Inflation

Let's say your salary is $100k, unless you get a raise, next year your salary will only be $98k (in the previous year's dollars), and so on and so forth. That's what I was referring to when I said it was a tax on your wages.

Whats wrong with 0% inflation?

I get a guaranteed 2% raise every year to account for inflation. I'm sorry that you work for a shitty company.

It encourages people to store their money in a vault like Scrooge instead of investing it to provide loans to businesses, which stimulates the economy.

What about the retiree who did honest work their whole life and saved with the understanding that their savings was an absolute store of value, do they deserve to be robbed? What about people who aren't in the position to negotiate for higher wages, such as those who live on fixed incomes or work low-wage jobs?

Two percent doesn't beat the average inflation rate in the US, btw.

If you store your savings in a bank account, you are stupid and deserve to get robbed. If you work a minimum wage job, then there should be plenty of opportunities for promotion and advancement.

2% is good enough for me, as I only spend around $20k a year in living expenses. My living expenses go up by $600, my salary goes up by $2000, and I get to pocket the difference and put it into my brokerage account. Of course, this doesn't include the 10-25% promotions I can get every few years either.

>in a bank account, you are stupid and deserve to get robbed.

>put it into my brokerage account

stfu mate, nobody is listening since u'r fist post on this thread

>that edge
Kek

When you decrease the relative wealth of individuals, you end up causing and/or exacerbating societal problems that go on to cost tax payers more in the long-run, regardless of whether or not they were initially effected by it.

There is no well-reasoned argument for robbing people of absolute wealth through a hidden tax on their savings. It's a cowardly, underhanded and unethical act.

There is no simple way of "saving money". Despite what the cultural messages say, putting money into bank is nothing else but extremely safe way of investing it.

> There is no well-reasoned argument for robbing people of absolute wealth through a hidden tax on their savings.
Saving money is not good for economy. Hoarding is inefficient.

Also, inflation is not a tax. It is not something that is created by a state but a natural phenomenon that is mostly fueled by market's wish to stay ahead of curve.

Tell me, where exactly did you learn that keeping wealth in a savings account is a good idea? Because in every piece of personal finance advice I have ever read, that was listed as one of the main things NOT to do. You seem to have this idea that there are millions of old people who have their entire life savings stored in their banks. That is completely false. They have their 401ks, they have their pensions, they get Social Security checks. All of these sources of income are adjusted for inflation. I think it's just you who are misinformed on topics of financial literacy and projecting your gripes on others.

Furthermore, people who actually do something with their money instead of letting it sit in a bank are helping the country. They are providing loans to businesses, helping them hire more employees and grow. Why shouldn't they be rewarded? Why should we encourage people to sit on their money, draining it from the money supply, and doing absolutely nothing from it?

It isn't a good idea, and I've never done so, nor have I recommended others to do so -- but the fact remains that the general perception of individuals doesn't account for the fact that a portion of their wealth is perpetually disappearing without ever being reflected on their balance sheets. Older people, who grew up in a time when saving money was a viable option for not only preserving your wealth but increasing it, still largely maintain that perception. And if you're under the impression that financial instruments are a viable means of preserving wealth for the average person, then I suggest you ask some old folks how they feel about the performance of their 401k/etc.

They should certainly be rewarded, and if they're successful, that reward will be reflected in their realized profits. That's still no argument for stealing from individuals who don't participate.

You seem to be under the impression that banks are just boxes that you put your money into to keep it safe -- they aren't. When you deposit money into a bank, you're essentially giving them a low interest loan, and if the interest rate is less than inflation, you're effectively paying them for the privilege taking your money and loaning to others at a 10:1 margin. It used to be a relatively profitable venture before people got cucked into believing that it's the bank that's providing them the service.

You do realize that people profiting off their investments is exactly what causes inflation right? It isn't a bunch of Jews who sit in a room and declare that inflation will be 2% this year, and then inflation ends up being 2%. As long as people profit off investments, their purchasing power increases and so does the prices of goods.

