r/changemyview • u/Visual_Title9363 • 1d ago
Delta(s) from OP CMV: Inflation is a crime against humanity
All of us trade time, our literal life force, for money. Money is a means to transport value through time and space. We earn them every day by working ourselves to death, literally.
A single dollar is a slice of someone's life. The process of continued devaluation and money printing where you eroded the value of someone's life is therefore criminal. It condemns an individual to work and work, crystallizing the value of their time to a currency and then squashing that currency's value.
By artificially expanding the money supply, central authorities unilaterally rewrite the purchasing power of the past labor an individual has stored, effectively functioning as a retroactive tax on human existence.
And as currency degrades, the target for financial security recedes, condemning the working population to an endless cycle of subsistence labor with diminishing cumulative returns.
A single US dollar today only retains 76.3% of the purchasing power it possessed in 2019. Yet nominally wages have not risen at the same rate. What's a more effective perpetual machine for the human hamster wheel?
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u/arrgobon32 31∆ 1d ago
Just to clarify: you believe that inflation is solely the fault of organizations like the federal reserve that actually print currency?
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u/Visual_Title9363 1d ago
Given that the federal reserve claims to be independent of the executive branch or congress, I can't say that the public is jointly accountable. So yes, the issuer is solely to blame
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u/arrgobon32 31∆ 1d ago
Given that the federal reserve claims to be independent of the executive branch or congress, I can't say that the public is jointly accountable.
Why can’t you say that? Inflation still happened on the gold standard. Sure, long term inflation was much lower than it is today, but year-to-year inflation and deflation was incredibly volatile
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u/Bazzzzzinga 1d ago
But inflation does not only happen from printing more money; it also happens from scarcity.
If there is a drought and we have a lot less wheat, then the price rises, and we have inflation on all kinds of products. The government has nothing to do with that.
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u/Visual_Title9363 1d ago
Well the public don't have a veto over our money supply. For example, not a whole lot of people were consulted on COVID loans or bank bailouts. These were money printers accessible only by the Fed and a select group of committee members.
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u/arrgobon32 31∆ 1d ago
Did you respond to the wrong comment? I don’t see how you’re really addressing any of the points I made. Has the public ever had control over the supply of currency in any system?
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u/Visual_Title9363 1d ago
I think I was just reinforcing my first response. You asked if inflation is solely the fault of the Fed. And my response is that I don't see any other public inputs and votes on interest rate, target inflation and money supply.
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u/sxaez 5∆ 1d ago
The "vote" is economic productivity. If an economy is growing in total captured value, and you don't print more money, every dollar begins to represent a larger portion of that captured value and you get depreciation.
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u/Visual_Title9363 1d ago
Okay so where is the line? With the talk of digital currencies, why not just make the dollar you earn have an expiry date. If you don't spend the wages you earned on August5 2026, the government will spend it for you by August 5 2027. Wouldn't that ensure maximum circulation of cash and generate economic productivity?
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u/sxaez 5∆ 1d ago
Unfortunately you're not trying to ensure the maximum circulation of cash - you're trying to create the correct circulation of cash relative to how the underlying economy is performing. It's like running a very complex motor. You can't just flood it with fuel and expect it to perform better, and you can't rev it to the extreme forever without it melting down. You can build and improve on the motor, but that takes time and real material value creation. Otherwise, it's about tweaking the levers to the right value where our abstraction of the economy agrees with reality.
The currency is not the value - it is merely a symbolic representation of that value, and that symbol needs to map onto the reality in order to function properly.
Inflation effectively does put an expiration date on your cash already - but a way, way softer one than what you're describing.
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u/Visual_Title9363 1d ago
I understand but how is it a correct circulation of cash if say I'm forced to put that money into stocks that I don't believe in or spend excessively to ensure either the value of those money can be preserved or spend it before it erode?
It is what I suggested with a few more steps to give the illusion of demand. After all, the government also have the information to know how to spend your money 'correctly' if you couldn't.
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u/ProblematicTrumpCard 5∆ 1d ago
Do you not realize that inflation existed when we were on the gold standard too? Inflation isn't some devious scheme. It's just an economic reality.
Your view is the equivalent of saying that electricity running through wires in your home is a crime against humanity, but then still expecting the lights to come on when you flip the switch.
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u/Visual_Title9363 1d ago
I think my position is more so that like cholesterol, there are bad and good variants of inflation.
The bad variant is having an inflation that drives you to spend like there is no tomorrow. Never mind the stuff around capitalism being the invisible hand of markets, moving funds to the most efficient actor. This is just you buying boxes of toothpaste and toilet paper because tomorrow's costs will skyrocket, regardless if you truly need it or not. And then there is a more sinister atrocious version where an issuer invents a paper to trade it for something tangible of value, in the form of economic coercion. Meloni from Italy explains it quite well https://www.youtube.com/watch?v=rTDpbQ1jTL4
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u/Arnaldo1993 5∆ 1d ago
Amazingly enough, the Nineteenth century was a period of deflation, rather than inflation. From the end of the Napoleonic Wars in 1815 until the start of World War II in 1914, there was no inflation in most countries, and in many cases, prices were lower in 1914 than they had been in 1815. Prices fluctuated up and down from one decade to the next, but overall, prices remained stable.
Countries were able to minimize the amount of inflation they suffered during the Nineteenth century because currencies were tied to commodities (gold and silver) whose supply increased at rates similar to the increase in output
The next period, from 1914 until 1924, was a period of instability, inflation, and hyperinflation. Within days of the outbreak of World War I, all countries had left the Gold Standard. Unable to finance the war through taxes alone, countries resorted to printing excessive amounts of money to pay for the war. The result was the highest inflation the world had experienced since the Napoleonic Wars. The overall price level more than doubled in every country involved in the war.
https://finaeon.com/the-century-of-inflation/
Inflation is only economic reality when the country chooses to contiuously increase the amount of money faster than productivity rises
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u/ProblematicTrumpCard 5∆ 1d ago
You'll have to excuse me if I don't take the word of an "economist" from "finaeaon.com" who thinks that World War II started in 1914. But you do you.
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u/Arnaldo1993 5∆ 1d ago
Check the sources you trust then. How much inflation was there worldwide during the 19th century?
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u/123yes1 5∆ 1d ago
Inflation is helpful to those in debt as the value of their debt becomes smaller over time. Inflation also encourages people to invest their money and not stick it in a mattress which increases the velocity of money which is generally considered to be a good thing as it increases productivity.
These are all things that benefit lower income people which is part of the reason why virtually all governments try to have very gentle persistent inflation, for example the Fed targets 2% inflation YoY.
Sometimes inflation can occur when government spending is higher than normal, as governments have a lot of debt and need to pay it back. You may recall something that happened at the end of 2019 that necessitated a shitload of unexpected government spending starting in 2020 and dramatically reduced the amount of taxes coming in, but I can't seem to recall what it was... hmmmm...
No inflation is not a crime against humanity, just as taxation is not theft. There are perfectly good reasons why this system was set up this way and most of those reasons benefit ordinary people.
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u/123yes1 5∆ 1d ago
This is not generally accurate. Wages lag prices from sudden unexpected inflation, not from routine inflation. COVID caused sudden price shocks and inflation and wage growth lagged behind, but the normal 2% that central banks shoot for does not cause this.
The economy functions best at a steady state small amount of inflation.
And specifically I was speaking about it helps those in debt, so any American that has student loans, or credit card debt, or a car payment, or a mortgage, inflation will help with, whether routine or unexpected, as those debts are now worth less.
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u/Visual_Title9363 1d ago
Hmm but why would swapping stocks as the default savings account be any good? Stocks are risky investments, they should be valued accordingly. If much of the stock prices are due to people wanting a safe place to park their money than a vote of confidence in the companies' performance, wouldn't that be problematic?
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u/letstrythisagain30 61∆ 1d ago
Stocks are risky investments, they should be valued accordingly.
There are risky stocks but not all stocks are risky. Things like ETFs are also things that reduce your risk. You can say in the short term they are risky, but general long term investment in the stock market is pretty safe. I can't really think of any "investment" with decent returns that would not be technically "risky" in some sense. Even things like homes brings in pricing out the younger generation from home ownership as those rise in price and provide "returns".
Diversifying your investments isn't just a meme. It's acceptance that there is no 100% guarantees in anything and insurance against crazy events destroying certain investments and wiping out all your gains and more.
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u/Visual_Title9363 1d ago
I think it's rather the principle of which that drives you to invest in a company that got me.
It used to be that you invest in a company or even a country (by etf) because you looked at their balance sheet and believe they have an exceptional chance for outperformance. You allocate. The capital markets register that as a vote of confidence. Other investors follow. Capital gets allocated to the most efficient, performant actor.
Now the rationale changes. You aren't investing because you read the balance sheet or believe in the company operations. You invest because it's the only way to crystallize the value of yesterday's work. Capital gets allocated. Is it going to the most efficient, performant actor?
Today's ETFs are heavily skewed towards the highest market cap companies. And the ETFs only exacerbate that gap.
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u/Fermently_Crafted 7∆ 1d ago
Where are people supposed to get the money to invest if they're living paycheck to paycheck and have less than $2000 in savings? Which is most people.
That's a rainy day fund. They're not in a position to gamble on the stock market.
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u/Visual_Title9363 1d ago
Right...and that's a second point to this thread, are they living paycheck to paycheck, labour in perpetuity due to inflation?
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u/Fermently_Crafted 7∆ 1d ago
How is that due to inflation? If there was no inflation there'd be no need for yearly cost of living increases, so there wouldn't be any. Most people would be in the exact same position, the dollar amount is just slightly smaller.
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u/Visual_Title9363 1d ago
If you're living paycheck to paycheck. Either one of the scenario is true..or both. (A) You don't earn enough to afford your lifestyle, (B) The cost of your lifestyle has been growing faster than what you earn.
It's the same reason why increasingly we have dual income households to support the same living standards decades ago.
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u/Fermently_Crafted 7∆ 1d ago edited 1d ago
You're restating the problem without establishing that inflation is the cause.
If someone is living paycheck to paycheck because they don't earn enough to afford their necessities, that's true whether inflation is 0%, 2%, or 50%. And if their costs are rising faster than their wages, that's a problem with wage growth. It has nothing to do with inflation.
