Inflation: please explain

[tzor]

Sabs argument: Taxes at the most extereeme generalized level are wonderful. Look, here is a picture of a puppy.

How can you be opposed to puppies taxes?

Puppy love arguments aside, the question has to be asked what are the costs and the benefits of taxes. (Especially placed in the extreeme general case.) For every "good," however, one can cite a "bad." Waste, fraud, and abuse.

P.S. Where I live, the firefighters are all volunteers.

[MfA]

Anyway, back to the corporate model. You might tie the money supply (and the bond market aka the debt ceiling) to the revenue side of the balance sheet (that's the nation's GDP) as the best optimal way

I hope you mean M2 and not the monetary base when you say money supply here ...

[Doom]

No, Taxes benefit EVERYONE.

It's good to be very clear with your words. You obviously don't mean this.

Absolutely everyone in the US benefits from the taxes being paid.

Again, this is not what you mean at all. Simply paying taxes is not a benefit unto itself for most people.

But everyone benefits from some of the tax dollars.

And this is what you really mean. I agree.

If you can't understand how giving someone an alternative between robbing you and starving to death doesn't help you.. well.

Made no such assertion.

Everyone benefits from some of the taxes.

Agreed, and these benefits come not from the taxes, but from how the taxes are spent, which I believe is what you mean. Following closely is addressing how efficiently the tax dollars are spent, but this would lead to a thread derail.

Roman Legionaires were paid in Salt.

Agreed (well, sometimes paid in loot and other things). The point still remains, the unit of currency was a thing, something that could not be manufactured from nothing; they didn't have an education system that made people foolish enough to believe in paper money, but used devaluation of a different form (less effective in stealing from everyone, but still did great harm).

[sabs]

Okay, you're smart and wonderful and awesome.

How exactly do you fund the things Government /should/ do.. without taxes? I'm all ears.

How do you make sure you have an FDIC, USDA, FDA, FBI, Police, Firemen, Education System. Or are you one of those fucked up Libertarians who think that the world should be a everyone out for himself, have money or your fucked, kind of place.

[tzor]

How exactly do you fund the things Government /should/ do.. without taxes? I'm all ears.

There is a joke somewhere in there ... basicaly any method the government would use might be considered a "tax." But we are talking in that fluffy abstract. So in effect in that level of fluffy abstract you need.

The right amount of tax
The right form of tax
The right level of government adminstrating the tax

Before I talked about puppies ... want to see a pit bull? Meet the MTA Payroll Tax. Here is an article from 2009 when the Democrats in Albany rammed this pile of stinking shit on the taxpayers. Here is a press release from Senator Lee Zeldin who is currently trying to repeal this God awful tax.

The MTA Payroll Tax is a tax placed on every business, school, local government, nonprofit and hospital in Suffolk County, costing Suffolk County Taxpayers more than $163,636,074 since its inception in 2009.

The majority of Suffolk County residents do not use the MTA. We also don’t get the same number of trains or the same level of service as other areas, but we are forced to pay the same tax. It is time to repeal it.

The tax is based on payroll. The more jobs an employer has and the more an employer pays their workers the more taxes the employer has to pay. For every new job created, the tax is increased.

With the exception of two ferries across the LI Sound, there is no way to leave Long Island without giving money to the MTA. If you want to run a private competition to the Long Island Railroad, not only do you have to pay the MTA to cross the tunnels, but you also have to pay the payroll tax; you are in effect funding your competition.

But wait, there is more. I have a dozen pit bulls I can show you. From school districts in the North Fork whose student population has dropped to almost nothing but somehow still need a massive and burdensome administration system to handle student populations in the hundreds, to the absolutely corrupt county of Nassau.

Still the MTA tax is the best of all, considering that the MTA has literally a ton of money with investments in non transportation related expenses, is currently violating the state constitution for how such an organization is supposed to be run and funded, and who not only provides shitty service, it drops service on the drop of a dime. Some people on the North Fork (a place that is desperately seeking tourists for their vineyards and taking the train is always better than driving narrow roads after a lot of samples of wine) only see a train twice a weekday and never on weekends (also killing a major route for bikers in the area). Hell, they cut off a station to one of Long Island's major horse racing places (hint, it's a part of the damn triple crown) just for shits and giggles. But hell, they have a beautiful residence for their K-9 unit (I thought K-9's are supposed to live with their handlers) who are never seen anywhere near a train station that cost us several million dollars.

