Hacker News Reader

Comment by rawtxapp | Hacker News Reader

Propaganda? Does it matter where they learned it as long as it's true and factual?

How is it true and factual? The inflation rate is set, it is high now and will be lower in the future to account for that. If you are planning to keep millions/billions sitting around in cash for a decade, instead of investing into assets where it works for you and everyone else, you are the reason we have the inflation rate and deserve to lose out to inflation.

A set yearly inflation rate incentivizes actual investment instead of currency speculation. Basically the system we have now exists to prevent what crypto enthusiasts are trying to push on us: a return to a super volatile currency that when it crashed wasn’t able to be fixed by just printing more money temporarily.

When you hear about things as complex as Monetary Policy, it is best to assume that lots of people have thought about why it is the way it is and why that’s preferable. The “gold standard” and the hoarding of wealth allowed things like feudalism to exist where lords just sat on their land and gold and were richer every year.

Yeah you can pull the “the rich get richer today too” card but so do poor people if they invest in assets, and the difference is that every wealthy person has almost all of their wealth invested in the US economy in order to beat the risk free and inflation rate.

I really, really am sick of the bullshit around the big L Libertarian party (and the crypto enthusiasts who identify with them.) Spreading lies about the evil fed and the evil inflation rate, both of which are a huge improvement over the constant depressions we had prior to this century.

It took thousands of years for people to develop the sophisticated monetary policy we currently have that allows our economy to be extremely stable and continuously grow, generations of very bright people, and anarcho-capitalists want to throw that away to go back to “basics.” At the very least you could do all those people, and the citizens of the world, the courtesy of understanding why were all in favor of yearly inflation (even if we bitch about prices going up.)

Can we start by talking about how modern money works in a more factually accurate way. In particular, can we stop talking about "printing money"? Printing money has no impact on the value of money. I think most people in a forum like this understand that but when we talk that way I worry that someone, somewhere doesn't understand.

Money is created when it is borrowed from a bank or banking institution. Even that is an oversimplification but it is still much more accurate than saying money is created by "printing" it because it isn't. One of the really key things to understand is that the money supply is created by government but it is also created by businesses and individuals.

I don't have a dog in this fight, but it always drives me crazy when people talk about economics in a sloppy way.

Sure, but central banks do influence how much banks can borrow, and hence how fast the currency supply grows. Even someone whose understanding of monetary policy is limited to "The Fed has a big meeting each year to decide what the inflation rate will be" can understand why a deflating currency would be really bad.

Right, but it's not. The idea that inflation "dilutes" wealth and is therefore bad for rich people is not true.

It would be if rich people held all their money in cash like Smaug in his mountain, but anyone familiar with the current monetary system would know that people invest in assets to prevent losing out to inflation and this is what we’re going for with a steady inflation rate. Keeps the economy pumping and in times when we hit a recession (not depressions, since we don’t really have those anymore thanks to our modern monetary policy) those same rich people want to get their freed up assets into the economy as quickly as possible.

Correct. Inflation is when the dollar gets weaker for the masses because the elite are printing themselves dollars. Deflation is when the dollar gets stronger for the masses because the elite's proportion of the national currency is decreasing. We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."

Stronger/weaker refer to the value of a dollar compared to other currencies; inflation/deflation refer to the value of a dollar compared to goods and services. Neither is related to the "elite's proportion of the national currency". Again, I can only suggest reading some articles about this stuff.

> We have pro-inflation, anti-deflation economic ideology because the elite fund the economists' "research."

Suppose USD deflated; what would happen? Some people would move some money from other assets (stocks/bonds/etc) into currency and hold it for risk-free returns. What would that do? Reduce the amount of money in circulation. What does that do? Deflate the currency even more. What does that do? Incentivize even more people to move money into currency, which makes the currency deflate even more.

The whole point of a currency is that people spend it or invest it in something useful. If it's going up in value, they're incentivized not to do that, and it stops being used as a currency. This is an unambiguously bad outcome. I don't believe shadow elites are trying to convince economists of this, because they're already convinced.

Reply on news.ycombinator.com