4 ms·

Is this really any different than US Monetary policy that leads to continual inflation making your savings worth less over time?

dchest 14y ago
Yes.
- tnuc 14y ago
  You wanna buy a bridge? I got a nice one I can sell you.
- marshray 14y ago
  Please elaborate.
ameister14 14y ago
It's significantly different. If I told you that every year your money would be worth 3% less, that's different than me saying that 10% of your savings are gone now. It's more complex as well because inflation influences salaries and prices, plus the whole long-term vs immediate aspect.
ahomescu1 14y ago
Yes, one problem I see that this is repeatable and not predictable. Continual inflation can be predicted and planned for, but confiscation of people's money can happen whenever the government needs money. What if next week they take another 10%?
snowwrestler 14y ago
The difference is that U.S. monetary policy seeks to create a low, predictable, consistent level of inflation. This allows everyone to incorporate it into their long-term financial plans. It's harder to plan for surprise 10% haircuts.
- thatswrong0 14y ago
  > seeks to create a low, predictable, consistent level of inflation Too bad seeking isn't reality, and too bad it isn't low and isn't consistent. Unless, of course, you alter the metric that measures inflation as the U.S. has done periodically.
deelowe 14y ago
Yes. One is intended as an encouragement to invest and, it works for the most part(401k, roth, 529, etc.. etc..) Most Americans know that that just sticking your money under a mattress is stupid, so we actively invest. Just about anyone in the US with disposable income invests in some way. This is something that benefits society as money that would normally be sitting idle is out in the market being used. And, how it gets used is determined by society and the markets, not a bureaucrat. This, on the other hand, is simply confiscation. There's no plan, no incentive, nothing. It's a short sighted implementation that will hurt things in the long run. What's everyone who's had their money taken from them without warning now thinking? They certainly aren't considering options that allow them to stay active in this country's markets. Quite the opposite, I assume.
- arbuge 14y ago
  I agree with this answer. The expectation in a bank account is that whilst the interest may or may not cover inflation, at least you don't have confiscation to worry about in addition to that.
tsuyoshi 14y ago
Well, for one thing, inflation doesn't cause bank runs. Even if you suppose that inflation is really an asset tax, this tax in Cyprus has just been evaded by anyone who's been keeping their money stuffed under the mattress. Greece, Italy, Spain, etc. will now be lucky if they don't themselves start having a problem with bank runs. Arguably it won't happen elsewhere, but who can say for sure?

dchest 14y ago

Yes.

tnuc 14y ago
You wanna buy a bridge? I got a nice one I can sell you.
marshray 14y ago
Please elaborate.

ameister14 14y ago

It's significantly different. If I told you that every year your money would be worth 3% less, that's different than me saying that 10% of your savings are gone now. It's more complex as well because inflation influences salaries and prices, plus the whole long-term vs immediate aspect.

ahomescu1 14y ago

Yes, one problem I see that this is repeatable and not predictable. Continual inflation can be predicted and planned for, but confiscation of people's money can happen whenever the government needs money. What if next week they take another 10%?

snowwrestler 14y ago

The difference is that U.S. monetary policy seeks to create a low, predictable, consistent level of inflation. This allows everyone to incorporate it into their long-term financial plans. It's harder to plan for surprise 10% haircuts.

thatswrong0 14y ago
> seeks to create a low, predictable, consistent level of inflation Too bad seeking isn't reality, and too bad it isn't low and isn't consistent. Unless, of course, you alter the metric that measures inflation as the U.S. has done periodically.

deelowe 14y ago

Yes. One is intended as an encouragement to invest and, it works for the most part(401k, roth, 529, etc.. etc..) Most Americans know that that just sticking your money under a mattress is stupid, so we actively invest. Just about anyone in the US with disposable income invests in some way. This is something that benefits society as money that would normally be sitting idle is out in the market being used. And, how it gets used is determined by society and the markets, not a bureaucrat. This, on the other hand, is simply confiscation. There's no plan, no incentive, nothing. It's a short sighted implementation that will hurt things in the long run. What's everyone who's had their money taken from them without warning now thinking? They certainly aren't considering options that allow them to stay active in this country's markets. Quite the opposite, I assume.

arbuge 14y ago
I agree with this answer. The expectation in a bank account is that whilst the interest may or may not cover inflation, at least you don't have confiscation to worry about in addition to that.

tsuyoshi 14y ago

Well, for one thing, inflation doesn't cause bank runs. Even if you suppose that inflation is really an asset tax, this tax in Cyprus has just been evaded by anyone who's been keeping their money stuffed under the mattress. Greece, Italy, Spain, etc. will now be lucky if they don't themselves start having a problem with bank runs. Arguably it won't happen elsewhere, but who can say for sure?