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I contend that creating debt money and giving it to tier 1 banks has a much larger wealth transfer effect than deflationary currency. My evidence is the wealth

I contend that creating debt money and giving it to tier 1 banks has a much larger wealth transfer effect than deflationary currency. My evidence is the wealth equality gap increasing from 1972 - current. Inflation does not impact all people in the economy evenly. When new debt money is created it has its full purchasing power. As it works it way through the economy, it loses purchasing power and raises price levels. When the fed creates new money in its accounts, it transfers wealth from all currency holders to the receiver of the new funds. The other mechanism that fiat credit currency increases inequality is fractional reserve lending. With fiat and a central bank (lender of last resort), fractional reserve banks lend a lot more than without fiat money (lower reserve ratio). Increased debt loads (especially debt for consumption) transfer wealth from debtor to creditor. Also, increased debt levels overall benefit creditors in general. See total consumer debt, it started accelerating after 1972. http://www.mybudget360.com/wp-content/uploads/2009/02/debt.png http://www.mybudget360.com/wp-content/uploads/2009/02/debt.p...

dragonwriter 13y ago
> I contend that creating debt money and giving it to tier 1 banks has a much larger wealth transfer effect than deflationary currency. My evidence is the wealth equality gap increasing from 1972 - current. I contend that the wealth equality gap increasing from 1972 to current is better explained as the direct result of fiscal policy, particularly tax policy changes which both reduced the (higher with increasing income) income tax and increased the regressive in part and flat in part payroll tax, and has nothing to do with change from the mostly fiat dollar of the late "gold standard" period to the pure fiat dollar of the post "gold standard" period. > Inflation does not impact all people in the economy evenly. Right, it transfers wealth from net creditors to net debtors through decrease in the value of assets denominated in the inflationary currency.

dragonwriter 13y ago

> I contend that creating debt money and giving it to tier 1 banks has a much larger wealth transfer effect than deflationary currency. My evidence is the wealth equality gap increasing from 1972 - current. I contend that the wealth equality gap increasing from 1972 to current is better explained as the direct result of fiscal policy, particularly tax policy changes which both reduced the (higher with increasing income) income tax and increased the regressive in part and flat in part payroll tax, and has nothing to do with change from the mostly fiat dollar of the late "gold standard" period to the pure fiat dollar of the post "gold standard" period. > Inflation does not impact all people in the economy evenly. Right, it transfers wealth from net creditors to net debtors through decrease in the value of assets denominated in the inflationary currency.