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remedialhedge | 5 years ago
That does not increase the real value of those assets, and it does not have any distributional consequences.
> Thats a theory-laden and motivated explanation
You could go read like, any of the vast literature on the great depression, the things that caused it and the things that made it worse. But you'd rather expose your ignorance on the Internet for us to see.
> discover that the central bank is very much fact and not at all theory.
I happen to know a lot about central banking, actually. You might be pulling a Dunning-Kruger on this one.
chordalkeyboard|5 years ago
Exactly correct. It decreases the value of the money use to pay for them, resulting in a higher nominal price and fewer people in society who are able to afford them, resulting in less access to capital for the majority of society.
> and it does not have any distributional consequences.
False. When assets go up relative to currency, fewer buyers can compete for those assets, leading to the wealthy owning more and the poor getting poorer.
> But you'd rather expose your ignorance on the Internet for us to see.
I’m quite sure I’ve acquitted myself satisfactorily in this discussion, if you feel the same about yourself, perhaps you’re the one who needs to peruse the literature.
> I happen to know a lot about central banking, actually. You might be pulling a Dunning-Kruger on this one.
Then how could you have been ignorant of Krugman’s statements to the effect that inflation was necessary because workers’ make too much money? Did you know he had said that? If so, why ask me for a source? If not, how much do you really know about central banks? Especially if you think that the words of several economists are evidence of some conspiracy?
AngrySkillzz|5 years ago
Also, Krugman is just a pop-econ writer at this point. He is not a big deal in the economics profession. Yes, I am sure he understands how inflation and sticky wages interact. I am not so convinced that you understand it. Just going to repost my other comment for you to puzzle over:
"You are purposefully ignoring the normal explanation, which is this: because wages are sticky, firms that need to cut costs in a recession are more likely to lay off people than they are to give pay cuts. Inflation helps to weaken that rigidity so that job losses are not as large. Maybe you know that.
You claim that central banks depreciate the currency because they "think wages among the working class are too high." But rhetorically, you are doing more than just referring to the explanation I gave above. You are implying that central banks "think" working class wages are too high, and want to lower them to hurt working class people.
Which is the opposite of the standard explanation - the purpose of inflation in that instance is to implicitly reduce the downward rigidity of wages so that employment does not contract as much in a downturn.
Presumably you, champion of the working class, would rather more people be unemployed?"
AngrySkillzz|5 years ago
That is meaningless, though. Imagine last year you bought some asset, that someone else did not, and it appreciated 2% with the price level. You are not any better off. I see you are implying that the other person "couldn't afford" to invest and kept their money in cash instead, to argue that the other person is worse off. That is also wrong - the issue here is holding cash, not the wealth disparity. Don't hold cash if you are worried about inflation. Mutual funds have low minimums, and you can buy fractional ETF shares at this point. You have no argument here.
arcticbull|5 years ago
Boy are you going to freak out when you learn about stock splits and fractional share investing.