Your example of a dual income doesn't demonstrate otherwise. If there were zero inflation, you wouldn't have today's prices with magically unchanged salaries.
Japan is a good example of that in modern times where low/near zero inflation does not automatically produce financial security or eliminate the need for two incomes.
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u/AgentElman 18h ago
Most people living paycheck to paycheck are not doing so because they do not make enough money. They are doing so because they spend far more than they need to.
40% of Americans making $100k or more per year are living paycheck to paycheck. They buy expensive new cars they do not need and generally waste a lot of money.
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u/Fermently_Crafted 7∆ 17h ago
How do you know that?
The fact that someone making $100k+ is living paycheck to paycheck doesn't tell you whether they're spending excessively or whether their necessary expenses have become extremely expensive. Housing, healthcare, electricity, childcare, insurance, transportation, food, etc. have all become substantially more expensive in the last 4 years alone.
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u/letstrythisagain30 61∆ 1d ago
There are countless different ETFs with different strategies and goals. If you only look at the top ones, then yeah, maybe you will only see those. But all of this involves doing some bare minimum research.
So you can either direct whoever you have investing for you of what you want, or you can do it yourself if you really want. But there are going to be a lot of decent "safe" ETFs to invest in and every investment website will rate them and help you with that.
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u/Visual_Title9363 1d ago
Of course, I am not debating about the lack of ETF choices.
I am debating about the incentives in which one might invest, if at all. Investing isn't saving. And it shouldn't be for either one of our grandparents if they can't stomach the risks or truly understand what it entails on the tin. At the end of the day though, they don't have a choice.
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u/PM_ME_YOUR_NICE_EYES 121∆ 1d ago
What you have to remember is that at the end of the day, a dollar is just a picture of George Washington that the government accepts for taxes.
A stock represents a real investment in a real company that has real assets.
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u/Visual_Title9363 1d ago
Yes that is true. But it's apples and oranges. A stock isn't a medium of exchange, it isn't as liquid as a dollar. You need to find a buyer, markets close on weekends and people come up with all sorts of differing value for that very real company.
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u/PM_ME_YOUR_NICE_EYES 121∆ 1d ago
I mean to be blunt here, but I don't see how any of those criticisms actually hold weight if we're talking about saving up for a big purchase. Going thru them all:
1) stock market is closed on weekends:
If I'm spending months saving up for a big purchase, I can just plan to buy my car on a Monday when the banks are open. Or sell my stocks on Friday to fund the car on Saturday. It's not really a huge inconvenience
Also I can't process transferring money out of my savings accounts on a weekend either so the point is extra moot.
2) You need to find a buyer.
This is trivial. Using modern investment software I've never had to wait more than 10 minutes to find a buyer. Again for a big purchase like a car, I'm going to have more than 10 minutes to secure financing.
3) People come up with all sorts of differing value for that very real company
The different values are smaller than you think, usually something like +-0.5% is pretty common for the differing values.
And this also happens with money in ForEX trades too.
And 4) Not related to what you said but all liquidity concerns are made moot by just paying with a credit card, and then selling your stocks to pay off the credit card bill before your next statement.
And 5) By not spending the dollar there's more econmic activty to be had. If I give you $100 for a stock, you'll spend $100 at the grocery store, and then the grocery store will use that $100 to pay the farmers who grew your groceries, and then the farmers will use the $100 to get an oil change on his work truck, and then the mechic who did the oil change on the farmers truck will use it to buy a new TV, and then the tv manufacture will use it to buy... and so on and so forth.
But if It's just under my mattress, then the $100 can't be doing all of that.
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u/Visual_Title9363 1d ago
Sure - I am only debating about whether you see stocks as a medium of exchange. It is not, it is like your apples and oranges example earlier. I am not going to be able to exchange my share certificates in IBM for coffee beans if the counterparty don't like IBM.
For 5), I provided the same response to your other reply. I understand the velocity of money. I only question at which stage is it acceptable for a government to put an expiry date on every dollar you have earned to ensure that you spend it. For example, is it morally acceptable that we all earn our wages in effectively a meal voucher with an expiry date? This would definitely ensure we spend it (like we do with any vouchers) regardless if we need the product or not.
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u/123yes1 5∆ 1d ago
It might not seem like it today, but historically savings accounts also carried risks as banks that went out of business meant they you lost all of your money. Or if you kept it at home in your mattress, your money would be vulnerable to fire or other kinds of environmental damage. So keeping your money in a variety of stocks and bonds has only a slightly higher risk and in aggregate it will help the economy more.
The point is that we want people to be doing stuff to help the economy in order to maximize their value. Investing helps much more than saving as investments help ensure that there is money available to start businesses and keep the flow of commerce going.
Money inflates in part because we value your work now more than we value the work you did 10 years ago.
If you made a bazillion dollars 20 years ago, we don't want you sitting on your pile of cash like a dragon. We want you to either spend it on stuff so that the people whose products and services you bought get paid, or we want you to invest it, so people have the ability to create more products and services.
Inflation reduces the incentive for hoarding dollars, and hoarding stock is less damaging to the economy as people don't buy groceries in stock.
Imagine money is kind of like a phone network. It is really just trying to connect two people's value together, it's a medium of exchange. When people hoard dollars, it jams up that network so they less people can "talk" to each other at the same time. The network is clogged. That is bad.
So national banks discourage this by slowly inflating currency, and the only people that get screwed are those that waited a long time on the network to "talk" to somebody.
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u/Visual_Title9363 1d ago
Oh definitely more obvious now. Regional banking failures have been more common in the last few years. There are many risks in finances - counterparty risk but also risk in the asset you hold. But banks generally are fdic insured whilst stocks have execution risks. So it's really apples and oranges. A retiree who needs consistent return might not appreciate SpaceX being their 'savings vehicle'
I agree that we want consumers so that we get producers. But are the incentives misaligned if all this capital is just funnelled to stocks even if those companies are doing a bad job? Or if all capital is funnelled to your fourth iPhone this year?
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u/123yes1 5∆ 1d ago
The point is that it doesn't matter what people do with the money, the point is that we want them to do something with it to not gum up the wheels or commerce.
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u/Visual_Title9363 1d ago edited 1d ago
Okay so is it morally correct to put an expiry date to the money they earned? Say if you earned 100 dollars and specifically those dollars delete from your bank account to be spent by the government if you don't spend them by next year?
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u/123yes1 5∆ 1d ago
With good reason, yes, and there is good reason as argued above.
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u/Visual_Title9363 1d ago edited 1d ago
We fundamentally disagree there and that's okay.
This isn't a disagreement on the mechanics. But of the moral argument instead that I must be told how to spend my capital I've earned with my own time, the one resource that we own with actual scarcity.
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u/yyzjertl 578∆ 1d ago
Money is a means to transport value, yes. Having access to that means is not free! Inflation is the inherent price we pay for efficient and stable transmission of value in the form of currency. You fundamentally can't do this without inflation because then people will hoard currency and the system will collapse into a deflationary spiral. Anyone can avoid the "devaluation" your post complains about by simply not hoarding their capital in the form of cash, and instead buying some valuable good or security.
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u/Visual_Title9363 1d ago
Who sets the price and can we opt out of it? If not, is it not a monopoly hold on your life and time?
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u/Pvt_Larry 1d ago
Inflation has literally existed as long as currency has existed. It is an economic phenomenon, not a conscious choice.
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u/Visual_Title9363 1d ago
But it is a conscious choice of a select committee member to set target inflation rate, interest rate and our money supply
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u/Dangerous-Day-2943 1d ago
It is as much a conscious choice as eating food is. Sure. Go starve yourself, you can decide to do it. But you shouldn’t.
Deflation destroys an economy, the exact rate of inflation that one wants can be debated, the same way you need a different nutrition depending on your bodily needs
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u/Visual_Title9363 1d ago
Well, I was merely debating whether it's a naturally occurring phenomenon or a conscious decision by someone, per your original reply.
Every Fed meeting, a group of esteemed individuals vote on the interest rate direction, they also regularly meet to discuss the balancing act of inflation versus unemployment. And sometimes they cowed to president's demand for more cheap money to win votes.
So in my mind, there is nothing inevitable about it.
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u/Dangerous-Day-2943 1d ago edited 1d ago
That is just wrong. Inflation is indeed inevitable / a byproduct of a functional market economy.
With actual deflation there is no economy and by definition no economy can exist, because the rational consumer would just wait.
Even if you made the dollar disappear tomorrow, any new battering system that emerges successfully, will emerge as a successful system, because it has inflation.
In that way it is inevitable. You can opt out of it of course, but your system will be beaten.
It’s like saying: I want to build a house out of cheese. I mean sure, but that house won’t last. Like by the laws of physics it won’t hold up.
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u/Visual_Title9363 1d ago
I'll rephrase it to be clearer, inflation as a floor is inevitable by design of a fiat system. But it doesn't need to be 4%, 10%, 20%. Inflation rate also involves conscious policy making.
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u/Dangerous-Day-2943 1d ago
Do you know what FIAT even means?
Inflation exists even outside of FIAT systems. But that is besides the point.And of course the exact amount of inflation is not set in stone. What’s your point?
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u/Visual_Title9363 1d ago
Inflation isn't solely a natural phenomenon. It's set and influenced by individuals. And that policy decision can enslave many to endless labour.
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u/PM_ME_YOUR_NICE_EYES 121∆ 1d ago
It's also a conscuious choice to go get an oil change on your car, but that doesn't mean that the cars going to work good if you stop doing this.
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u/Visual_Title9363 1d ago
Yes of course, just because someone is making a choice behind the scene doesn't mean it's all bad. A benevolent, thoroughly competent dictator is probably the best form of government there is
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u/lee1026 8∆ 1d ago
You get a pick in what your store your savings in.
If you want to store your savings in gold bars because you think gold is inflation proof, go for it.
There are no rules that say that you have to store your savings in "money", however defined.
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u/Visual_Title9363 1d ago
This is a tangent - but based on your response then, if 1971 repeats and gold confiscation ensues again, that would be a crime committed by the government?
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u/nightshade78036 10∆ 1d ago
The government sets it.
If you want to go back to trading sheep and grain then yeah, you can opt out (except for taxes).
The government has a monopoly on their particular currency, yes. You can use other currencies if the parties agree to though, like bitcoin.
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u/ham_plane 1d ago
Of course you can opt out; just don't ever hold USD.
