It’s becoming really annoying.
I never understood why inflation was a good thing. I understand why it happens. But I can’t wrap my head around the value of your money going down being good.
Maybe so you actually spend it. But then it also keeps you from saving up for bigger purchases or having some emergency money tucked away.
Because inflation applies to both the amounts you owe and the ammounts you save. It’s kinda baffling to see multiple people here arguing that inflation encourages hoarding or not spending. Specifically it does the opposite. Money you save loses value, so you need to invest in something that returns value faster than inflation rather than sit on a pile of cash. Money you borrow also loses value, so the money you pay back later is less than the amount you borrowed. If you pay the same amount each month for your mortgage for 25 years and inflation is 2% each year the last payment should be half as valuable as the first (edit: about two thirds, actually. Maths!), so you’re encouraged to buy on credit.
More importantly, governments have tools to control inflation, so they can intervene and course correct when sudden imbalances happen. The anarchocapitalist fantasy where the market balances itself is extremely dumb, government intervention is absolutely needed, and tools to regulate runaway effects are what keeps all your savings from evaporating every so often.
If you wanna know chatgpts answer:
Pros of Inflation:
Debt Reduction: Inflation reduces the real value of debt, making it easier for borrowers to repay loans.
Economic Stimulus: Mild inflation encourages spending and investment, stimulating economic activity.
Adjustment Mechanism: Inflation allows for flexible adjustment of nominal wages and prices, promoting market efficiency.
Monetary Policy Tool: Central banks use inflation targeting as a tool to manage economic conditions and achieve policy objectives.
Cons of Inflation:
Purchasing Power Erosion: Inflation erodes the purchasing power of money, reducing the standard of living for fixed-income individuals.
Uncertainty: High or unpredictable inflation can create uncertainty, making long-term planning difficult for businesses and individuals.
Distorted Investment: Inflation can lead to misallocation of resources and distorted investment decisions as investors chase higher returns to offset inflation.
Income Inequality: Inflation can exacerbate income inequality if certain groups are not able to keep pace with rising prices.
Potential Solutions:
Inflation Targeting: Central banks can continue to use inflation targeting as a tool but aim for moderate and stable inflation rates to avoid the negative impacts of high or unpredictable inflation.
Economic Education: Educating the public about inflation, its causes, effects, and management can help individuals and businesses make informed financial decisions.
Income Support: Implementing policies such as targeted income support or indexed benefits can help mitigate the impact of inflation on vulnerable groups.
Price Stability Measures: Governments can implement measures to promote price stability in essential goods and services, reducing the impact of inflation on basic necessities.
Oh my God why do I see this all the time on here. Nobody wants a massive copy/paste wall of text of whatever garbage chatGPT generated.
I have my chatGPT configured to produce short answers. It’s really nice
Me no want read! Me want 26 minute YouTube video!
LMFAO oh yeah the reading is the problem, not the low-effort AI drivel. Dumbass take.
As long as there is quality in the response I don’t see why you shouldn’t share it. And there was no other post summarizing it as good.
Because if people want to see what ChatGPT says, they can ask it themselves. You’re not contributing anything by copy-pasting from ChatGPT. If you have commentary on what ChatGPT had to say, that could be different, but you literally just used ChatGPT’s output as your whole comment.
You’re not contributing anything by copy-pasting from ChatGPT.
I disagree, it’s the content that matters most and not the effort you put into a comment.
If you have commentary on what ChatGPT had to say, that could be different
Aight, then I’ll just tell gpt to make it sound like a reddit comment next time lol
I just don’t understand why you want to copy-paste ChatGPT. Surely the parent commenter could access ChatGPT if they wanted, so you’re not bringing a new perspective. If “content” is all that matters, you could generate a thousand different ChatGPT responses and reply to their comment with each one, but that’s not acceptable. Why not?
People come here for a conversation with other people, and copy-paste ChatGPT responses don’t actually contribute to that. If all they want is information/content, there are better places to find it. They could use ChatGPT, sure, but they could also use Wikipedia or even an economics textbook. It’s up to them. Even if they use ChatGPT, they’d probably prompt it a few times in a few different ways to get the best info for them.
