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> Of course, for being a left wing economist, it isn't difficult to see a possible reason why he favours monetary policy: it devalues currency, taking more from
by ef4 12y ago
> Of course, for being a left wing economist, it isn't difficult to see a possible reason why he favours monetary policy: it devalues currency, taking more from those who hold large cash balances.
This is one of those memes that just won't die: currency devaluation isn't bad for the rich. It's bad for the poor. The rich hold the vast majority of their wealth in inflation-proof assets. Their housing costs are fixed because they own houses. The poor hold what little liquid wealth they have in cash, and their housing costs are variable because they rent.
If inflation was the pro-poor policy, you could be damn sure we wouldn't have experienced it consistently for a hundred years.
This confusion springs from the idea that inflation is a pro-debtor policy. But the biggest debtors by far are rich people and institutions. Nobody lends poor people tens of thousands of dollars to buy securities on margin, or millions to build real estate developments.
- MarkPNeyer 12y ago> This confusion springs from the idea that inflation is a pro-debtor policy. we have made debt slightly less awful to be in, at the cost of making the entire world run on debt, and putting as many people into debt as possible. a situation where everyone had all their needs met and didn't need to spend any money would cause the world to come falling apart at the seams. ridiculous.
- parasubvert 12y agoThe reality is more complicated. Wages tend to be sticky downwards, therefore the main way to dig a country out of a balance sheet recession is through currency devaluation, which forces a haircut through other means. It's how Canada and Germany rebounded in the 90s. Yes, this hurts the poor and middle class, as inflation does (though it also can help - people that bought houses in the 70s effectively got a discount), but unemployment hurts more.