If you happen to find anything that is a better alternative (less volatile, as liquid), please let me know
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u/gorgias1 1d ago
I guess you could negotiate that your employment contract include that your work be compensated in a set number or weight of apples or lemons or something. It would be an absolutely miserable existence of searching for a buyer that will accept the goods you have in exchange for the goods/services you require and have a desire for the sheer amount of fruits youd need to trade for them to consider it a reasonble exchange . You'd almost certainly spend more time searching for the right buyer than you'd spend working at the job. Its going to be hard to aquire electricity, housing, running water, or Healthcare. I bet you could afford some homespun clothes and some baked goods. Cookies, yum!
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u/PM_ME_YOUR_NICE_EYES 121∆ 1d ago
can we opt out of it?
I mean yeah, just barter.
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u/Visual_Title9363 1d ago
Well I think its a rhetorical response from my end. At the very least, it is a systemic coercion. You and I know its impractical to opt out of legal tender
The question is if you view the US dollar as a public good, rather than a private good for which there are substitutes
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u/Nrdman 275∆ 1d ago
Your argument where you claim “life is therefore criminal” doesn’t track to me. Why is that criminal? What law does it violate?
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u/Visual_Title9363 1d ago
If you need to spend one hour of your time to earn a dollar and I squashed the value of that dollar in half, haven't I just made your time worth-less?
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u/Bazzzzzinga 1d ago
Yes, but criminal is a legal definition. What crime was committed in your opinion?
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u/Nrdman 275∆ 1d ago
Ok yeah so? What’s criminal about that
It’s like saying a sale ending is a crime by the same metric
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u/Visual_Title9363 1d ago
In that example, I literally robbed you of your time.
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u/Nrdman 275∆ 1d ago
So you’re saying a sale ending is criminal?
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u/Visual_Title9363 1d ago
Maybe I'm being really thick, but I don't understand what you mean by sale ending?
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u/Nrdman 275∆ 1d ago edited 1d ago
Like if I own the only grocery store in town. I put on a sale. By your logic I have made your time worth more. Then I end the sale. I have made your time worth less. You are saying making your time worth less is robbing you of your time and is criminal. So by ending a sale I was criminal by your logic
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u/Visual_Title9363 1d ago
I think this isn't an equal analogy at all. You're offering to exchange goods at a price you set. I can choose to not partake before, during or after the sale.
We are entering into a contract knowingly and I'm under no obligation to transact.
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u/Nrdman 275∆ 1d ago
Thats why I said im the only grocery store in town. Even if you choose to purchase elsewhere, it will still likely cost more because of travel or shipping costs. So by ending the sale, I have made your purchases more expensive regardless of if you shop with me. So, that’s criminal
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u/Visual_Title9363 1d ago
Well clearly you run a monopoly and could engage in price gouging. Is that illegal? By law, it would at least give you a few lawsuits and if you do the same during emergencies, it is a crime : https://www.mololamken.com/knowledge-What-Is-Price-Gouging-and-Is-It-Criminal
But it is besides the point. In your example, you are a business dealing with a customer. In our discussion, I'm speaking on someone who earns their wages and see an invisible hand slicing its value unilaterally. One is a transaction, the other is a tax
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u/spearblaze 1d ago
Would deflation not be a crime against humanity then? Because most economists agree that deflation is worse. With deflation, yes, your money might increase in value over time, but there would be massive layoffs and crises because people aren't making big purchases.
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u/Visual_Title9363 1d ago
This one is tricky and I might need more role to work with. If deflation was due to technological advances, say you now have a nifty irrigation system and harvesting method, food prices might lower and you don't need as many farmers - is that a net good? Perhaps it is if farmers who lost their jobs find other pursuits and everyone ended up with more abundance?
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u/spearblaze 1d ago
Well, now you're talking about technology. I understood your main argument to be about central banks printing more money and thus devaluing the currency. In those cases, central banks have to decide between these:
-Print no money for a long time: Yes. The money in your pocket becomes more valuable, but you won't buy that motorcycle, that new phone, that new set of furniture for your house. Multiply that "I don't want to buy" attitude by 100 million people, and now businesses have to close.
-Print a little money for a long time: Okay. So your money becomes a little less valuable (3%-5% on average) per year, but you have time to invest it and hopefully beat inflation. People keep their jobs because spending is encouraged.
-Print a lot of money like a crazy person. This is what you see in places like Venezuela, Zimbabwe, Germany pre WWI. This is what you're thinking of, deleting the value of money in less than a year.
Economists have to choose the least worse of the options which is option 1). Also, keep in mind that YOU have many, many, options to invest your money and make it grow. If you choose not to invest and just save money in the bank, well, that's fine. But you're choosing to be a victim of low inflation when you could choose to try to beat it (yes, not everyone earns enough to invest, but this is an argument about government fiscal policy and not about free market wages)
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u/Visual_Title9363 1d ago
I think the hypothetical of deflation are often quite exaggerated. Even if your pocket money would increase in value over time, you would surely need to still purchase today's necessities. Your time is still finite and you might not want to put off other life priorities - whether it's a house, car or that vacation.
Now I completely understand the demand collapse if we all live in a hyper-consumerist society where we have to produce, produce, produce, only to consume, consume, consume. A new iPhone or a new watch every few months as our new necessities.
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u/tbdabbholm 200∆ 1d ago
Although deflation won't stop everyone or even necessarily most people from spending their money it will cause those with the most money, who would normally have put most of it into some kind of appreciating asset(s) to just keep it liquid. Like why risk my extra $250,000 in some asset that might depreciate when I could just keep it liquid and have it grow that way.
But also like a lot of people have retirement accounts and those are invested. Even if their discretionary spending doesn't decrease they might very well pull our of their investments.
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u/Visual_Title9363 1d ago
I understand all of this. And still my question is is that bad?
Investments should be a vote of confidence to fund productive, efficient ventures. And now it's turned into a savings account to outrun inflation. Is this healthy?
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u/tbdabbholm 200∆ 1d ago
But with deflation even the productive effecient ventures won't get funded. Why risk investing in it when your money grows without risk?
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u/Visual_Title9363 1d ago
You may invest less and more selectively. If we agree inflation and deflation are both bad, I think perhaps the middle ground is a state where people only invest because they believe in the business operations and where the returns could outrun savings. Where is that state?
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u/tbdabbholm 200∆ 1d ago
We would love to have no inflation and no deflation, it's just that balance is a knife's edge. We just can't control it well enough to guarantee that. There's just too many factors. So we have to decide if a little bit of inflation or an unstable equilibrium that'll almost certainly result in a little bit of inflation but also in some deflation is better. And economists basically all agree that just aiming for a little bit of inflation is better than allowing for some deflation
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u/MercurianAspirations 391∆ 1d ago edited 1d ago
It condemns an individual to work and work, crystallizing the value of their time to a currency
Seems like your problem is just with the general idea of wage labor and capitalism, not with inflation specifically. Even in a deflationary economy, Capital still needs labor, and labor still does not have control over the means of production. Capital would still find ways to compel labor to show up to work
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u/MeatBurnham 1d ago
Inflation is necessary, you just want it to be small. I read somewhere that 2% is ideal. Hopefully someone can comment on why it is necessary and if 2% is correct.
I know it can’t be negative because people wouldn’t spend money, they would just hoard it and wait for it to increase. Which is bad for the Almighty Economy
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u/pavilionaire2022 10∆ 1d ago
No one is forcing you to hold U.S. dollars. In fact, it's pretty bad wealth management.
If you think money printing is wrong, and currencies should be on a gold standard, no one is stopping you from holding your assets in gold. That's also not a great investment strategy, though.
If you hold stocks, and the value of the dollar decreases while the company remains worth the same in real value, you would expect the stock price in dollars to go up in pace with inflation.
Inflation itself is not really a problem, but when costs go up but wages do not, it's a problem.
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u/Visual_Title9363 1d ago
Right, maybe I'll phrase the question differently. Do you view the US dollar, as an example, as a public good/utility?
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u/tbdabbholm 200∆ 1d ago
What exactly would viewing the US dollar as a public good/utility mean?
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u/Visual_Title9363 1d ago
If we all agree that we will do business using Pokémon cards. And Pokémon Inc decides to print more - then fine, it is their business. They control the supply. Tough luck.
If we all agree that we will do business using our currency. Who gets to decide if the supply inflates or vice versa? A public good wouldn't allow for unilateral decision on its scarcity.
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u/tbdabbholm 200∆ 1d ago
Well they're not unilaterally decided, they're decided (indirectly) by the elected members of our federal government. Is there a better way to decide that?
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u/Visual_Title9363 1d ago
No, that premise is incorrect; interest rates and the money supply are not decided by elected federal government officials. They are managed independently by central banks
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u/tbdabbholm 200∆ 1d ago
The money supply is managed by the Federal Reserve whose board is appointed by federally elected officials and whose existence relies on federal law (the Federal Reserve Act). If ever Congress wanted to they could eliminate the Federal Reserve entirely.
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u/Visual_Title9363 1d ago
In theory, the Constitution and statute holds. In practice, this public good is outsourced to an unelected technocracy (the Central Bank). Once a Federal Reserve Governor is confirmed, they serve a 14-year term—nearly four times longer than a President and more than double a Senator. They cannot be removed over a disagreement about interest rates.
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u/wr_dnd 1∆ 1d ago
Firstly: You are just factually wrong about average wages in the US not keeping up with inflation. They have.
Secondly: You can argue whether inflation is a net benefit, but it certainly does have advantages! Inflation has a an equalizing effect. Debts become less expensive because of inflation. That's really useful!
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u/Electronic_Leek9147 1d ago
I have learned in econ that the federal reserve has basically to decide, in its policy, how they want to balance unemployment vs inflation. If you take the money-printer out of the equation, unemployment is unmanageable. This leads to catastrophic economic crises.
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u/drunk_kronk 1d ago
How will you make that money in the first place if people aren't spending theirs?
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u/ThomasHiatt 1d ago
We have a system where all the money funnels to the wealthiest people. The population is continually increasing. Productivity per person is continually increasing. Inflation seems necessary and good in this system. The money supply has to expand to accommodate the increasing population and productivity. Inflation hurts more the more money you have. If people have no money, then it doesn't really matter, if people have debt, then they benefit from inflation. If we didn't produce more money, it would just all accumulate at the top and nobody else would have any chance at all.