>because wages also rise.

kek

>inflation is not a tax
>what is currency debasement

At any given point, there's a finite amount of absolute wealth in the world that can be represented as a dollar amount, and you don't create more of said wealth by creating more dollars. Assuming a fixed demand for dollars (which isn't the case in reality), for every dollar you create, you decrease the value of all the other dollars proportionally. That's the essence of monetary inflation.

Inflation doesn't magically occur when people realize profits, it occurs when the demand for dollars decreases relative to their supply. If the United States treasury suddenly started printing $100 trillion dollar notes and began handing them out on street corners, what do you think that would do to the value of the dollar? Same concept, except it's banks that are expanding the money supply, and they're doing so at a prescribed rate that more-or-less creates the inflation they desire.

The whole purpose of QE and the current rock-bottom interest rates, is to increase the money supply and provide a counter to the deflationary pressure seen in the aftermath of the recent financial crisis, in which a large amount of dollars (but not wealth) disappeared. Without suddenly creating many trillions of dollars to counteract the contraction of the money supply, it's likely that we would have experienced severe deflation (which will probably happen anyway, they just kicked the can down the road a little).

Your business lit " I will teach you to be Rich" is a personal finance book that recommends storing money in an online high interest savings account for personal savings goals. So to answer your question yes there are personal finance books that recommend a savings account.

As well proper asset allocation suggests you have a certain amount of cash on hand

>autism alert

Stop thinking about wealth as numbers on a page. That's elementary school thinking. All wealth is relative. Inflation isn't a "tax" because it affects everyone in the relevant economy equally. If prices rise 2%, they rise 2% for everyone. Consequently, compared to my neighbor, I'm no worse off at the end of the year than him.

>Inflation is healthy because it encourages people to use their money instead of leaving it in a vault.
Wouldn't it merely force you to throw a few more % into the vault to achieve the same result?

>Stop thinking about wealth as numbers on a page.
Literally the opposite of everything I've said.

>All wealth is relative.
Exactly.

>Inflation isn't a "tax" because it affects everyone in the relevant economy equally.
So if they instituted a tax that levied 3.2% of everyone's income, it would somehow magically not be a tax because it "affects everyone equally"? Might want to tell the government about that, I'm sure they'd love to know.

>If prices rise 2%, they rise 2% for everyone
If prices rise 2%, then everyone's purchasing power decreases by 2%. Value exists independent from money, currency is simply used to represent that value in a manner that facilitates trade.

>Consequently, compared to my neighbor, I'm no worse off at the end of the year than him.
And if both of your houses caught on fire, you would also be no worse off than him.

>Value exists independent from money
Not in any modern economy. Enjoy your barter society, kid.

>So if they instituted a tax
If the government instituted a tax, then of course it would be a tax. Are you retarded?

You're the one who called inflation a tax. Is this some kind of reverse trolling?

>And if both of your houses caught on fire, you would also be no worse off than him.
Again with the kiddy logic. Stop thinking about tangible items (houses, bank balances). Wealth is relative. You say you agree, but you clearly don't understand what it actually means.

Good lord I hope you're trolling. Otherwise, I hope you're never charged with managing anyone's money, ideally not even your own.

Something that isn't done in FIAT monetary system?

>Devaluing money over time encourages spending
Is this a troll thread?
Inflation is just a symptom of how much the usury is being subsidized since money needs to be created to account for the interest, if not the interest consumes the principle. This is where inflation comes from.

>They should be rewarded
Its a shame that market capitalism functions on economic rationality, not moral obligations, then.

So that's what you've got left: meme photos and insults?

Too bad, I had the sense that you'd try to argue for a while, providing some welcome comic relief. Instead you tuck tail and run. Sad.

Money does not represent existung wealth, but the ability of states to generate wealth.

Money and wealth are not the same thing.

This is a test

>implying you made a cogent point worth arguing

Re-read your post, then mine.

Money is a store of value designed to facilitate trade between disparate parties whom may not otherwise be able to directly barter with each other. This is some Sanders-tier babble you're spouting.

