[HN Gopher] America Needs Higher, Longer-Lasting Inflation
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America Needs Higher, Longer-Lasting Inflation
Author : hncurious
Score : 9 points
Date : 2021-10-14 21:07 UTC (1 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| dkdk8283 wrote:
| This is absurd. Inflation destroys lives and retirement savings.
| thescriptkiddie wrote:
| Inflation spurs economic growth. And people shouldn't save for
| retirement, they should have pensions.
| randomhodler84 wrote:
| This is basically gaslighting so people don't realize how much
| they are being robbed. The inflation rate is closer to 15%...
| Good luck buying any kind of house with static wages and vastly
| inflating prices.
| nabla9 wrote:
| It's so hard to make people to think in the terms of real wages,
| that politician saying his aloud would be a political suicide.
|
| All you get is unintelligent comments like:
|
| - fed conspiracy against working man, and
|
| - money printing brrr.
| mlindner wrote:
| I think the arguments are much more complex than that. Some
| primary reasons:
|
| - High inflation destroys savings. If someone is saving to buy
| a house or saving for their children's schooling, inflation
| destroys it if it's not invested in something.
|
| - High inflation is rarely if ever matched by wages going up.
| Just look at the minimum wage, it hasn't matched inflation at
| all.
|
| - Inflation penalizes anyone who isn't invested in things that
| hold their value versus the value of the money. Namely if
| you're rich enough to invest in stocks and bonds your money
| holds better value than if you live day to day or keep your
| money in a savings account. It's a form of regressive taxation.
|
| - Inflation isn't bad at all for people who are in the
| financial system itself, namely the people who actually control
| the inflation rate.
|
| - It frees the government to spend even more wastefully as they
| can use the inflation to erase the federal debt
| nabla9 wrote:
| >High inflation destroys savings
|
| This is not true. When the inflation is high, normal savings
| accounts pay interest rate that protects from inflation.
| Besides if you are saving a lots of money you should invest
| it for something. Like government bonds at least.
|
| > High inflation is rarely if ever matched by wages going up.
|
| This is not true. Inflation and real wages are not connected.
| Why would they? See for example: https://en.wikipedia.org/wik
| i/Real_wages#/media/File:United_...
|
| What high inflation does in some jobs, it allows employers
| not to lay off people by not increasing their wages (when
| their productivity is not increasing).
|
| > Inflation penalizes anyone who isn't invested in things
| that hold their value versus the value of the money
|
| And this is how it should be. Money should not be good store
| of value in long term.
|
| And as I said before, savings account interest rates are not
| zero when inflation gets going.
| https://www.finder.com/history-of-savings-account-
| interest-r...
|
| https://www.bankrate.com/banking/cds/historical-cd-
| interest-...
| sjg007 wrote:
| Inflation and wages are in fact connected.
| simplemts wrote:
| You are discussing a theoretical world. In the real world,
| interest rates are 0.
|
| I can't find a SINGLE savings account over 1%, while
| inflation is over 5%:
|
| https://www.bankrate.com/banking/savings/rates/
|
| Treasury bonds are barely better -- 10yr < 2% (!)
| randomhodler84 wrote:
| We have lived in a time of very low interest rates for a
| long time, if they ramp it up; the leveraged real estate
| market will collapse. Repeat the money printing to bail
| them out. A hole cannot be escaped by digging deeper.
| simplemts wrote:
| This comment is spot on.
|
| Interest rates are not in line with inflation, therefore,
| savers are being eaten alive. Those on fixed income
| (retirees, disabled) are getting absolutely screwed.
| dnautics wrote:
| > normal savings accounts pay interest rate that protects
| from inflation
|
| Pray tell which banks are you banking with?
|
| > What high inflation does in some jobs, it allows
| employers not to lay off people by not increasing their
| wages
|
| shorter: "Let's screw the labor class over so that their
| managers don't have to fire themselves."
|
| > Money should not be good store of value in long term.
|
| "it is important to encourage consumption at all cost in
| the long term"
| doubled112 wrote:
| It's definitely not a bank in Canada.
|
| A TD High Interest bank account has a 0.050% interest
| rate after $5,000. Before that the interest rate is
| 0.000%.
|
| Don't worry, as long as you have $25,000 dollars in
| there, they'll waive the transaction fees every month ($5
| per transaction).
|
| I might as well stick it under the mattress and pretend I
| don't have it at those rates.
| mchusma wrote:
| I'm skeptical of this author's claim: that inflation will make
| housing more affordable.
|
| The core problem of housing is limited supply, mainly driven by
| zoning, parking requirements, and NIMBY actions.
|
| Inflation by printing money is a tax. In recent times, this tax
| was used for things like giant unemployment programs and PPP
| loans. You can argue whether or not those were good things, but
| all things being equal more taxes are bad. (for example, if the
| fed printed trillions and gave them to politicians, nobody would
| purport that it was good).
| sjg007 wrote:
| Inflation eats the interest rate right? If your mortgage is
| less than inflation that's basically free money, assuming your
| wages increase.
| nabla9 wrote:
| > Inflation by printing money is a tax.
|
| Inflation is tax on lazy money. As it should be. Money should
| be put into work or lose value.
| randomhodler84 wrote:
| For most of human history, a fine gentleman's suit cost 1troy
| oz of gold. It's still the same today. I don't agree that
| savers must take on risk in order to maintain value. Take on
| Risk for treading water?
|
| I feel like this is financial engineering to ensure the
| continuous capital injection into equities markets.
| dnautics wrote:
| I don't know if there is, but if there is also a "foreign real
| estate investment sops up housing supply" and/or "makes prices
| slow down supply churn" then inflation might making housing
| LESS affordable, by making it nominally cheaper for foreign
| investment participate in the market.
| nwah1 wrote:
| Those supply issues you mention are true but ultimately not the
| key.
|
| Cities are expensive, but we have endless amounts of cheaper
| suburbs. Yet people still want to live in cities despite the
| price. Why is that? Because they get a value from that, and
| that value is reflected in higher _land values_
|
| Adding more supply of buildings doesn't make the land any
| cheaper. In fact it would make it more expensive via
| agglomeration effects.
|
| So the issue for affordability is land value. And the way to
| reduce it without destroying the underlying desirability is to
| clamp down on land speculation.
|
| This can be done by shifting taxes off of buildings and onto
| land.
| randomhodler84 wrote:
| By George I think you might be on to something there...
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