[sabs]

You're really confusing apples for oranges in there Tzor.
Obviously, there needs to be an overhaul of how the MTA is managed, and probably a couple of criminal investigations. Yet, that in NO WAY makes the MTA a BAD thing. They're supposed to provite Mass Transit (which is a good thing) for the New York/Long Island area.

It sounds like they're run by idiots, that happens, we need ways of fixing that, but I don't see anything wrong with that MTA payroll tax.

It's like you see a dog biting a kid, and you're reaction is.. OMG people with dogs are evil, lets get rid of all people with dogs.

[DSMatticus]

I already dug through the pages and showed you the quote, liar.

Except you didn't - or at least, you only found 'that' quote about inflation after you added the inflation bit to it. So when you'd like to actually start quoting what I say, as opposed to what you would like to think I said, I'll listen.

@Great Depression

Being 40% gold-backed is a partial gold-standard economy. It is not a fiat economy. To be a fiat economy, it has to be instrinsically worthless, representing nothing of any value directly. Being 40% backed by gold is not intrinsically worthless. Calling it a fiat economy is completely wrong. These are defined concepts, and the definitions don't match the bullshit you're spewing, so you are wrong, just as wrong as if you were claiming 2+2=5.

Also, a lot of the gold trade happened with foreign banks, which the U.S. had no jurisdiction over to bar from holding gold.

No, just shredding your assertion that people that live paycheck to paycheck aren't hurt by the system.

You'll have to show that they actually are hurt if that's your claim. Living economically stable lives with a good standard of living and a small, fluid nest egg does not sound like the system is hurting them.

People that live paycheck to paycheck don't have this. But, you're right, if they have a nest egg, they're being hurt by inflation, too.

Only if that nest egg is held in a non-interest returning fund for an extended period of time, without ever being spent or even being replaced. Inflation only hurts static, untouched, unused assets held over a long period of time.

And finally, your true belief comes out. Everytime the government creates more money, it's confiscating wealth from all the citizens (as Greenspan himself said). You don't believe this is theft because people don't actually own their money. I guess it's possible you were being sarcastic here...but it's so hard to tell.

Did you miss the part where this happens under gold economies? Until you can explain why this is okay in a gold economy that buys more gold, I don't give a shit that you 'don't like it' in fiat economies.

But even beyond that, it still doesn't establish that's a bad thing. Seriously. Here's a completely identical situation to the inflation problem, and looks the same, and involves taking money from no one.

1) Inflation is 0.0%.
2) Over the course of a year, your wages gradually decrease from 100% to 96-97% of what they were.
3) At the end of the year, they reset to 100%.

Nobody got anything stolen from their pocket, yet we completely mimicked the effects of inflation over the course of that year.

This happens because as inflation increases prices, it also increases wages. If you want, you can pretend paper loses value with age. And that happens to plenty of other assets, and you aren't bitching that bacteria are stealing your wealth by rotting meat.

You can have a completely viable system where unprotected, uninvested assets decay over time. The ONLY, ONLY time that's a bad thing, is when it's not an expected part of the system. In the same way paying taxes is just a part of living under a government, handling inflation is just a part of living in a fiat economy. The disadvantage of both is that money is being lifted from your pocket in a loose sense of the word. The advantage is that both make society and the economy stronger.

If you're just whining, "I want to keep money in my wallet for a few years and be able to buy the exact same shit for the exact same price I could have a few years ago," you're not making a valid point. You're just saying, "well, I don't like fiat economies." Fiat money depreciates in value in individual units at a rate proportional to inflation. If that's a part of the system, you're not getting robbed anymore than when you pay taxes, because that too reduces your total wealth against your will.

but it got wiped out by inflation (indirectly of course, quite often by massive medical expenses)

And here's where you finally stomp all over your own feet - medical costs increase at a rate higher than the inflation rate. This is completely not a fucking problem with inflation, at all. This is a problem with runaway medical costs. The solution isn't, "tear down inflation and fiat economies!" The solution is to reform the healthcare system so that it doesn't get more and more expensive every year, compared to the value of the money you actually have accruing interest.