If you really want to use ChatGPT in your responses, why not add your own voice? When I suggested commentary I don’t mean that you should just prompt ChatGPT into pretending to be a human, I mean that you should add your own perspective. Editorialize. Pull out the good bits.
Short answer: Inflation encourages spending, because if you don’t spend it, it will be worth less in the days, weeks, years ahead as inflation eats away at the value. If your money is worth more by saving (deflation), then you wait to spend because the thing you want to buy will be cheaper tomorrow, and cheaper yet the next day. If people stopped spending the economy grinds to a halt. Everyone loses their jobs.
I hear this very often, but has this ever been proven? People are not exactly going to stop eating or paying rent which already eats more than half of people’s income. I could see gambling and entertainment become more stale, but I’m not sure how big of a problem this is.
I hear this very often, but has this ever been proven?
Yes, multiple times we’ve seen this play out in real life. The most recent big one would be Japan 1990s. Look up “The Lost Decade”. The biggest one in the USA was the Great Depression in the 1930s.
People are not exactly going to stop eating or paying rent which already eats more than half of people’s income.
You stop buying all but the absolute basics (bulk beans and rice and nothing else?), so all the food that isn’t a “basic” goes un-bought and the people producing that food/product lose their jobs. Then you stop buying food when you’re out of money, which is what can happen in an extreme deflationary environment because you have no income, because you lost your job, because no one buys whatever your work produces.
And if you stop paying rent, you’re going to get evicted. If you stop paying your mortgage, the bank will take your home. This played out exactly this way during the Great Depression.
I could see gambling and entertainment become more stale, but I’m not sure how big of a problem this is.
Its much more than just those sectors, but just imagine how many jobs are in the gambling and entertainment business. Now all of THOSE people are out of work competing with you for whatever jobs remain. That, too, happened during the Great Depression.
Yes, not all demand is the same, but the idea isn’t to increase the demand of bread, it’s to increase investment. If sitting on cash gets you more interest from the bank you’re going to let it sit more. If it loses value you’re going to spend or invest it more. And yeah, this does happen, among other things because inflation affects everybody, not just consumers, although this also influences how likely individual people are to buy things on credit. Companies and governments also care about this.
As always with economics things aren’t straightforward, and you get lots of weird paradoxical behaviors, but the big lines of this one are easy to see. If you have some inflation and low interest rates you’re gonna be more likely to make big purchases or investments on credit. And the real problem is once you have those and are paying them back if inflation flips and suddenly the 100 bucks you pay each month for that credit go up in value to 110 you may find yourself losing money on that investment or being unable to afford it, which is a big problem when that happens to literally everybody who owes money (including the government) all at once.
And since the people you owe money to are mostly just a handful of banks… well, that’s not a great wealth redistribution technique, is it?
No wonder the degrowth movement exists. It’s because of this bullshit that we harm everything around us.
No wonder the degrowth movement exists. It’s because of this bullshit that we harm everything around us.
Economists and those that made political theory have been looking for better alternatives since the formation of civilization.
What is your suggestion for a better system?
Degrowth
From your source:
"For world economic equality to be achieved with the currently available resources, proponents say rich countries would have to reduce their standard of living through degrowth. "
Can I ask what measures you’ve taken in your life to reduce your standard of living to match the degrowth goal?
Can I ask what measures you’ve taken in your life to reduce your standard of living to match the degrowth goal?
Buy local products, buy conflict-free, slave-free, or fair trade products whenever possible, most of my belongings are second hand or have been in my possession for a long time (the oldest piece of clothing I was gifted is about 40 years old, the oldest I bought about 20), don’t own a car and public transport is taken whenever possible, short distances are by bike or foot, food waste is nearly 0, etc.
How about you?
The value of everything changes. Time is not static. What maybe useless today may be of great value tomorrow and that value has to be tracked.
A system without money is just a system where the actual currency isn’t obvious.
American’s will do anything to avoid using the metric system.
Oh you euros all just mad because your country is heating up faster than others. https://news.un.org/en/story/2023/06/1137867
Of course it’s heating up faster. Celsius is a shorter scale.
