You're always free to buy gold with your money, if you think that's a better store of value. I don't think the government cares.
(Personally I invest in productive assets and bettering my standard of living, but to each their own.)
(Personally I invest in productive assets and bettering my standard of living, but to each their own.)
"..forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 and/or up to five to ten years imprisonment. The main rationale behind the order was actually to remove the constraint on the Federal Reserve which prevented it from increasing the money supply during the depression"
https://en.wikipedia.org/wiki/The_Gold_(Control)_Act,_1968
"Desai finally introduced the Gold Control Act, on 24 August 1968, which prohibited citizens from owning gold in the form of bars and coins. All existing holding of gold coins and bars had to be converted to jewellery and declared to the authorities. Goldsmiths were not allowed to own more than 100 gms of gold."
(If they do, it's in a 401k, which is a productive asset and not tied to the whims of fiat currency.)
Poor people have debt. (Actually, I think most people in the US have net debt. (EDIT: Actually it's 20%; 30% if you're a minority [1].)) Inflation is good if you have net debt. It means the principal of your debt decreases in real terms each year.
I keep bringing up gold because this whole thread is about metal-backed currencies. Poor people can – and do – buy gold just as easily as rich people can. Pawn shops are rife with the stuff. The problem isn't that they must "watch their savings wither". It's that they don't have savings; they have debt.
[1] https://www.marketwatch.com/story/one-in-five-american-house...
What sort of nonsense is that? A lot of people don't have savings, sure, but there's also a lot of working class individuals who are financially responsible enough to save.
> If they do, it's in a 401k
Exactly my point -- the only way to save money is to risk handing it over to a corporation and crossing your fingers. Never mind that the general advice is not to invest money you plan on needing within the next 6 years.
> Inflation is good if you have net debt.
Not when the interest rate on your debt is higher than the rate of inflation.
You've done a sad job making any case at all for inflation.
Yes, it's still good. It still decreases the real value of your principal. Deflation does the opposite.
I.e. people who loan money are not stupid, and you're not getting any bargain because of inflation.
My mortgages are all using a fixed repayment plan, where the interest rate, payments, and repayment duration are fixed on day one. If the inflation rate doubled or halved next year, my loan terms won't change and I'd end up repaying less or more money, relatively.
Many other loan rate, such as margin interest, are "prime rate plus X". The prime rate is inflation plus a constant.
Again, the people loaning out the money are not fools about inflation.
There were many government employees in Brazil who'd bought real estate in Brasília (the country's new-ish capital) with significant mortgages at reasonable fixed or quasi-fixed interest rates before the inflationary 1980's. After many years of 100% or 600% inflation in the 1980's, were left paying the equivalent of US$50 per month mortgage for awesome apartments.
Contrast that with the impacts of deflation: If you know you’ll be able to buy more tomorrow with the same money, you’ll often choose to wait.
Because companies see fewer revenue for the same goods/services they have to cut costs - unemployment balloons.
Fewer people employed decreases demand overall. Leading to still more layoffs.
The deflationary forces spiral the economy lower and lower.
Any debt a person holds becomes dramatically more difficult to pay as their income decreases.
And all because the money supply remained constant or decreased in circulation.
With free banking, there won't be net deflation either, as the market forces on the creation/destruction of money prevent it.
As pretty strong evidence, there was no net deflation or inflation in the US dollar from 1800 to 1914, while the economy grew from subsistence farming to superpower.
To argue that this cannot work, one must explain that.
The one thing that changed in the 20th century is the absence of severe deflationary crises. Inflation in the 20th century is actually way less volatile than in the 19th century, but absent deflational periods those low levels of inflation compound over the decades.
source: http://liberalarts.oregonstate.edu/sites/liberalarts.oregons...