If medical costs increased with inflation, it wouldn't be a problem - the amount you've saved will increase at the same rate as your typical investment. Or very approximately close. And you could afford it with what you'd been saving, and everyone's happy.

@Blah blah blah.
Okay, I'm going to try to refocus and summarize this bullshit into a few key points.

1) Is inflation/printing money theft? It reduces your total wealth without consent against your will. But so do taxes - and both are expected parts of the system. You'll have to sell me why one is theft and the other isn't. Or you'll have to try and convince me we should get rid of taxes and inflation.

2) Does inflation hurt savings? This depends on the medium in which you're saving, and the yearly return rate. When that matches the inflation rate, you're good to go. When it's higher, you make money. When it's lower, you lose money. The closer it is, the less you care. Is this bad? Only if you absolutely depend on savings and can't get a decent return rate on them. Again, why is the solution to this, "tear down inflation and the fiat economies?" Our banks post ridiculous profits, and you think with a little regulation you couldn't pair interest and inflation? They're already pretty god damn close for most investments (some are even better than the inflation rate). Or do you think banks can't take advantage of people in a gold-backed economy?

3) Does inflation destroy economies? You haven't shown this either. All you've shown is a bunch of dying fiat economies that had hyperinflation at the end, but that's expected at the death of a fiat economy, and those economies collapsed for entirely different reasons (i.e. sucking). Inflation is not a predictor of economic collapse. Economic collapse in a fiat economy is a predictor of hyperinflation. Those are completely different statements, meaning completely different things, and showing the latter (which you've done) doesn't help your position, at all.

[tzor]

You're really confusing apples for oranges in there Tzor.

I'm actually not. How "good" a tax is is besides the point. The question is spending, what is good, what is necessary, what is sufficient. Anything above that is wrong, and any taxes that are used to support that excess is always wrong, because it hurts more than benefits. Revenue can only pay for spending. In the end it has to come down to spending.

When you look at it from the tax side, you just fill water into an ever leaking swimming pool. You can never add too many hoses to fill the leaking pool. (Because the pressure from the water, only makes the leaks worse.)

[tzor]

It sounds like they're run by idiots, that happens, we need ways of fixing that, but I don't see anything wrong with that MTA payroll tax.

OK, I'll see your argument and raise it. I don't think I should pay for electicity. It should be funded with a payroll tax. The same for automobile gas. Fund that wth a payroll tax also. And it doesn't matter if we make the radius of the tax base larger than the radius of the base that gets free electricity and taxes; so let's limit the benefit to NYC only.

Logic demands that the MTA be funded by a usage tax, not by a payroll tax. Especially as the case that the MTA is a near legal monopoly that does not serve the community at large and could not survive as a private corporation.

[Doom]

Except you didn't

Except, I did. Jeesuz, dude, seriously.

Being 40% backed by gold is not intrinsically worthless. Calling it a fiat economy is completely wrong.

Again, you believe saying something creates a truth. Suppose I told you our economy is actually backed by gold pressed latinum. No, can't actually get the latinum. No, you can't hold the latinum. I keep it in a secret place. No, can't show you.

Now, like a good student, you've been trained to believe me, but other folks without such effective training probably might suspect I'm lying. In fact, I am. Similar, with the very questionable 'gold back' situation where you can't actually get the gold.

So no, the economy is not backed by gold pressed latinum, or gold for that matter. Do you get it yet? If you can't actually change in the dollars for gold...it's not gold backed, by any stretch of the imagination. Hope that helps, not optimistic, though.

definitions don't match the bullshit you're spewing, so you are wrong, just as wrong as if you were claiming 2+2=5.

But you're actually claiming 2 + 2 = 5, and you've been saying it over and over....and you're still wrong, no matter HOW many times you repeat it.

You'll have to show that they actually are hurt if that's your claim.

