Comment by jkepler | Hacker News Reader

Comment by jkepler | Hacker News Reader

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You're correct that the Cedi has lost value compared with the US dollar while existing in a world where USD is one side if nearly every international business transaction.

However, look at the US dollar over longer durations against wheat [1], copper [2], gold[3], or Bitcoin [4]: the dollar buys significantly less than 10, 15, 40, or 100 years ago.

While the Cedi may be much weaker against the dollar, the dollar is loosing against real commodities/assets that can't simply be created by banker's fiat.

So, the dollar's the cleanest dirty shirt in the room. And Ghana just announced that they'd rather trade oil for a clean shirt (gold) rather than taking a dirty one.

[1] https://www.macrotrends.net/2534/wheat-prices-historical-cha...

[2] https://www.macrotrends.net/1476/copper-prices-historical-ch...

[3] https://goldprice.org/gold-price-charts/15-year-gold-price-h... / For 100 year chart, https://www.macrotrends.net/1333/historical-gold-prices-100-...

[4] https://www.xe.com/currencycharts/?from=USD&to=BTC&view=10Y

Of course the dollar has devalued. That's the whole idea. It's supposed to. At a modest rate of 2% inflation, $1 should be worth 50 cents after 35 years. That's literally how currency works.

That's a policy choice, one which is non-obvious and requires serious justification. Why should people be incentivized to spend their money, morally? The mandatory inflation basically is saying, "spend your money or we'll spend it for you". How does this robbery encourage social mobility and the building of generational wealth, exactly? It's one thing to give handouts to people, and quite another to rob them. It's most harmful to the poor who generally have less leverage in ensuring that their wages keep up with inflation and they tend to need to spend a high fraction of their wages to live on, so eroding their savings is seriously destructive. The poor also can't as easily access investing advice and methods, to avoid the effects of inflation.

It's important to realize what currency really is at its core, which is not a store of value but an intermediary store of the current value of labor vs the barter value. Todays labor is worth more today than it will be in 10 years, so the dollar value of that labor should fall correspondingly. When we pick an inflation rate, we are more deciding what the time decay of todays labor should be moving forward.

May I ask if you think price stability is of any benefit for a given currency at all? If not, why not?

My intention is to justify inflation from this end.

This is not a policy choice. Step outside, touch grass, then open a macro Econ 101 book and understand how and why inflationary economies were created and settled upon as a working model. A non inflationary economy literally cannot expand. You’ll be writing this from a typewriter and posting it from your local post office if inflation didn’t exist.

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