This is the annual inflation rate. Annualized inflation of 2-3% is generally considered a modest, stable rate by economists.
TLDR Accumulate assets at favorable prices to invest for your future.
Incredible how the elites have conditioned us to encourage systems that impoverish us.
So, if you have no inflation, or even deflation, then the rich just sit on their gold like dragons. It stays with them and doesn't circulate. The only change is really for gambling debts and having kids. It's not actually useful as a method of exchanging goods and services.
But if you inflate away the dragon's gold, then these rich asshats are pretty much forced to find ways to beat that inflation, just to stay stable. So, they go out and invest the money in gold mines and dunny roll companies. The rich then find out that they can actually make their gold piles larger than the inflation rate, sometimes.
That investment ends up being good for the poor as the rich have to give them jobs and these jobs pay wages and then you get the consumer economy of Henry Ford paying workers enough to buy the cars they are making (likely apocryphal). So, money then is flowing and not just sitting there. Which is kinda the point of money in the first place.
In general, inflation is about the rich. It just so happens that a side effect of inflation happens to mostly be good for the poor too. A very very rare win-win situation.
Or so the rich asshat tell me.
A simple power law land value tax would limit the dragon from hoarding gold and incentivize working rather than hoarding. Instead, we have the exact opposite. We tax working via earned income taxes, and have lower capital gains tax rates. And we bail out asset owners time and time again, but when wages don’t keep up, it’s crickets.
In a way, it is also a way for old people to maintain their power, after their physical power declines. Things are hunky dory as long as economic growth is achieved, but if population dynamics are changing, then we’re in for some drama. The battle lines are not just rich v poor, but old v young, especially in democracies.
See the most recent proposal to court votes by removing income tax from social security income.
Historically speaking, that's pretty much all we have ever had.
I do want to echo the difference though. In the 'old system' of hoarding dragons, the money was useless. In this 'new' inflation system, the money is being sent out into the economy to invest in things. See the ZIRP of the 2010s. The money is working, not the dragons, but at least that is something.
As for the elderly, the maximum outflows of social security in the US will be in ~2030. So expect a lot of chatter leading up to that year and then for it to die down (literally).
The ratio of inflow to outflow is important, not the outflow. Also, Medicare/Medicaid get lumped in with Social Security for the purposes of discussion wealth transfer from workers to non workers, and I don’t see the ratio of inflow to outflow increasing anytime soon.
> $1 in 1924 is equivalent in purchasing power to about $18.37 today, an increase of $17.37 over 100 years. The dollar had an average inflation rate of 2.95% per year between 1924 and today, producing a cumulative price increase of 1,737.28%.
> This means that today's prices are 18.37 times as high as average prices since 1924, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 5.444% of what it could buy back then.
This is at a time where technology is making everything cheaper mind you...
If this were true, then there would be no inflation.
The price of housing is one of the biggest drivers of cost of living in the US. The constraint on housing supply is primarily political (codes and zoning) not technological.
https://www.aei.org/wp-content/uploads/2022/07/cpi2022junea-...
I'm happy we're looking at dollars as cars. "This is a 1924's dollar model and that is 1960s one". Makes you really wonder how crazy we are as a society to view our output denomination like that.
This implies that if inflation wasn't a thing, you'd somehow be able to keep your pay raises (including any inflation adjustment), which seems doubtful.
Automation is just one factor of supply and demand curve movements. Supply (and demand) of labor, money, energy, good weather, etc are others.
https://www.epi.org/publication/charting-wage-stagnation/
Weirdly, most graphs start getting off in the 1970s when the US left the gold standard. This is to be expected due to the Cantillon Effect.
>Wages don’t seem to have raised at the same rate at all.
>https://www.epi.org/publication/charting-wage-stagnation/
Figure 1 from that link is compares actual income with "projected assuming no growth in inequality"... whatever that means, not inflation.
Figure 2 compares hourly compensation with productivity, not inflation
and on and on...
Real wages (ie. inflation adjusted) has gone up, albeit slowly[1]. Even your link suggests this. "Stagnation" implies staying in the same place, not falling behind.
Sometimes I wonder how people have come to accept this line of thinking as anything but malicious.
As to your second point, yes. PP is more important, so let's use that. I'm sure the picture will look a whole lot better... /s
1. Destruction of savings
2. Distortion of price signals in markets
3. Impoverish those on long term fixed/low income
4. Creates massive inequality especially inter-generationally
In my estimation however, if you really have to ask about the benefits or downsides of theft then you've already started at the wrong end of things.
Low, stable inflation is a natural phenomenon in a growing economy, largely a function of market forces.
It's not theft, but it's not that far off from it. But at this point, we've normalized things like "taxes" anyways, so peoples' definition of theft doesn't align with reality, so why would it be different when it comes to printing of money.
Everyone is just post-rationalizing about this because they can't cope with the logical inconsistency of the world they live in.