• Windex007@lemmy.world
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    1 year ago

    There are a ton of issues with our economic system, and there are a ton of structures in place to funnel money up, but keeping a moderate inflation is not one of those things.

    Inflation is a specific counter-measure against people who already have a ton of money. It provides a reason for them not to just “take their ball and go home” once they have a pile of money.

    To shelter their money from inflation, they need to either risk it on the open market, allowing that capital to do things like pay worker salaries, or buy things like GICs which are essentially loaning money to the government so the government can do things like build roads or fund social programs.

    In either/all cases, inflation is designed to do the exact opposite of funnel money upwards, it’s a mechanic to wrench that money out of the hands of the wealthy.

    • 🐱TheCat@sh.itjust.works
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      1 year ago

      I feel like this story is essentially propaganda at this point- at least in the USA where the ‘risk’ for the rich never plays out.

      The rich don’t actually risk their money. They risk the government’s money and other’s lives and livelihoods. When they fail, they get bailed. Bailed out by the banks. Or they simply don’t pay their bills and lay off all their employees and let everyone else take a bath.

      Rather than inflating everything, why don’t we tax the shit out of their held wealth? Seems more direct without all the side effects of making FOOD, HOUSING, AND HEALTHCARE UNAFFORDABLE

      • Windex007@lemmy.world
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        1 year ago

        There isn’t anything wrong with the mechanic of inflation as a means to encourage money to be reinvested into the economy.

        You’re right about cost of living not keeping up with wages. You’re right about fucked up taxes on the ultra wealthy. You’re right about a massive erosion of social services. you’re right that the USA healthcare system is fucked up.

        These are all issues that are distinct from the plan of maintaining a moderate (2%) inflation rate.

        Yes, we SHOULD get living wages, unions and legislation should do that. The top tax bracket SHOULD be taxed at 70% that’s tax policy. We SHOULD reinvest in social services that’s government poicy. You SHOULD get universal healthcare, that’s a government program. Inflation isn’t the thing keeping you from any of these things.

    • intensely_human@lemm.ee
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      1 year ago

      Yes, and the people at the top do keep their money in circulation, and as a result their wealth stays constant across inflation while workers’ wages and savings go down.

      I have no idea why you don’t see that as a transfer of wealth.

      You say it incentivizes the rich to not hoard cash. Well, they don’t. In fact, it incentivizes everyone to not hoard cash, but the rich are the only ones with sufficient cash to trade that cash for income-generating assets.

      It incentivizes everyone by punishing everyone for holding cash, but only the upper class is able to evade that punishment by converting their wealth. Poor people don’t have though cash to transform it into wealth. Their cash is only useful to them as cash.

      This is why the poor are feeling the inflation the worst. People who own no stock are the ones hit hardest when the government printed a bunch of money and injected it into the stock market.

      • ungoogleable@lemmy.ml
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        1 year ago

        What you describe would be worse without inflation. The rich would still have most of the capital, but they also wouldn’t bother investing it either, which at least recirculates the money and becomes income for others.

    • TawdryPorker@lemmy.world
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      1 year ago

      It provides a reason for them not to just “take their ball and go home” once they have a pile of money.

      If that’s the reason for it it’s not doing its job. Investments are much like savings to high net worth individuals and their investments are managed by someone else and they simply lay in the cut and collect dividends. Yes there is a risk to investments but if you’re in a good wealth fund then over time you’re almost guaranteed to win even if you have disastrous months here and there.

      • ungoogleable@lemmy.ml
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        1 year ago

        If they’re invested in businesses, the capital gets recirculated in the economy and becomes someone else’s income.

    • God@sh.itjust.works
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      1 year ago

      Or just buy gold and bitcoin and other things that aren’t tied to the value of the dollar.

      • intensely_human@lemm.ee
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        1 year ago

        This is exactly how inflation is a tax on the poor: there are ways to counteract inflation, which only become available at a certain level of wealth.

        Basically disposable income is safe because you can convert it; and non-disposable income is not safe because you can’t convert it.

        • w2qw@aussie.zone
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          1 year ago

          You have a point but how much cash are we talking about? If you have $10k-$20k sitting around in a chequing account that’s only $200-$400 you are losing to inflation. Things like the earned income tax credit would give you back like $500-$8000. They may not seem super related but in general it’s easier to compensate those lower income folks for inflation than trying to change the inflation target.

        • God@sh.itjust.works
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          1 year ago

          yup, that’s exactly how it is, idk why ppl downvote me but upvote you, it’s saying the same thing lol, crypto bad i guess.

      • n0m4n@lemmy.ml
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        1 year ago

        Gold is a shiny bauble material, but never grows. It can be a good investment for that part that you want to put aside and will just sit. Bitcoin is invaluable for money laundering, but very unstable for saving/investing. Look at how many have been fleeced when someone gets their keys, or lost their coins by a hard drive failure. It is costly in electrical use to mine.

        There are far better things not tied to the value of a dollar. I would suggest very low-fee indexed mutual funds as one better alternative. They offer an accessible way for people to get a share of the means of production. My experience is that for people who can can learn to not be ruled by fear or greed can, over time, build enough wealth to live better lives.

          • n0m4n@lemmy.ml
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            1 year ago

            Investing in a company puts your money in a non-inflationary asset. If inflation goes up, your land, machinery, buildings, raw materials as well as finished product just jumped in numbers of dollars of value, thus holding its real value. The same can be said of any hard asset, and dollars could also be switched with any country’s currency. I like large index funds because they are largely diverse. There are big swings, but I have gotten 9-12% average, over long periods of time.

            Inflation is similar to a stock split. If you can understand stock splits, you have a rudimentary understanding of inflation.

            Here is some extra information that may be too much info: Add in population growth, and realize how money supply has to at least increase to keep pace, for every worker to maintain the same pay. (in theory) Some nation’s citizens like the relative stability of the dollar’s value, and trade or have savings hedged with dollars. These dollars essentially drops out of money supply. Their trade velocity drops for these dollars. There are so many variables, that economists look at inflation measures to see how they are doing. These indicators are always 6 months or so behind, so they are always flying by only being able to look behind their plane.