Money is the means to an ends of wealth - real estate, control of resources and of course control of the pleb. This is why concentration of wealth is getting obscene. When money makes money through usury...
Seriously, the mathematical principles behind it are like elementary grade 6 level but the economists and central bankers window dress it with word salad and the masses eat - for more than a thousand years now.

When it first started in the west after the eastern crusades - enabled by the Pope actually to redistribute all that stolen wealth - it was limited to 3% simple interest. We now see outfits being able to charge 400% or more compounded. Why the carnage, inflation and recessions cycle at all time highs historically.

>3% simple interest
Banks are a business, not a charity

yeah here in canada its only the civil servants who get their "raise"
>school teachers making almost 100grand a year complaing they cant bank their 20+ sick days anymore etc
everyone else is either staying at the same wage or taking pay cuts to keep their jobs.

And yet the government subsidizes them....

economics student.

most people here have failed to mention that the inflation rate counts as an indicator of other economic activity. in periods of high inflation, it could mean that the money supply is growing at a faster rate than real output. i.e. gdp will go up, but our 'wealth' will be the same. it could also be an indicator than unemployment is low, in which case we can expect output to increase.

additionally, positive inflation could be an indicator to the fed that demand is increasing and so they would lower the interest rate with the goal of firms borrowing from commercial banks to produce more and thus meeting the higher demands with higher supply.

as for the $10 bread. keep in mind that not only will prices go up, but your income will also go up (generally). and this has been the case since 1970s in the USA

additionally, the natural level of unemployment, or the non-accelerating inflation rate of unemployment (NAIRU, zelda ftw). by keeping the unemployment rate at a certain level, about 5% for usa i believe, the fed can ensure that inflation will remain steady from year to year. this is also the level of unemployment that ensures your economy's output is sustainable long-term.

i.e. positive inflation is associated with positive economic growth as indicated

But say you make 100 dollars a day now, and bread costs 1 dollar.

Eventually with inflation you make 1000 Dollars a day, and bread costs 10 Dollars.

Whats the point? everyone has 10 times the money, thats valued at 1/10th original in that example.

>Whats the point?
The point is that inflation isn't inherently good or bad. It's a symptom that arises from a variety of conditions in the economy.

Generally (but not always, admittedly), the conditions that cause inflation are positive things (e.g., increasing consumer demand, high employment rates). Indeed, a moderate, controlled level of inflation tends to be a side effect of a healthy, growing economy.

2% rise will affect those less well off than those on higher income. It doesn't effect everyone equally dumbass

>deflation
>everyone's money appreciates and spending/loaning goes down
>economy is kill

>inflation
>price of goods rises, assets appreciate and people spend money

Deflation can be a good thing if it's natural, like if we invented fuel free shipping the price things would drop across the board, but usually it isn't.

they told me we are officially in a deflation so...

>2% rise will affect those less well off than those on higher income. It doesn't effect everyone equally dumbass

2% is 2% for everyone. 2% for the rich is a fuckton more money than your 2%, poorfag. It's literally the same ratio for everyone.

Flat taxes/fees/expenses favor the rich. Percentage taxes/fees/expenses (like inflation) are inherently progressive.

The rich will still have a higher real disposable income than the poor. More weighted items such fuel would hurt the poor more than the rich, even if inflation is similar to progressive tax

As more people are born or enter an economy more money needs to be injected into the money supply because the total amount of labor contributions is increasing.

Also, all goods and services improve over time as a society evolves.

For these two reasons inflation must occur.

OK but how is deflation a bad thing for a particular country?

Say 1 Euro is worth 100 US Dollars, how does would that not make citizens of Europe incredibly rich compared to US citizens like US citizens are rich compared to Mexico

21st century governments in a nutshell

How is it even possible to have a lower birth rate than a country that literally consists of Anime NEETs?

Are germans collectively autistic?

bunch of retards in this thread that buy the whole "what's good for wall st is good for main st" bullshit.

