they realize they can't steal any amount of money immediately from every holder of wealth.

by maeon3 14y ago

rayiner 14y ago

> A currency is supposed to be a stable store of value This is a fundamental misunderstanding. Currency is nothing more and nothing less than a proxy for goods and services. It simply decouples bartering transactions. Consider the scenario of saving in the present to buy a car 50 years in the future. Forget about money, and think in terms of the underlying bartering transactions. Say in the present someone will trade you a car in return for 1,000 hours of labor as a woodworker. How can you defer this bartering transaction, through a "stable store of value" without money? Nearly anything you might care to buy and save will degrade over 50 years. Meanwhile, improvements in productivity will devalue your productivity over 50 years, and improvements in technology will mean that the car you buy in 50 years will be much more intrinsically valuable than the car you would have bought now. "Saving" is not a fundamental primitive of the economy. It has no real natural analogue in the bartering economy. It's something that only seems so if you confuse money with the intrinsically valuable goods and services of the economy.

barking 14y ago
Except that when a government prints too much of the stuff it's diluting the value.
pjzedalis 14y ago
That's why I dislike the currency = proxy for goods and services. It seems more accurate to say it's debt. When a person has earned/acquired currency it does not mean anything. Proxy for goods/services only goes so far as someone accepts it. Debt feels more accurate because in order to be debt someone must owe. Collectively our society has agreed that we will exchange currency as debt. A debt that someone else will desire to exchange goods/services for. This guarantee is enforced by the central banking system. "Saving" makes much more sense when you view it as collecting debt for the future. It's in the Government's and banks best interest to inflate the currency to limit the repayment of your debts.
- rayiner 14y ago
  The debt analogy obscures the physical nature of whats happening. Its non-intuitive how to conceptually separate the value of debts from notions of money. Though it does clarify that someone in the future must be on the other side of the transaction.
- eli_gottlieb 14y ago
  "Saving" makes much more sense when you view it as collecting debt for the future. It's in the Government's and banks best interest to inflate the currency to limit the repayment of your debts. Other way around: inflation devalues existing debts. A small, predictable inflation is a little economic rule that says, "Actual goods and services today are this percentage better than a mere promise of goods and services one year from now." This sounds like it's immoral, in a way, encouraging consumption and profligacy. But of course, your consumption is someone else's sale; what it really encourages is the production and sale of actual goods and services that hold value better than money (anything from steel to apples to video games). Predictable inflation is a check and balance on the otherwise-natural tendency of capitalism to eat itself by valuing capital assets above all else.
  - pjzedalis 14y ago
    I don't disagree. Some get upset about governments and banks "printing money." My point was they are not upset/concerned to do so as it benefits them.
yxhuvud 14y ago
I actually think you are wrong here. Money does not decouple bartering transactions as bartering transactions is not what we would have without money. In practice, we'd have a society that lends services and goods in return for other services and goods. Money allows this to work a lot better and allow the creation of real markets and greatly improves the ability to set a fair price.

pjzedalis 14y ago

Cars are better today then they were 60 years ago. I would not presume that their prices should remain equal.

maeon3 14y ago
but an hour of toil from a human in 1950 is an hour of toil from a human in 2000. ultimately we are exchanging toil for toil, and inflation is theft from the global pool of toil. it's akin to a thief seeing two men exchange potatoes for beans and getting in the middle and taking a fraction of the potatos and beans and running off and eating them without compensating the producers. Inflation =stealing.

anigbrowl 14y ago

30 years ago a 5 gigabyte hard disk cost $250,000, now it costs about $1. You might want to read The Wealth of Nations for an in-depth explanation of how over-reliance on gold can strangle and economy; in a nutshell, those who possess it have every incentive to take it to wherever it can yield the highest return, and an economy once starved of currency rapidly grinds to a halt.

mbetter 14y ago

Gold is not money.

maeon3 14y ago
Gold has held it's value and increased in value since it was first recognized as a currency. Since the US Dollar was created, it has lost 99.99% of its value. Gold = Money. When you get some in your possession, you have something people will covet, and continue to covet as long as gold can't be created from thin air. USD = Not Money. It's a socialist shared bank account where others can withdraw from it without you knowing about it.
- mbetter 14y ago
  You could have just said that you don't understand what money is.

yxhuvud 14y ago

In the great scheme of things, I'd claim that it is a much more important function of money to a: facilitate trade and b: have a predictable value in the short to medium term, compared to having a value that is stable in the really long term. The main reason we have money is not to store value, but to make the economy run as smooth as possible.

jamoes 14y ago

> Inflation is stealing This cannot be overstated. All other points the monetary scientists try to make are simply distractions from this core point. Inflating the money supply is the literal theft from everyone holding that money.

maeon3 14y ago
So true, The fact that smart people are defending inflation is a testament to how thorough the media machines are at tricking people into thinking theft equals productivity. I hope bit coin or something equivalent takes off. I just want to see the look on the Federal Reserve's face when they realize they can't steal any amount of money immediately from every holder of wealth.