If you were to choose between a little bit of inflation and a little bit of deflation, you should choose a little bit of inflation. Deflation means people have a greater incentive not to spend, so dissuades investment and thus innovation and progress. It leads to wealth hoarding and feudalism.
Not at all, but it's a dominant view for a variety of reasons. A base concept is to keep money moving into other investments and discourage saving. I suspect the ongoing inflation rates will make this view less attractive in the future.
Not required, but a deflationary asset used as currency discourages borrowing, and companies and governments love borrowing.
If you knew that inflation was going to rapidly increase, the smartest thing you could do would be to take out as many loans as you can and buy usable assets, like a car and a warehouse full of canned beans.
Imagine you take out a loan to buy a car. Tomorrow, hyperinflation happens and the currency has lost 99% of its value. You can now pay off your car with a can of beans.
Inflation is also an avenue for a government to steal the excess value produced by an economy over time. Probably just a coincidence though.
> Inflation is also an avenue for a government to steal the excess value produced by an economy over time
What's the incentive here? "The government" (unless we're talking monarchies or dictatorships?) usually isn't some monolithic, self-interested entity capable of benefiting from things like "stealing" via inflation. Who's the evil mustache-twister behind all this?
The way this is usually trotted out makes it sound like Nancy Pelosi—because there's almost always a Nancy Pelosi hot take—is siphoning $20's out of IRS revenue streams, and laughing her way to the bank.
dools|1 year ago
psychlops|1 year ago
halfcat|1 year ago
If you knew that inflation was going to rapidly increase, the smartest thing you could do would be to take out as many loans as you can and buy usable assets, like a car and a warehouse full of canned beans.
Imagine you take out a loan to buy a car. Tomorrow, hyperinflation happens and the currency has lost 99% of its value. You can now pay off your car with a can of beans.
Inflation is also an avenue for a government to steal the excess value produced by an economy over time. Probably just a coincidence though.
whimsicalism|1 year ago
the_gastropod|1 year ago
What's the incentive here? "The government" (unless we're talking monarchies or dictatorships?) usually isn't some monolithic, self-interested entity capable of benefiting from things like "stealing" via inflation. Who's the evil mustache-twister behind all this?
The way this is usually trotted out makes it sound like Nancy Pelosi—because there's almost always a Nancy Pelosi hot take—is siphoning $20's out of IRS revenue streams, and laughing her way to the bank.