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Comment by vkou | Hacker News Reader

Monetary policy isn't intended to steer the behavior of normal people[1] who have ~net-zero cash for most of their lives, it's intended to steer the behavior of investors who don't need to spend all their money on food and shelter and medicine, and who will happily choose to sit on their cash, instead of investing it, if that provides them with better returns.

Everyone bitches when the price of milk goes up 8%, but nobody seems to realize that it went up because wages did. On average, if you're a worker, and you aren't saving (or trying to save) a pile of cash, inflation is net-zero for you.

[1] Stimulus checks did steer the behavior of normal people, but they were fiscal, not monetary policy. They had knock-on monetary policy effects, but the juice was worth the squeeze - thanks to them and the PPP, the economy didn't entirely collapse.

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> if you're a worker, and you aren't saving (or trying to save) a pile of cash, inflation is net-zero for you

But people should be able to save. So that they can buy a house or apartment for themselves and their family. Without having to take up a loan to do so.

> But people should be able to save.

If everyone saves, the economy will collapse. Every dollar you save is a dollar that someone else doesn't earn.

In an inflationary environment, people can still save by buying equities.

This has tax and timing implications... But it's still possible.

> Without having to take up a loan to do so.

The existence of 25, 30, 35 year mortgages driving housing prices into the stratosphere is a separate problem, but not one you're ever going to unwind without having existing mortgage holders stringing you up from a lamp post.

That's a completely separate issue to inflation.

> If everyone saves, the economy will collapse. Every dollar you save is a dollar that someone else doesn't earn

Where is the plan to make billionaires spend all their savings? That’s the money I personally didn’t earn!

Or is it saving for them, nothing for me?

Billionaires have very little in savings relative to their wealth. Most billionaires have their wealth tied to ownership of a small number of companies, usually ones they founded.

If you want to buy a house or apartment, you're probably looking at at least several hundred thousand dollars, and average working class people would need years to save that much.

In other words, we're looking at someone with a few hundred thousand dollars, held for a few years. At which point, what's stopping them from keeping the money in an index fund, instead of under the proverbial mattress?

Also, taking a mortgage is a totally normal thing to do when buying a house, it will give you years of enjoying your home ownership, and in this case inflation actually works for you!

> what's stopping them from keeping the money in an index fund

Risk of principal loss.

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