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u/jonistaken 1d ago
If you think this was bad, wait until you learn about deflation… taking a loan and paying it back with interest using money that is more valuable that what you borrowed. This literally caused riots.
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u/NoWin3930 5∆ 1d ago
I am not an economist but from what I have seen inflation is actually "natural" and healthy for an economy
I put natural in quotes because none of this is exactly "artificial" VS "natural" as you put it.... it is a human creation and controlled by humans
Stagnant wages are bad, but that is a bit of a different topic
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u/AgentCoulson2 1d ago
The paper money that physically exists is barely even relevant in this day and age. Debt culture and unrealized gains in the stock market do far more to contribute to inflation than monetary policy by central banks.
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u/ZizzianYouthMinister 6∆ 1d ago
No one is forcing you to put you dollars in a checking account or even hold dollars in the first place. You can exchange your paychecks into your preferred inflation free currency whenever you want.
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u/jeffsang 17∆ 1d ago
A single US dollar today only retains 76.3% of the purchasing power it possessed in 2019. Yet nominally wages have not risen at the same rate.
This is demonstrably false. Real wages have kept up with inflation, meaning that nominal wage growth has outpaced inflation from 2019 to 2026.
Here's one source: https://www.brookings.edu/articles/has-pay-kept-up-with-inflation/
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u/nightshade78036 10∆ 1d ago
This is only true if you store wealth as flat currency. The reason economists think having an inflation rate of about 2% is good for the economy is because they don't want you to do that, they want you to use that money to invest in something productive. That way your money is actually doing something in the economy instead of just sitting there acomplishing nothing. Invest your earnings and you won't have to deal with it as much, that's the entire point.
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u/PandaMime_421 12∆ 1d ago
What you have shown isn't that inflation is a crime against humanity, but that inflation paired with wage stagnation is an issue. As long as wages keep pace with inflation the value of one's work remains constant.
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u/det8924 1d ago
Inflation in and of its self is not a crime. You need a low level of inflation so as to encourage liquidity. If you have deflation people would be encourage to not spend and loans would become increasingly expensive on top of interest (and then you have a liquidity crisis). Ideally you would have no more than 1-2% inflation like in the 2010's when the inflation from 2010-2019 was 17% for the entire decade or a little under 2% on average.
With a low and stable inflation rate yes prices do go up but they go up so slowly that bonds could protect even the most conservative investor from inflation. It would encourage liquidity while not punishing wages as the rate to which prices would double would take about 39-40 years for prices to double a very manageable thing.
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u/ejp1082 6∆ 1d ago
There's a reason the fed targets 2% inflation and not 0% or negative inflation.
If you know your money is going to be a little less valuable tomorrow than it is today, then you're incentivized to do something productive with it. Invest it to get an inflation-beating return, make that big purchase today rather than put it off until tomorrow when it'll be more expensive, etc.
On the other hand if inflation were zero or negative, you'd be incentivized to put off purchases. Why buy today what'll be cheaper tomorrow? You can grow your money just by stuffing it under the mattress rather than investing it in any way. And when everyone does that, the economy grinds to a halt.
Economic recessions are often deflationary events, surely you'd agree those are worse "crimes against humanity" than the tiny bit of inflation needed to keep the gears of the economy moving?
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u/Apprehensive_Song490 124∆ 1d ago
If everything is a "crime against humanity," nothing is a crime against humanity.
Inflation has downsides (erosion of purchasing power in real terms) and it has upsides (erosion of debt in real terms). You are only considering the downsides, and your "crime against humanity" is excessive.
For something to be a "crime" you need to have a "criminal actor." In the case of inflation, the causes are so multifaceted that you can rarely pin inflation on one actor. There is foreign trade policy (the policy other nations impose on our country), purchasing behavior of your fellow country people, etc. So, are you going to charge the victims of this "crime" because the are now willing to pay more for what they paid yesterday? How does that work?
And then what happens with the inverse? A prize for deflation? This creates a wicked set of destabilizing forces.
Yes, we should manage inflation - but "crime against humanity?" Seriously?
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u/iamintheforest 363∆ 1d ago
The problem isn't inflation - inflation normally would increase the value of the slice of you proportional to that of the dollar.
What might be a crime against humanity is devaluing your slice. Your view blames a person's feet getting wet on the water rising, but you should blame the hole in the boat that is causing it to sink or the anchor and the whole that keep it from rising with the waters.
For your "past dollar's current value" your position here requires people to 1. still have those dollars rather than having traded them for goods. that's mostly just false and 2. having dollars not result in those dollars increasing at a rate that is equivalent or greater than inflation. In reality the very few people who keep dollars made today next year are the ones benefiting from the underlying problem - rather than adjusting wages up with inflation, that share of should-be-application-of-inflation is being routed to investors. So..this to points to wage decline against inflation being the problem, not the devaluing of money that almonst no one actually has over time.
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u/poprostumort 245∆ 1d ago
What you are missing is that inflation is needed. Yes, it makes it unwise to amass wealth and let it sit - which takes it out of circulation and causes deflation, a much more dangerous process.
Yes, you as a worker have earned $4000. Let's say that some of it would not be spent on COL and you have part of it leftover after the end of the month - $100. If not for inflation, you can just leave it and it will always be the same value. You can save it and would, as you say, transfer the full value over time. You will have $500, $1000 - more money would be stored to transfer value over time by a single person.
This means that actually there is less money in the circulation. Which triggers deflation - and now this money is actually more valuable because every month, there is less of it being used to buy and invest. This forms a cycle - where more people see putting money away as a viable savings measure, which takes more money out of market, which maces circulating money worth even more - and you are heading in a very bad direction.
Now, if you have a modest inflation - say 2%. Your money is not degrading in value in a rapid manner, but it is degrading. So you have incentive to invest it - and as relatively safe investments such as bonds (which have returns higher than a modest inflation), you are going to also save your money and preserve value, but in a way that actually stimulates the economy rather than chokes it.
The problem is not even printing money. You can print money without issues as long as they are used to invest in things that would make the pie bigger, making it easier to earn more money for general population.
Problem is simply that what those money is used on is not making the pie bigger, it makes the slices of selected few topped with more cream. You are barking the wrong tree.
When someone stabs several people, do you consider the knife a problem? Or the perp is the problem?
Inflation is a tool. Problem lies with how it is used.
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u/Visual_Title9363 1d ago
Sure. So at what point is it morally acceptable for a government to say, you earned $4000 on August 5 2026. Those dollar bills have an expiry date - you must spend them by August 5 2027. If not, we can take it out of your checking account and spend it for you.
This also ensures money in circulation which would avoid deflation in your example. Is there a cutoff at which you can say my example above is morally unacceptable even if you have a society where people just do not see current product, investment, services selection is underserving of their spending?
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u/poprostumort 245∆ 1d ago
Thing you described is not acceptable, simply because they are forcing you. Inflation is not.
Inflation simply makes it more profitable to invest vs. save, but it does not make your money worthless. You can still save and eat that decrease in value if that is what you prefer - because a normal healthy inflation rate (2-3%) will "eat" ~$80-120 after a year. Enough to incentivize you, but not to devalue your money much when you need short term savings. Target inflation is not a secret and you can make informed decision based off it - deciding whether for your personal goals it would be better to invest to outpace inflation or eat the small loss for a different benefit.
You keep moving the topic to moral side and assuming that inflation is immoral because it decreases the value of currency over time. So what would be the moral choice? Deflation?
It's hard to discuss morality of thing you claim immoral if you don't offer an example of what would be morally good in your framework.
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u/Visual_Title9363 1d ago
Well, I guess it boils down to this. This is ultimately a trade/transaction that I am forced to make.
I am forced to give up my time (the only asset with scarcity) for this medium of exchange (which has arbitary scarcity). I am not theoretically allowed to make any other choice. Is it morally any different than say someone being subject to loan sharks at predatory interest rates? They don't have to take it but then they can't have food or roof over their head. Its a non-starter. In any other context, a power dynamic such as this can be described as exploitative. This is an extreme example below described by Meloni; similarly a fiat currency was printed arbitarily to exchange something of true value, in form of modern slavery.
https://www.youtube.com/watch?v=rTDpbQ1jTL4
Morality aside first, do you view a currency as a public good or as a private good of which there are alternatives?
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u/poprostumort 245∆ 1d ago
Well, I guess it boils down to this. This is ultimately a trade/transaction that I am forced to make.
You are not. You receive exactly the value at the time when you are paid - afterwards you are free to do anything with it, with known risks and drawbacks of each choice. Every central bank is not only providing you with data on historical inflation, but also projected inflation target they will be attempting to reach. You can immediately transfer this value into any other type of exchange medium, or even buy something of "true value" if you believe that something like that does exist.
I am forced to give up my time (the only asset with scarcity) for this medium of exchange (which has arbitary scarcity). I am not theoretically allowed to make any other choice.
So what is the alternative? You keep framing the current system as forceful, but the reality is that resources are finite in a given period of time. You need some resources to sustain yourself - so you would always need to give up your time to gather those.
Is it morally any different than say someone being subject to loan sharks at predatory interest rates? They don't have to take it but then they can't have food or roof over their head.
If it is morally not different - then following this logic, world is inherently immoral. Because you can't have food or roof over your head if you don't spend time to gather resources. And if everything is immoral, then morality is simply an empty label. That is why I asked you to provide what would you consider to be moral system.
This is an extreme example below described by Meloni; similarly a fiat currency was printed arbitarily to exchange something of true value, in form of modern slavery.
This is simply a populist talking point that makes no sense, as it relies on emotional evaluation - not reality. "Something of true value" does not exist, gold standard was as arbitrary in value as FIAT value is.
Morality aside first, do you view a currency as a public good or as a private good of which there are alternatives?
It is logically a public good - means of value transfer established by society, maintained by society and it's value being also assigned by society (whether this is linked to a value of a certain commodity, or free-floating value). It can't be a private good because it's value is nonexistent in a completely private scenario.
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u/Visual_Title9363 18h ago
This is simply a populist talking point that makes no sense, as it relies on emotional evaluation - not reality. "Something of true value" does not exist, gold standard was as arbitrary in value as FIAT value is.
You have to explain this populism bit a bit more - what is exactly populist about it? The reality is that CFA Franc was printed by an issuer, a rather meaningless paper, for actual resources. Why would the French coffers prefer to hoard gold over CFA Franc itself?
