INFLATION is actually a tool utilised by the rich and powerful to enslave poor / ignorant people and

Discussion in 'Economics & Trade' started by Bic_Cherry, Dec 14, 2020.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    If people spend more of their money, couldn't that just lead to more inflation?
    Maybe then goods and services wouldn't actually increase much then.
     
  2. bringiton

    bringiton Well-Known Member

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    No.
    Except that they would, and always have historically.
     
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Can you provide some other explanation of how or why that would happen?

    Preferably an explanation that relies less on the use of money. (Because as soon as we throw money into the equation it makes things very complicated)

    Maybe some explanation about the basic factors that lead to production, and what exactly spending more of one's savings represents (not looking at the money side).

    Can you describe this in some analogy (however imaginary) that doesn't involve money?
    Or describe a hypothetical example that only involves two people?
     
    Last edited: Apr 11, 2021
  4. bringiton

    bringiton Well-Known Member

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    Land rent is determined by the economic advantage obtainable by using the site, not the money supply.
    Well, you are just objectively wrong about that. The only ultimate purpose of all economic activity is to enable consumption. Prioritizing saving over consumption is therefore nothing but anti-economic nonscience.
     
  5. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Why is it different for other consumables?
     
  6. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    There's a big difference between enabling consumption and trying to coerce people to consume.
     
  7. bringiton

    bringiton Well-Known Member

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    You mean an explanation other than the true one? Sure: it would happen because of the positions of the planets in the zodiac. Want another one? It would happen because of Wiccan sacrifices.
    It's only complicated if you choose not to know facts.
    You mean like people wanting to consume $#!+?
     
  8. bringiton

    bringiton Well-Known Member

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    Land is not a consumable.
     
  9. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Can you explain why inflation (and being pushed to spend more of one's savings) would make people spend more money on other things, but not on land rents.
     
    Last edited: Apr 11, 2021
  10. bringiton

    bringiton Well-Known Member

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    No it isn't. That's why they do so little of it.
    No it doesn't. It just makes the economy even more unpredictable and unstable.
    None of us do. But the poor don't have enough money to be saving any significant amount of it. What they do typically have is debts, and that is why inflation benefits them.
     
  11. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    That's an ambiguous non-specific answer to the question.
    People "wanting" something doesn't necessarily cause consumption.

    You also need to consider the fallacy of composition, what is true for the parts individually is not necessarily true for the whole. This is often the case in economics.

    I questioned whether "spending more money" would increase production (overall in the economy).
     
    Last edited: Apr 11, 2021
  12. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Anecdotal evidence from Latin America's history suggests it is the poor who suffer the most from high inflation.

    I'm not claiming that is definitely the case, but we do need to look at that claim and take it seriously.
     
    Last edited: Apr 11, 2021
  13. bringiton

    bringiton Well-Known Member

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    They would, roughly in proportion to the increase in production. Land rent is equal to the economic advantage obtainable by using the site. It generally tracks GDP, as the more production there is, the more opportunity there is to take advantage of the associated economic opportunity. So if GDP is 100 and land rent 20, leaving 80 for consumption, then a GDP increase to 200 would imply land rent increasing to ~40, leaving 160 for consumption (land rent actually tends to increase slightly faster than GDP, but only very slightly).
     
  14. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    And this "economic advantage" factor doesn't change if people spend more of their savings?

    I don't understand. Now it sounds like you are saying land rents will go up in proportion to the increases in all the other production.

    That seems to defeat your original argument.
     
    Last edited: Apr 11, 2021
  15. bringiton

    bringiton Well-Known Member

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    High inflation is economically harmful because it makes financial calculation too uncertain and production too risky. I'm talking about low single-digit inflation: 1%-5%.
     
  16. bringiton

    bringiton Well-Known Member

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    It tends to track total production, or increase very slightly faster.
     
  17. bringiton

    bringiton Well-Known Member

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    "Coerce"? What nonsense.
     
  18. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    If inflation were 0%, or there was even a little bit of deflation, maybe the demand for money would be higher and prices would go down.

    Maybe if prices went down, that would encourage more consumption.
     
  19. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    You know what I was referring to. Basically making people pay a penalty if they don't spend their money quickly.
     
  20. bringiton

    bringiton Well-Known Member

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    Pretty close.
    No, because it is better to pay 40 land rent out of an income of 200 than to pay just 20 land rent out of an income of 100.
    It's called an incentive, not coercion. A little inflation is good for the same reason any deflation is bad.
     
  21. bringiton

    bringiton Well-Known Member

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    Yeah. So your point would be....?
    No, because if they saw prices going down, people would wait for prices to go down even more, the economy would seize up, and unemployment and poverty would become widespread. All because you think a handful of poor people should be able to avoid losing a few dollars in the purchasing power of their meager idle savings.
     
  22. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    That was my point. If there is deflation, the incentive for people to hold onto their money will equal the incentive for people to buy because prices are lower. If there is inflation, the incentive for people to not want to hold onto their money will equal the incentive for people not to buy because prices are higher. In either case, it doesn't result in overall change in people's purchasing behavior.
     
  23. David Landbrecht

    David Landbrecht Well-Known Member

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    That's fine. At least you understand it is a position I recognize without endorsing.
    To me, economics has to be totally re-examined and re-invented. It may not even resemble anything we have called "economics" before. Society and technology have outstripped the concepts of the past, the 'received wisdom' of how things are done.
     
  24. modernpaladin

    modernpaladin Well-Known Member Past Donor

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    The inflation of the currency is sortof a side benefit of the whole thing. It does net them some profit as they're positioned on the proper 'end' of the loop to benefit from the value fluctuation, but the real scam is in the cost of housing. The average monthly cost of buying a home (and thereby the monthly cost of renting a home, as the two tend to stay similar) is 1000% or 10X higher today relative to average income than it was in 1950. Given that we still have vast amounts of residentially suitable land sitting unused in reserves owned by the govt and homes are cheaper to construct today than in 1950 due to advancements in materials and building technology, its clear that the housing market is being artificially manipulated to create a renter economy whereby the cost of the critical resource of housing continually rises to gobble up the bulk of the lower classes earnings, keeping them from scaling up. This machine is somewhat self-regulating, as each person manages to climb out of renting into a mortgage, property values increase and it becomes harder for anyone else to climb up after them, in a sort of 'the ladder keeps getting shorter' situation. This is, of course, a natural result of scarcity, as we get more people but not more land, land inevitably increases in demand and thus cost. But the rate that it is happening is not natural. Available land is being artificially restricted both by having so much of it owned by the govt and thus unavailable in the market, as well as the practice of hoarding land as a means to hoard/hide/grow wealth. This artificially induced scarcity coupled with the fact that literally everything except real estate is getting cheaper because technology allows to make everything except real estate more efficiently results in this situation we have now where the most basic resource of housing is becoming unaffordable.
     
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  25. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    The Federal Reserve owns a lot of housing equity, indirectly. They have more money issued, and then use that money to buy up mortgages, while the money then gets lended out to new buyers which drives the prices up. (If everyone can borrow more, then it drives the total price up when those people compete with each other)

    Imagine if you could print money and then use that money to buy up a large swath of housing equity in the economy. Easy money for you, and then it would create artificial scarcity and drive prices up.
     
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