Inflation and low interest rates is way to keep you in their game. They can't steal your money if it's in a bank or you have a pension.

when you realize life is awesome and full of possibilities to explore and enjoy you suddenly look at children as liabilities not investments.
in shitstainistans children are hedge against starving to death when you get old. in europe they just slow you down hinder you in your carrier eat up all your free time and cost shittons of money. basically the states don't compensate for the burden of childbearing anywhere properly they just assume you want to have them anyways. but what if you don't?

GOOD THING WE HAVE SYRIAN REFUGEES TO STOCK UP OUR WORKFORCE AMIRITE

Because the rich want their money to grow regardless where the economy is going.

If you're poor you're fucked.

END OF FUCKING STORY YOU LOSER

Wouldn't the rich prefer Deflation because their money would gain worth?

too bad they are going to deport all the syrians they taught how to work back and keep the ones that will live in welfare once the war ends

Rich people don't hoard inflating paper numbnuts, that's for the dumb suckers that are unaware of how the system functions against them. Rich people's wealth is in things like businesses, real estate, gold, ya know, tangible stuff, whose value goes DOWN in deflation.

The bank owners/Fed will do anything within their power to stave off deflation. Here's it in the IMF chairperson's own words: youtube.com/watch?v=XwS9MA6_mLI

In short the economy we have is designed to oppress the many for the benefit of the few. It is not a fair or democratic system whatsoever. These people actually believe they know whats best for the world and do whatever they can to fulfill their self-centric vision by manipulating the money supply we all rely on.

Consider the attached pic, the Fed came about in 1913, since then there has been an obvious bias towards inflation. If you had saved a dollar in in 1700, despite fluctuating inflation/deflation it would have roughly the same value in 1800, one hundred years later. However, when inflation in the literal MANDATE of the organization monopolizing the money supply, your savings are GUARANTEED to lose value. Joe Schmoe doesn't understand this, which is why the bankers get away with it.

And of course, those that get to spend newly printed money first don't have to deal with inflation, because it's only AFTER that money circulates through the economy that inflation takes effect.

We are being taken advantage of. That's it. End of discussion.

>you're a bank or a lender, because you can magically create money out of thin air

arm chair economist detected- banks and lenders don't create money out of thin air, only the FED can.

What is fractional reserve lending you fucking IDIOT

Something that the Fed regulates.

>The rich will still have a higher real disposable income than the poor.
Duh, because they're rich. If your example starts with the premise that Person A is wealthy than Person B, and then apply inflation (which affects all equally), why would you be surprised that Person A stays wealthier?

Inflation isn't magic, fag.

>OK but how is deflation a bad thing for a particular country?
As I said above () inflation isn't inherently good or bad. Same for deflation.

What's bad is that the economic conditions that tend to lead to deflation are bad. Things like high unemployment, low consumer demand, low productivity.

Inflation and deflation are symptoms and only symptoms. You always need to look deeper to find the cause, and then you can made judgements like "is this good or bad?"

yes, but Canada is going through a recession. Gov't jobs are safe havens from mild recessions. H8 em 'cause you aint em

Cash and Flat assets would be more appropriate to say.

It would be more correct to say net wages rise as the economy becomes optimized. Interestingly

You're only robbed if you know the state of affairs and do nothing about it. In which case yes you do deserve to be had.

Take its more like redeploy.

He's an idiot operating under falsehood, any casual glance at finance and one of the first concepts you encounter is inflation. Don't operate under false assumptions and learn the facts.
Fixed and low- they choose that life through indolence and ignorance. Especially in America.

Oh you mean the time when inflation was in the teens? Get bigger charts.
Would you prefer Deflation? From what I hear those are the fun times.

He recommends that up to a point. Those are liquid emergency assets and capital purchasing accounts not wealth building accounts.
Wealth isn't money and money isn't wealth. That money is so short term inflation is pretty much negligible.

You just proved my point, fuckface. Inflation doesn't affect everyone equally because the less well off now have a lower disposable income than the rich