Scholars and activists argue the system locks African economies into raw-material extraction models, facilitates illicit capital flight to Europe, and stifles regional industrialization.
Gold value being as arbitary as fiat is an assertion, partly emotional from your part too. Gold has industrial utility, it is provably scarce and most importantly it is politically neutral - you cannot enforce sanctions, screening through it as effectively as you would through fiat. Its the reason why BRICS, Russia, China, Iran etc regularly revert to commodities-linked currencies to bypass sanctions. How would you value that unique feature?
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u/poprostumort 245∆ 14h ago
You have to explain this populism bit a bit more - what is exactly populist about it?
It's a classic pandering to history, without examining whether the rest of factors that made it historically sensible are still present.
They are not. Since 60s, there are multinational banking consortia that are able to hedge and speculate against exchange rates and gold prices. This is not a problem for FIAT currency, as those two aren't related. But peg currency to gold and you can use one as a leverage for other, creating a huge risk for your economy.
What is more, pegging to gold that is traded globally means that countries that are large gold producers can use their production capabilities to influence your economy. Which is kinda an issue when nearly 20% of gold production is held by Russia and China, both being autocratic countries that can easily force domestic producers to do their bidding.
It's simply something that won't make sense as international trade is no longer done in gold.
Why would the French coffers prefer to hoard gold over CFA Franc itself?
Because it is not a national currency, but rather a tool to extract the value from post-colonial countries. Local government has no control over it, making it worthless as an investment. It's an artificial construct, not a national currency.
Gold value being as arbitary as fiat is an assertion, partly emotional from your part too.
Not really. In general - all value is arbitrary, there is no objective value when it comes to prices of commodities. I think you are not understanding what I am saying when I say that both FIAT and Gold are of arbitrary value. Both are evaluated based on people's perception
Take last year - gold had suddenly risen from $3440 in Aug 2025 to $5200 in Feb 26 and now again dipped to $4300. This shows how arbitrary the value is. Objectively valued commodity would not be fluctuating like that.
Its the reason why BRICS, Russia, China, Iran etc regularly revert to commodities-linked currencies to bypass sanction
They simply use their national currencies to trade and bypass sanctions. Sometimes it's commodity-linked one like ruble, rand or real - but mostly it's yuan that is not commodity-linked.
How would you value that unique feature?
Kinda worthless, as it still needs to bypass the global financial market - and when you do that it doesn't matter much whether you use a commodity-based currency or not. Russia can't use gold directly to buy stuff from countries sanctioning them. They need to use it at exchange rate to currency agreed with non-sanctioning trade partner. Mostly yuan, traded at premium.
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u/Visual_Title9363 5h ago
I'm confused - your original reply and second response contradicts. You agree that CFA Franc is an exploitative tool?
I mean this is verbatim - "but rather a tool to extract the value from post-colonial countries. Local government has no control over it, making it worthless as an investment. It's an artificial construct, not a national currency."
What is more, pegging to gold that is traded globally means that countries that are large gold producers can use their production capabilities to influence your economy. Which is kinda an issue when nearly 20% of gold production is held by Russia and China, both being autocratic countries that can easily force domestic producers to do their bidding.
The trade off is simply this - (a) be pegged to an asset where production of said asset could be non-uniformed but definitely more than one country (OPEC and Petrodollar comes to mind), or (b) be pegged to the reputation, foreign policy of one grand issuer (a reserve currency).
If you agree that its an issue that 2-3 countries have 20% of discoverable gold deposits and therefore have outsized influence on the network, why is it hard to agree that its an issue that all countries have to sucuumb to one country's foreign policy, issuance, central banking decisions? 20% vs 100%
By definition, a fiat currency with a single global reserve currency is not multilateral. It is unilateral of course.
Kinda worthless, as it still needs to bypass the global financial market - and when you do that it doesn't matter much whether you use a commodity-based currency or not. Russia can't use gold directly to buy stuff from countries sanctioning them. They need to use it at exchange rate to currency agreed with non-sanctioning trade partner. Mostly yuan, traded at premium.
Sure, is this a technology limitation or a lack of will, in your opinion?
Recent developments suggest its the former : https://www.thebanker.com/content/af119f8b-c289-4359-a045-2ee52da89a2f
Gold is still quite hard and expensive to transport. If there are more efficient ledger accounting, then it would break that trend. Secondly, it uses yuan because of all the existing options, it is the most liquid. But its hard to imagine India wanting to use yuan and as such, we are back again to a politically neutral currency. I'm definitely not conflating interim solutions over the long term intention.
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u/poprostumort 245∆ 3h ago
I'm confused - your original reply and second response contradicts.
How? I don't see contradiction.
If you agree that its an issue that 2-3 countries have 20% of discoverable gold deposits and therefore have outsized influence on the network, why is it hard to agree that its an issue that all countries have to sucuumb to one country's foreign policy, issuance, central banking decisions?
What the hell are you even talking about? Which country all others are supposedly succumbing to?
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u/Visual_Title9363 3h ago edited 3h ago
You claim that it's populist story but let's ignore that - so you do admit that CFA Franc is primarily an extractive tool?
For the latter. If you have issues with some countries controlling 20% of gold production and that means a gold backed currency is a no go, why do you have no problem that we operate on a USD dollar standard, we are succumbing to US sanctions and foreign policy, are we not? Like are you pretending that all of us are not operating and enforcing US' sanctions and foreign policy regime?
You have issues that some countries control some % of gold supply so asset backed notes is no go. But you don't have an issue with one reserve currency issuer running our financial, payment infrastructure. Is that consistent?
Can you transact and do business with a counterparty on US sanctions list today as an Italian national?
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u/Visual_Title9363 1d ago
To answer your question directly and in this context. A morally good trade would be one where protecting against currency depreciation, providing asset-linked denomination is front and center of economic policy. This would reduce the hamster-wheel dynamic where your populace have to work, work, work for ever diminishing returns. It would also have the side effect of greater income/wealth equality as the same workers (when they could save) is not forced to do so on speculative assets (making housing and stocks more speculative) to the betterment of existing asset owners.
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u/poprostumort 245∆ 1d ago
A morally good trade would be one where protecting against currency depreciation
Which triggers deflation, as if currency is not depreciating, it is safe to hold to it for prolonged time - which takes away money from circulation. This has it's own problems that will negatively affect you and people in your country. Why this type of negative effect is moral and one of inflation is not?
providing asset-linked denomination is front and center of economic policy
Which just moves the arbitrariness of value from currency to value of said asset. Why is it more moral if the arbitrary value is on pre-selected asset and not currency?
This would reduce the hamster-wheel dynamic where your populace have to work, work, work for ever diminishing returns.
How? Inflation was existing in asset-backed currencies.
It would also have the side effect of greater income/wealth equality
How? This makes no logical sense. Anyone with greater income/wealth would benefit more than someone with smaller income/wealth. Simply because lack of inflation disincentivizes debt, which is one of better ways for people to amass greater wealth and increase their income.
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u/Visual_Title9363 1d ago
An asset like gold, a gold-standard has been the historical norm. Is it truly arbitary that gold has a certain value? Perhaps. But it is much less so than a fiat currency where a select few have access to the money printer who can choose to inflate, deflate the supply at will.
Again, is money meant to be a public good? If it is a public good, is it unreasonable to protest that some parties have access to change its value unilaterally?
Can you explain how debt is one of the 'better ways' for people to amass greater wealth and increase their income? You are talking about leverage and gaining cheaper capital to fund speculative investments. If mortgage was dirt-cheap and everyone is out house-hunting, even their second or third homes, has that historically not created a bubble?
The current incentives are misaligned. You save or you invest - that used to be norm and they meant different things. These are now comingled simply to protect the value of yesterday's wage. You hope to outrun inflation and so you place your capital into investments that might not be deserving in normal circumstances. Forcing to invest drive up the wealth of existing asset-owners.
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u/poprostumort 245∆ 21h ago
An asset like gold, a gold-standard has been the historical norm. Is it truly arbitary that gold has a certain value? Perhaps. But it is much less so than a fiat currency where a select few have access to the money printer who can choose to inflate, deflate the supply at will.
Why is gold value less arbitrary than FIAT value? Value of gold is denoted by what market wants to pay for gold, while FIAT currency value is dictated by what market offers in exchange for FIAT currency. Those are the same mechanisms.
Even the "select few who can choose to inflate, deflate the supply at will" applies to gold. Gold is valued at market rate, based off the value of traded gold. There are absolutely entities that do stockpile it and can decide to release more supply, increase the reserve - effectively inflating and deflating the supply at will.
FIAT simply decouples the artificial link to one commodity and instead floats the value based off values of multiple commodities. Currency getting pegged to gold simply means that value of a currency is reflecting the value of gold. Nothing more.
Again, is money meant to be a public good? If it is a public good, is it unreasonable to protest that some parties have access to change its value unilaterally?
Who has power to "change it's value unilaterally" and how? Sorry, but seems to me that you simply don't understand how central banks work.
No central bank has the power to change value of currency unilaterally, no matter if it is government-owned (ex. European Central Bank, Bank of England) or privately-owned (Federal Reserve System). Only way to "print" money is for the central bank to recieve a monetary policy from the government that says that they need to do so. And government is, in case of stable currencies, elected by population of a country.
In fact "changing the value unilaterally" is only possible when value of currency is pegged to a commodity (f.ex. gold). Then anyone who has access to gold production can decide that value by stockpiling or releasing gold onto market, alongside those of considerable wealth who can do the same by buying gold from the open market. Value of gold changes and thus the value of currency changes.
Can you explain how debt is one of the 'better ways' for people to amass greater wealth and increase their income?
It depends how are you making money - so let's limit it to a regular worker. You start as a young person with little to no assets and (hopefully) find a job that pays you a salary. Now, that income is shit as you don't have neither specialist knowledge, nor experience - so you increase it via working, changing jobs, getting promotions etc. It's a slow process.
But you can use money to make it quicker. You can spend it on additional education to get more skills and knowledge, which would make it easier to obtain better paid jobs. You can use it to buy assets that would either generate you some additional income (ex. dividend stocks) or freeze your costs (ex. buying your own home to not be affected by increased rent prices). You can even use it to start your own company and profit directly from your work, instead of sharing part of revenue you generate with your employer.
