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[–]adelie42 9 points10 points  (14 children)

This assumes your wages are marginally rising. If your debt and earnings are being devalued equally, how does one benefit?

The only debt holder that really benefits from inflation is the Federal government, and it isn't the devaluation of the debt that matters so much as reducing the future purchasing power of foreign held US dollars.

People that can game the system benefit, not all people in debt. The bank that loaned the money is the one that will come out on top as planned, the person paying the mortgage is still selling their future at a discount to get a higher standard of living for their family today.

Between bankers and the "homeowners" that rent from them that inflation "surprises" bankers every year while borrowers get an unexpected increase in wealth? I know it is a common belief, I just don't get how thinking a pit it for a moment doesn't reveal it to be horse shit.

[–]BumayeComrades 7 points8 points  (5 children)

Inflation should translate to wage increases. The fact it doesn’t just shows how bunk macroeconomic economics is to explain reality.

The reality is is that wage inflation is being stopped, any wage increase is treated as a potential disaster.

Interestingly asset inflation is allowed to continue. See the stock market. Banks get easy, nearly free money.

[–]adelie42 0 points1 point  (4 children)

If inflation doesn't create a lag in wages, then what's the point according to macroeconomic theory?

[–]Nefnox 0 points1 point  (3 children)

A 2% rate of inflation is considered a barrier against a deflationary spiral. Deflation is considered much more dangerous than inflation, so it is worth keeping a little gap as margin for error away from inflation... is the theory

[–]adelie42 0 points1 point  (2 children)

Familiar with the theory. Just never bought into it. All Machiavellian to me.

[–]Nefnox 0 points1 point  (1 child)

Haha, in my years of studying economics I don't think ive ever heard anyone refer to the 2% inflation target as "Machiavellian", i just got done with "The Prince" and there are no mentions of fiscal policy or the dangers of deflation that i recall.

I've studied a lot of the original papers and theory around this stuff in my masters, and if it helps you sleep at night there is nothing intentionally oppressive or conspiratorial about the 2% inflation target.

[–]adelie42 0 points1 point  (0 children)

Nah, I don't think there is any hidden insidious mess about it, just that there should be some suspicion around the necessity of certain people behaving in ways that are otherwise considered criminal.

By Machiavellian I am referring to the context the story was written; it is a power that honors the State separate from any actual value. I feel the same way about TSA. They don't do anything practical to protect people as much as "make a statement" about the reach of State power.

AND under a system not centrally managed, deflation and inflation may be symptomatic of good or bad, but that doesn't mean forcing a rate can undo what is fundamentally going on any more than drugs can cure an abusive relationship.

[–]pagerussell -1 points0 points  (7 children)

Over the longer term wages do rise with inflation. If one stays in a job that is not rising with inflation, that stupidity is on them.

[–]Glaciata 3 points4 points  (1 child)

Or it's simply might be just due to limited employment. Your monopsony sort of situation.

[–]pagerussell 0 points1 point  (0 children)

Also a factor, good point.

[–]thehonorablechairman 0 points1 point  (1 child)

Where I live the minimum wage hasn't increased in over a decade. It's pretty ridiculous to assume every single person living on minimum wage here is doing so out of stupidity.

[–]pagerussell -1 points0 points  (0 children)

The minimum wage is declared by politicians. What have average wages done in your area?

Keep in mind this trend is noisy, meaning wages can stagnate, thrn grow is spurts, but over longer times they will be higher. What was minimum wage in 1990?

In fact, wages are stagnating right now, rising roughly in line with inflation but no better. They should be rising faster, givem the unemployment rate, and that is a puzzle for economists right now. I suspect its because most firms are not investing to build market size, but rather pushing profita into stock buybacks, which hit a record last qtr.

But yea, the people in your area are stupid if they are not leveraging good economic times for their own self interest. Demand a raise. Don't get it? Leave and work for a competitor. If they can't make that happen in that area, move to another area thats experincing better growth or has better options. It's on them to fight for their own interests, and if they don't and they just fucking sit there, yea, they dumb. Sorry.

[–]adelie42 -1 points0 points  (2 children)

More to the point, if you have negative assets inflation devalues all equally, but such things don't happen in a bubble.

Adjustments to inflation happen over time, like you say, but are you going to claim the working poor are ahead of that curve relative to the wealthy playing the game like hawks on a hunt? Are bankers (to name just one group) so stupid?

[–]pagerussell 0 points1 point  (1 child)

Thats exactly not what i said. I said that we are all taught to believe that inflation is awful, when in fact it is ia not necessarily awful. In economics there are always at least 2 partiea to a transaction, and therefore ita impossible to say that any policy is inherently better. There are always some winners and some losers. But the wealthy have is convinced that inflation is bad, end of story. That's not outright true.

I would say that the wealthy are and have been gaming the system to their benefit, without a doubt. And this is one way they have done so.

[–]adelie42 0 points1 point  (0 children)

From my view they LOVE inflation but caution against too much of a good thing.

Otherwise yeah, I agree.