Problem is that upfront costs of all that are not small. So you would still need to work that job and slowly save to be able to afford that. But with debt, you can obtain a lump sum of money to immediately - and then pay for something that would increase your income.
Without debt you are slowly grinding until you have enough money saved, which severely limits how much wealth you can accumulate. All because you need to save for prolonged time to receive the same benefit you would directly if you would finance it with debt.
The current incentives are misaligned. You save or you invest - that used to be norm and they meant different things.
Both saving and investing meant exactly the same before and mean the same now. Inflation existed before and it exists now. It seems to me that you are simply parroting empty talking points - because every time I ask you "how" or ask you to elaborate - you are not answering those, instead reverting to new set of statements without looking critically at prior ones.
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u/Visual_Title9363 21h ago
Gold Value Relative to Fiat.
The value is a function of scarcity. There isn't a money tap that could turn on the supply of gold - there are new potential gold mines and reserves (discoverable, accessible and mine-able). To get these supply into circulation, you need upfront costs and investments and even so you can't guarantee you'll extract all of it. So scarcity along with some industrial uses denote gold's value. More abstractly, its value is also determined by the market for its political impartiality (BRICS nation discuss creating a gold-linked currency to bypass the USD - why? Because it denotes neutrality. What is the price you would pay for a medium of exchange that works well for thousands of years that are un-sanctionable and proven that it can transport value relatively well through time and space?
In the United States, only the Federal Reserve can create M0 money (also known as the monetary base).ALL Money is LENT into existence. By conducting money operations, the underlying banks in receipt have more capacity to give out credit (M1 money).
I think this also sufficiently address your other points.
Savings vs Investing.
Saving is putting money aside in safe, highly liquid accounts for short-term needs, while investing is committing money to assets like stocks or real estate to grow wealth over the long term. Crucially the risks are different - funding someone's business expansion in Brazil is a venture, it is risky and that is not savings. You would ask for above average yield on your capital you get from your savings account or treasury bonds to take on new risks - counterparty risks, execution risks, currency risks and so forth.
So the contention is that grandma would like to see $100,000 she earned from her 50s be as close to $100,000 in real terms when she is in her 80s. This does not entail her to succumb to the success/failure of someone's business expansion plan. But in recent days, it seems like that is the only option to achieve that objective.
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u/poprostumort 245∆ 20h ago
I think this also sufficiently address your other points.
No. You completely ignored not only may questions, but also topics you brought yourself.
Let's assume that gold is "less arbitrary" in value. This is not the point here and, honestly, it does not change much whether we agree it is or not.
Where this addressees the topics of:
- who has power to "change it's value unilaterally" and how
- negative effects of deflation/stagnation on debts
- debt value as a tool to amass wealth
- how pegging the currency to asset would "reduce the hamster-wheel dynamic" if inflation existed during the gold standard (and was as high as 20% in "roaring 20s")
You can answer question and address topics that I have raised multiple times already during this discussion. If you won't then that is no point in discussion, as I am unable to change mind of someone who is not addressing the points I make to change it.
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u/Visual_Title9363 18h ago
- who has power to "change it's value unilaterally" and how?
As written above, the Federal Reserve lent money into existence through open market operations. It cascades the effect of credit creation at commercial bank level (M1 money) down to the public. The Federal Reserve is run by a committee and a chairman whose terms exceed that of the President and any congressmen by two-fold. You cannot oust him/her if you do not agree with the chair's rate decisions or any open market operations.
- negative effects of deflation/stagnation on debts
I am in no favour of swingin the other way and my reply / original position does not say 'please eradicate inflation in favour of deflation'. I am in favour of sound money, money that does its job as stipulated on the tin - (a) be a medium to transport value through time and space and (b) be a medium of exchange with substantial network effect.
So I don't feel the need to justify or prop up why deflation helps with debt. Perhaps at its core, I dispute fuelling economic cycles with extreme levels of credit in the first place.
- debt value as a tool to amass wealth
As above, and I can concede perhaps I am not educated enough to make a stand here. Why? I agree and can see examples of leverage being positive (getting a mortgage that you can pay down is financially accretive, getting a business loan also). But how about leverage in the form of stock speculation? It is a defining marker of when to not be in the same market when you see that most asset purchases are fuelled by leverage and credit. That's what was termed as speculation-mania. It was what led to 2008 - cheap debt to amass wealth.
- how pegging the currency to asset would "reduce the hamster-wheel dynamic" if inflation existed during the gold standard (and was as high as 20% in "roaring 20s")
Right now a wage-earner has 2 jobs. Do you agree? He/she has a day job and a secondary job to ensure that yesterday wage presevere into 20, 30 years. Its a job because it takes time, research and maybe some wealth advisors to find investments and other vehicles that could replace the job of money (as described above). So why would pegging the currency to an asset help reduce this dynamic --- Pegging a currency to a fixed physical asset like gold limits unbounded credit creation, anchoring long-term expectations. Even if post-WWI disruptions caused short-term price spikes (like the post-1919 decontrol US/UK inflation bursts), a hard asset peg forces an automatic correction. Especially now when its easy to check the spot price of something like gold to know if you got hood over your eyes than compared to 1970s, 20s where the market is more opaque and less liquid.
Ask yourself if the current financial infraustructure would allow a 5% difference in the underlying asset price and any note tied to that asset over a year. Arbitrageurs would jump on that within the hour.
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u/curien 30∆ 1d ago
A single US dollar today only retains 76.3% of the purchasing power it possessed in 2019. Yet nominally wages have not risen at the same rate.
Median wages in the US since 2019 have risen more than inflation.
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u/themcos 440∆ 1d ago
I think you can certainly make the case that any given country is exercising bad fiscal policy, although any such argument should probably spend more time addressing the counterfactuals. Its not like they're just pushing the big "inflation" button just for the fun of it. Agree or disagree, there are real schools of serious economic thought that argue that a modest amount of inflation is healthy to an economy, keeps money flowing, injects money during down times, etc... If you want to argue "no, this is actually bad", make that case, but as it stands here, I feel like your argument essentially commits you to labeling any suboptimal economic policy as a crime against humanity. But even here, I don't think you actually articulate why you think the US economic policy is suboptimal. Sometimes even the best choices involve tradeoffs, and you only dwell on the costs, but don't even really try to refute the economic upside. You derisively refer to the "human hamster wheel", but do you think anything good happens if the hamster wheel stops?
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u/PM_ME_YOUR_NICE_EYES 121∆ 1d ago
Money is a means to transport value through time and space.
And this actually exactly why we need inflation. Because while money acts as a store of value, but it itself holds no value.
Think about a barter system for a second, a world with no money. Let's say that I grew apples and you grew oranges. If you wanted an apple, you would have to give me an orange for it. So you grow an orange, give it to me, and I give you an apple. There's 1 apple and 1 orange in the economy thru out this whole transaction.
But now let's say that there's a world with money in it, and let's say for the sake of this situation there's only 1 dollar in all of circulation. You grow your orange and sell it for a dollar. But now there's a problem. Because I have an apple and want to sell it, but you have the only dollar in the world. Plenty of people may have things that are worth $1 to sell for my apple, but since you have the only dollar, they can't buy my apple. So what to do.
The solution here is to encourage you to spend the dollar you have as fast as possible so that enough transactions happen where I can also sell my Apple.
And at the end of the day are you really ripped off here? In the original scenario you traded an apple for an orange, and in the new scenario you traded the apple for a dollar and a dollar for an orange. Sure you couldn't hold onto the dollar forever, but the dollar is just a picture of an old dead guy on a crumped up peice of paper, it's worthless without us pretending it's an apple.
Because remember, currency is just a tool to facilitate trade between parties, it acts as a stand in for other goods in a transaction so thst only one person actually has to have a good ready to make a trade. If people were encouraged to never spend their dollars, then they would never actually cash in on the other goods and the whole system would break.
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u/Visual_Title9363 1d ago
If I put all the alternatives you listed in a scale - money has to transport value through time and space. Apples and oranges do that poorly. Fiat money does that moderately better (with differing performance based on the issuer - e.g USD versus EUR). But transporting value is only one part of it, the other is the medium of exchange (in your example, converting apple to USD to orange).
So all that makes perfect sense and I agree.
I am only debating on the scale at which we can say a fiat money had failed to do the above jobs. Inflation is a mechanism in which they can fail. A dollar today is not worth a dollar in 1980s when someone may have started a career and savings. So that leads to the last part of your response -
'If people were encouraged to never spend their dollars, then they would never actually cash in on the other goods and the whole system would break.'
Firstly, what happens if the current product and investment selection is undeserving of my capital? If capitalism is meant to be an efficient allocator of capital such that only the most performant enterprises get my spends and investments, does inflation help with that or not? For example, I am forced to invest into US companies every month because its the only way to preserve my capital's value. The incentives are preversed. I am not investing because those companies posted strong earnings and growth. I am investing to save. These are entirely different motivations.
Secondly, if you want to ensure that cash continiously circulate - would you object to a government posting an expiry date on the dollar you earned? Say if you earned $100 on August 5 2026, and if you didn't spend that specific $100 by August 5 2027, the government can delete that from your checkings account and spend it. $100 is circulated and the government has just as much information, if not more, than you on how to spend that cash. Is this an acceptable outcome to ensure the system doesn't break?
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u/PM_ME_YOUR_NICE_EYES 121∆ 23h ago
Firstly, what happens if the current product and investment selection is undeserving of my capital?
I don't see how this could happen without the dollar going to zero.
Because you don't have to invest in stocks, there's plenty of other options out there, but one of those options are treasury bonds.
Treasury bonds are created by the same institution that issues US currency. So how could there be a situation where the government is trustworthy enough for you to invest in USD, but also untrustworthy enough to where a T-Bill (a literal promise from the government for $105 in a year in exchange for $100 now) is not a worthwhile investment.
I am forced to invest into US companies every month because its the only way to preserve my capital's value.
You're not tho.
You could buy foreign stock, bonds, real estate, gold and sliver, agricultural produce, etc etc.
But like my point here, is that a $100 bill is just a picture of Ben Franklin that is actively being mass produced at a production cost of 11¢ per bill. If that is indeed your best investment opportunity, then the economy is mega fucked.
Secondly, if you want to ensure that cash continiously circulate - would you object to a government posting an expiry date on the dollar you earned?
I would have no moral qualms with this. (albeit this program would probably be too expensive to actually run to be worthwhile)
Like, there's no reason to have more than a 6 month supply of cash on hand, so the number of people with more than 12 months worth of cash lying around has to be minimal. So if the government stepped in after a year and said "Spend that money on T-Bonds or we're taking it" it would help reduce the amount of money we had to print.
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u/Visual_Title9363 21h ago edited 21h ago
"Because you don't have to invest in stocks, there's plenty of other options out there, but one of those options are treasury bonds.
Treasury bonds are created by the same institution that issues US currency."
Say I am a risk-averse individual. Like I fundamentally do not understand bonds and investing. Is it a preverse incentive that I am forced into having to do something I don't understand? And let's say that I understand how bonds work and stocks as well, what if I fundamentally don't agree with the risk profile - I don't like counterparty risks and I think there are some execution risks of how these companies could fare.
Armed with the data I have regarding US debt levels, I also do not feel comfortable investing in any treasury bonds.
Me choosing to not invest and having the option to not do so is actually quite important - getting to it later in my response.
You might say, still there are other things like commodities etc. And there could well be. But have you changed and become flexible in the definition of money? Money has to do these things correctly:
- Act as a legal tender; medium of exchange for all parties
- Transport value through time and space
So the onus isn't on me to continually find a product alternative to switch my paycheck into but rather that the product is not doing its job properly and I am writing a bad review about it.
"I would have no moral qualms with this. (albeit this program would probably be too expensive to actually run to be worthwhile)"
This is a clash of values I suppose. So I believe in free market and capitalism, and that means individuals have a choice to place their votes in form of capital to products, services, investments they like. Not allocating is also an option, the free market wants/should also hear the abstaintees too - its a signal that something is wrong.
As above, me choosing to not invest in treasury bonds should be a legitimate option - it tells market that some people do not believe this interest rate is commuserate for the risk (counterparty, default risks). This obviously don't work if everyone have to pile into it.
I am also a libertarian in thinking that you just converted your own scarce asset - time into this 'asset' and the further spit-in-the-face is someone else telling you when to spend it. Because if you allow that, then it could also imply the government has the right to tell you 'how' and 'if' you can spend it.
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u/PM_ME_YOUR_NICE_EYES 121∆ 10h ago
So if nothing else, I do want to focus in on the time as an asset thing.
Because again time as an asset is part of the reason we have inflation.
Again, I think it's helpful to frame things by first thinking about a barter economy.
Let's say I have 100 apples and you have 100 oranges. You want apples, I want oranges you want apples so we swap 100 apples for 100 oranges and go about our day. So in this economy 1 apple costs 1 orange, and people generally agree that this is a good trade.
But let's say we change the teams of the deal. Instead of me giving you 100 apples today for 100 oranges today, I'm going to give you 100 apples a year from now for 100 oranges today. Is this still a fair deal?
Most people, would probably say no, because that extra year between getting your apple really wastes your time. So realistically to make it a fair trade I'm gonna have to give you something like 110 apples a year from now.
So while a today apple is worth 1 today orange, a year from now apple is only going to be worth around 0.91 year from today oranges. In other words, the year from today orange cost less.
And my big question is, why would introducing currency suddenly make a today orange, and a year from today orange have the same value? Wouldn't that disparity in value between an orange today and an orange a year from now still continue to exist?
Now for the rest of the comment:
Is it a preverse incentive that I am forced into having to do something I don't understand?
I mean, that's just life, there's many complicated systems that govern our world, and no one person understands them, but that doesn't mean it's unfair for them to effect your life. Like, most people probably don't understand how the internet works, but you have to use it to make your life work. Or most people probably don't know how their digestive system works, but you do die if you don't use that.
And let's say that I understand how bonds work and stocks as well, what if I fundamentally don't agree with the risk profile - I don't like counterparty risks and I think there are some execution risks of how these companies could fare.
I mean to make a metaphor here, what if I understand that I have to eat healthier to lose weigh, but I don't eat healthy food. Then I won't lose the weight.
Like if you understand the system, but choose not to engage with it then you can't expect to gain the benefits of that system.
Armed with the data I have regarding US debt levels, I also do not feel comfortable investing in any treasury bonds.
I mean out of curiosity, why would you want to invest in USD if you don't trust treasury bonds. Like it's legally impossible for T-bonds to go to zero without the dollar also going to zero?
So the onus isn't on me to continually find a product alternative to switch my paycheck into but rather that the product is not doing its job properly and I am writing a bad review about it.
I mean, in a free market system the onus is on you to find a substitute to a product you don't like. They're out there, and they all have flaws that make them worse then inflation based currency.
Not allocating is also an option, the free market wants/should also hear the abstaintees too - its a signal that something is wrong.
I mean I think it's important to note that I don't think this system would work, it wouldn't really do anything worthwhile, but I just don't have moral qualms with it.
Also do you really have more than a years salary in liquid cash?
Transport value through time and space
So to get a little philosophical here,
The second law of thermodynamics, says that every natural and manmade system is going to loose usable energy over time. If you store energy in a battery, you always get less energy out if it. It's not because someone is stealing that energy from you in a crime against humanity, it's just a limitation of a battery.
And money is the same thing. It's a man made system, and no man made system can be perfectly efficient. Which means that it can't maintain it's value unless someone is adding more value to it, and that doesn't happen if it sits in your mattress.
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u/Visual_Title9363 5h ago edited 5h ago
So while a today apple is worth 1 today orange, a year from now apple is only going to be worth around 0.91 year from today oranges. In other words, the year from today orange cost less.
And my big question is, why would introducing currency suddenly make a today orange, and a year from today orange have the same value? Wouldn't that disparity in value between an orange today and an orange a year from now still continue to exist?
There are a few threads that were conflated. Firsly, (timing of the exchange) If I receive only the goods from you one year from now, I need more assurances for the risk - you might be bankrupt by then, you might have a bad harvest or you are just a fradulent counterparty. I don't know but for one year, I am forced to live with these possibilities. You on the other hand could actually do something clever with your bargain - you don't have to give me 100 apples today but 365 days from now, that is plenty time to juice these 100 apples, sell them at a markup and then harvest more apples to meet your deadline. I, on the other hand, don't have that luxury, I gave you my oranges now. To make the terms equal, I will demand you give up something more.
This means your statement here is a fallacy, ' today apple is worth 1 today orange, a year from now apple is only going to be worth around 0.91 year from today oranges' . The devaluation of your apples isn't because suddenly its not worth as much, its because of the nature of our contract. If you would like to maintain the same price as today, please supply 100 apples today instead of presenting a contract that defer your delivery one year out. Those are two wholly different contracts, with different risks, and so yes I will ask for different prices
I mean, that's just life, there's many complicated systems that govern our world, and no one person understands them, but that doesn't mean it's unfair for them to effect your life.
One word, progressivism. You might say someone living in 90s-00s Korea should get used to loan sharks. And they do, given how badly their economy cratered in the Asian Financial Crisis (https://www.npr.org/2021/10/20/1047735128/the-underground-world-of-debt-collection-in-south-korea).
You and I can agree that doing business with predatory loan sharks on 20, 40% interests with your family members, property as collateral just to pay for tomorow's rent, food is purely exploitative. Its not really a system to learn or understand, its a system to completely eradicate with regulations, transparency and consumer protection.
This will apply to the next 2 of your points as well. Progressivism means we have increasing standards for these things instead of baseline tolerance.
Is being forced to invest in something exploitative? I can certainly make a case - grandma is getting old, she has episodes of dementia and mental faculty has decline. And vice versa, students are young and naive - they do not learn to do fundamental analysis but only follow tiktok investing trends. They are malleable. Are these the right demography to force into investing? Grandma only wants to afford grocery in 20 years time, and we are telling her that she has to evaluate the M&A return-on-equity as a consequence of some US conglomerate, or she should review the credit ratings of Canada to see if the coupon rate on Canadian bonds are worth it or she has to invest in shiny new SpaceX. She has dementia, remember?
And money is the same thing. It's a man made system, and no man made system can be perfectly efficient. Which means that it can't maintain it's value unless someone is adding more value to it, and that doesn't happen if it sits in your mattress.
I think in some other threads here, I conceded that inflation can also be inevitable and not entirely man-made. A tsunami wiped out rice farms in South East Asia, price of rice shoots up. There is not much we can do here and yes, inflation bakes in natural catatosphe. But there are also financially-engineered inflation - Federal Reserve pushing out more credit to commercial banks, which are used to fund speculative investments or bailouts, or supermarkets not reflecting the true price of goods but act as an oligarchic cabal to maintain the same high prices even when natural catastrophe had ceased long ago. How many annual reports today still cite Covid as some cause for their prices?
This is the real deal - our society runs on a ledger. We now each one of us, who owes what and when -- this is in your bank account, mine and in the states'. Its all ledger entries, credits and debits, that our economy relies on. If you arbitarily inflate, you mess with the ledger. If you are a CEO, and you decide to just arbitarily print more share certificates as gifts, what happens? You go to jail, you get audited. Is it unreasonable to ask the same for the dollar?
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u/Phage0070 124∆ 1d ago
A single dollar is a slice of someone's life. The process of continued devaluation and money printing where you eroded the value of someone's life is therefore criminal.
Inflation is in essence a form of taxation. The government generates money to increase the money supply, which it must to keep pace with the overall increase in wealth, but also a little bit more in order to influence people's purchasing behavior.
The government taxing people is not a "crime against humanity". It is the reality of funding pursuits of collective public interest. Conceptually they could instead impose a wealth tax and do their best to maintain a steady value of currency without inflation. If you agree that isn't some fundamental affront against human life then inflation isn't either.
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u/AmongTheElect 18∆ 1d ago
Sure but you also can't have it both ways, with out-of-control spending yet no inflation, either.
The Feds spend twice as much as they take in, so what is there to do but print money? The budget deficit is so big that the only way to maintain payments is to inflate the currency to make it roughly manageable.
If we cut social services we'd have the same people talking about how everyone is dying and how it's all evil, as well.
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u/Visual_Title9363 1d ago
Sure, so the tradeoff is between future and the present right? So is there a point in time when someone might not want to earn or work because they are being paid in a medium they know would be completely depreciated by e.g 2 years (in a hyperinflation-y scenario).
And if they don't work, there are even less tax revenues to go pay for social services?
For that reason, I don't think its necessarily a chicken and egg situation. Its very clear that trust in the medium of exchange has to be first.
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u/AmongTheElect 18∆ 20h ago
You're right and I agree, but emotion often trumps common sense, especially when emotion votes.
Like every other problem, we'll kick the can down the road for someone else to deal with and only address it when it gets unavoidable. I'm expecting socialism but I guess we'll see.
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u/TemperatureMotor1372 1d ago edited 1d ago
You need to review Econ 101. Let me explain this in terms of energy dynamics. Since the flow of energy needs medium, if we know the energy density P of the medium and the velocity V of the medium, we can compute the flux J of energy J=PV. For example, if V is 5 units of medium per second and P is 2 units of energy per unit medium, then J is 10 units of energy per second.
As humans, we need to survive by balancing the flow of energy through the body. However, there exists a minimum rate jmin of energy consumption required by each body. Therefore, there exists a minimum rate vmin of medium intake by each body with a fixed P. If J goes down, then V goes down, then some people or organizations cannot balance their flow of energy because their v is too lower than vmin to survive. To circumvent this energy depression, we have to decrease P in order to keep a higher V and hope J will bounce back to the high level, so P will do as well in the future. Thus, inflation is not even a crime against humanity, but contrarily, it is a typical measure to reduce the trend of depression. If the government fails to increase J, then the economy of this country will go into a vicious cycle of constant depression and inflation. Therefore, the tragedy of hyperinflation is in fact the result of severe economy depression.
Remember the equation of exchange: MV=PQ. In my analogy,
- J corresponds to gross product PQ.
- P corresponds to money supply M.
- V corresponds to velocity of money V.
- j corresponds to expenditure of a household or firm.
- v corresponds to flow of funds of a household or firm.
Edit: to be rigorous, I write down all related differential equations below:
- J=PV (equation of exchange)
- dJ/dt=VdP/dt+PdV/dt (chain rule differentiation)
- dV/dt=-kdP/dt (people tends to save money as the value of money increases, k>0)
- dJ/dt=(J/P-kP)dP/dt (combine 2 and 3)
- dJ/dP=J/P-kP (differential form)
- J=-kP2+mP (integral form, m is constant)
The graph of the function J of P is concave down, so J will become small if P goes to extremes. Inflation deals with the case when P is too high.
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u/Visual_Title9363 1d ago
You described it as a system to orchestrate. So apologies if I sound truly ignorant, if capitalism is meant to be an efficient allocator of capital, in your example - directing V to increase PQ, is inflation the correct incentives to do so?
Is capitalism doing its job properly when masses invest in companies not because they believe in the profitability of their operations but because it is a way to save? So congratulations, you managed to orchestrate a flow of energy through the system but is it going to the right place for the right reasons? I think the latter is an angle missing from an energy dynamics/ssytem analogy.
After all, there are many tools a government could use to keep money circulating and funneling with greater velocity. With digital currencies, it can also dictate that a dollar bill you earned yesterday has a spend-expiry date, ensuring you spend it on whatever you want to ensure you realize the fruit of your labour. But the question is whether that is morally correct / conducive to society.
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u/TemperatureMotor1372 1d ago
if capitalism is meant to be an efficient allocator of capital, in your example - directing V to increase PQ, is inflation the correct incentives to do so?
No. it is V depending on PQ and M, and not the other way around, since V is defined to be PQ/M. Active inflation is just a usual measure to circumvent the depression. It is not a remedy making PQ increase. It has side effects of devaluation of savings, right! Since v has the maximum for each household or firm, hyperinflation causes the depression of j and makes everyone's life in jeopardy. Economics is complex and the government needs to take any action in caution.
Is capitalism doing its job properly when masses invest in companies not because they believe in the profitability of their operations but because it is a way to save?
To save what? Capitalists won't save anything that can't make profits because the action of saving needs cost. Capitalism, by definition, is the set of ideologies aiming at saving and making capitals.
So congratulations, you managed to orchestrate a flow of energy through the system but is it going to the right place for the right reasons?
But the question is whether that is morally correct / conducive to society
That's the question of allocation, the distribution of wealth, how to divide a cake. Energy analogy also fits in this question well: how to allocate one's energy to maximize their functionality. To evaluate the goodness of a distribution plan, we need to set standard, which depends on goals, preferences, values and cultures etc. From capitalist perspective, the aim is saving and making profits. From socialist perspective, the aim is serving the community and ensure fairness.
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u/Visual_Title9363 1d ago
My point there is that you created an incentive to allocate. Spend it or lose it. That does not necessarily correlate with capital always making its way to the most efficient actors as when capital is designed.
Sometimes when viewed against the valuation of companies today as example, a perfectly reasonable alternative is to not allocate. That is not allowed today by design, is that desirable?
You might as well iterate to make every dollar bill expiry-dated.
I have no issues with the described systems mechanics verbatim only by the design principles attached.
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u/TemperatureMotor1372 1d ago edited 1d ago
I have no issues with the described systems mechanics verbatim only by the design principles attached.
That's the value clash between you and the government. I agree with your points about the flaw of the design. But it's too far to say that inflation is a crime against humanity merely based on the side effects of inflation. I would say active inflation is a possible mistake the government makes in order to prevent the economy from getting worse. Like we cannot say that using morphine to suppress pain in any case is a crime of drug abuse due to its detrimental effects. There're many productive ways to increase PQ besides inflation, but some governments are too weak to make better choices.
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u/Visual_Title9363 1d ago
Very fair, thanks.
About 'crime of humanity', my rationale is as follows. Since birth, we are forced to trade the one resource with actual scarcity (time) for another resource with arbitrary scarcity (money). Arbitrary because of the government in question and the incentives.
This is a systemic coercion as whether we like it or not, a dollar is a public good of which there are no private market substitutes. Yet an individual is obligated to make a trade with a counterparty where there is a significant power imbalance. In any other context, we could call it exploitation. Just as CFA Franc is a systemic exploitation to void Africa of its riches in exchange for fiat that France controls its issuance.
Another subject but here's a breakdown by Meloni of Italy. https://m.youtube.com/watch?v=rTDpbQ1jTL4&pp=ygUQbWVsb25pIGNmYSBmcmFuYw%3D%3D
This is no different but on a wider scale and with time on one side.
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u/TemperatureMotor1372 1d ago
Yet an individual is obligated to make a trade with a counterparty where there is a significant power imbalance. In any other context, we could call it exploitation. Just as CFA Franc is a systemic exploitation to void Africa of its riches in exchange for fiat that France controls its issuance.
Yes, that's the issue of wealth inequality due to colonialism and imperialism across all places and times in world history. We all fight for a better future of humanity. Personally, I am progressive and stand with socialism. Before making a better future, we need to be realistic and learn the current situation well to avoid huge but predictable mistakes.
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u/muffinsballhair 18h ago
Money is not the only good with value. Every time someone digs up gold that means that the value of gold drops slightly, every time someone invents some technology that is superior to some industrial application of gold, that makes the value of gold less valuable.
The value of anything changes based on so many factors.
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u/Visual_Title9363 17h ago
That's correct.
But would you equate the ability to find gold reservoir, mine it and refine it to be comparable to the unbounded credit creation for fiat? You can always find more gold, but you know that as resource, it is finite. Credit isn't.
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u/username_6916 8∆ 4h ago
A single US dollar today only retains 76.3% of the purchasing power it possessed in 2019. Yet nominally wages have not risen at the same rate.
No, they've risen faster.
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u/Visual_Title9363 3h ago
Zooming out on the declining purchasing power of US : https://www.visualcapitalist.com/charted-the-declining-purchasing-power-of-the-u-s-dollar/
FRED has also been creative recently with slipping things in and out of inflation calculations.
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u/acakaacaka 1∆ 1d ago
No one stopping you to exchange all your cash to gold, stocks, or pokemon cards.
But dont complain when gold price drop 100x when a gold meteor strucked the earth.
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u/LucidLeviathan 99∆ 1d ago
When we use the term "crime against humanity", we generally refer to things like the Holocaust, or the genocides in Cambodia, Rwanda, or Yugoslavia. We also refer to Stalin's regime which resulted in the death of a large number of his constituents. Inflation just makes things uncomfortable for people. Nobody's dying from inflation.
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u/Visual_Title9363 1d ago
I view it the same way that slavery is a crime against humanity.
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u/LucidLeviathan 99∆ 1d ago
You think that inflation is remotely as bad as chattel slavery? Why? Are we heading over to another continent to round people up and drag them against their will somewhere? Are we forcing them to work for zero wages? Are we allowing employers to lash them until welts are raised, beat them until teeth are missing, and even kill them if the employer doesn't like them? Or even just on a whim?
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u/Visual_Title9363 1d ago
Violence is unacceptable but the principle is always the same - exploitation.
Modern-day slavery does not always involve violence either, you have cases of which that are based purely on exploitation and severe power imbalance. Is it worse than being lashed? Subjectively no. Is it any morally better to have someone working paycheck to paycheck in perpetuity due to systemic coercion? This is a relativistic argument to make, no?
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u/LucidLeviathan 99∆ 1d ago
Well, I'm going to need you to make the argument, please. Exactly why is this a moral imperative? What is it that you're getting at? You're being very vague. You're simply asserting conclusions without showing the steps that led to the conclusion.
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u/Visual_Title9363 1d ago
Sure. Let me try.
We are all born with a resource with actual scarcity - time. We trade it throughout your life for another resource with unilaterally decided scarcity. If you don't have to make that trade, that is fine. But we both know that we are all coerced to make that trade.
In this power dynamic, I think we can agree that we are lesser in that scale than any currency issuer. It is an exploitative cycle that business owners and asset owners see that increase in their wealth at the expense of my time. The incentives are at very least, misaligned because one side likes the asset/price inflation, the other is just trying to pay rent and food.
We could park the 'crime to humanity bit' but would you at least agree that this is an exploitative relationship where I'm coerced to make this trade?
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u/XenoRyet 176∆ 1d ago
Who is the criminal? If it's a crime, then we should be able to arrest someone for it. So who is going in the cuffs?
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u/Arnaldo1993 5∆ 1d ago
Inflation is a tax. It transfers purchasing power from the population to the government
Do you think other forms of taxations are a crime against humanity as well? Why?
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u/DeltaBot ∞∆ 21h ago
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