Already demonstrated. Again, please, reread again. Do I really need to cut and paste, you seem to forget so fast.

Living economically stable lives with a good standard of living and a small, fluid nest egg does not sound like the system is hurting them.

Too bad that's now how people living paycheck to paycheck live. They go from one crisis to the next. When you live this way, a $1000 repair bill on your car is devastating, even though this is a natural part of modern life. A $200 emergency room bill is crushing and means asking Mom for more money, again. Paying an extra $30 a week on gas is backbreaking. Wal-Mart actually tracks and notices this how paycheck-to-paycheck people live, for what it's worth. This is a bad way to live, but the system forces on people, since it discourages and even punishes saving, as you acknowledged earlier.

Now, right now, you've got Mom to go back to, so you think it's all good. Trust me, in a number of years, you'll understand this better.

Only if that nest egg is held in a non-interest returning fund for an extended period of time, without ever being spent or even being replaced. Inflation only hurts static, untouched, unused assets held over a long period of time.

Again, you can't seem to grasp this. Even in an interest bearing account, inflation still slurps away constantly. If the interest is above inflation, the slurping isn't as bad...but it's still there. If the interest is below the inflation, the constant slurping is devastating, as shown.

Slurping away at profits, slurping away at losses...constant slurping, constantly. You've just been trained not to notice, is all.

But even beyond that, it still doesn't establish that's a bad thing.

Again, simply saying it doesn't make it so. Already established, earlier. Please, again, go back and reread, although I put some reminders, below.

Seriously. Here's a completely identical situation to the inflation problem,

So it is a problem, good.

and looks the same, and involves taking money from no one.

1) Inflation is 0.0%.
2) Over the course of a year, your wages gradually decrease from 100% to 96-97% of what they were.
3) At the end of the year, they reset to 100%.

Nobody got anything stolen from their pocket, yet we completely mimicked the effects of inflation over the course of that year.

Seriously, you're so far in wtf-land I can't even address the confusion of ideas here. Can anyone tell me what he's trying to say with this? Every interpretation I come up with has it come out as total garbage as an approximation.

This happens because as inflation increases prices, it also increases wages.

Yes, that's what they say in school. Not everyone gets annual COL increases, though, assuming the measurements are accurate. In fact, the vast majority of people don't. Even minimum wage doesn't increase every year.

Even if it did increase every year, it's still screwing people over the course of the year prior to the increase. Slurp. When (and if) the increase comes, that just puts them at the baseline for another few years of inflation slurping away at their pay.

So, this is wrong and you need to stop saying this.

and you aren't bitching that bacteria are stealing your wealth by rotting meat.

Again, you're confused. It's not the meat rotting, it's a guy coming in and eating the meat against my wishes, that's the problem. Do you get it, yet? It's not a random, natural, process, it's a human action causing all the harm.

The ONLY, ONLY time that's a bad thing, is when it's not an expected part of the system.

I remind you, again: saying something doesn't make it true. I also remind you, there's no way to predict exactly how much inflation there will be, assuming there was a way to determine exactly what inflation is, so there's no way to expect anything at all. In short, this is wrong and you need to stop saying this.

The advantage is that both make society and the economy stronger.

Again, I remind you: saying something doesn't make it true. Harming everyone and driving away producers, as I showed earlier, does not make an economy stronger.

You're just saying, "well, I don't like fiat economies."

No; I've shown in detail the immense flaws and risks of fiat economies, highlighting how much they harm human beings. You maintain sacrificing human beings is acceptible for the good of the economy.

I promise you, when it's you being sacrificed, you'll think differently. Please, consider restraining your responses until you've spent some time outside of school.

And here's where you finally stomp all over your own feet - medical costs increase at a rate higher than the inflation rate.

Still counts, though, since inflation rates are just averages. Some things will be higher than the average, by definition, and these will wipe people out. And so, shown again how bad inflation is, being mathematically certain to destroy people.

To clarify: yes, in this case it's medical costs. But *something* would be above average, and whatever it is, would be sufficient to destroy a person who only keeps up the average (assuming such an average even makes sense). This really shouldn't be that hard to follow.

The solution is to reform the healthcare system so that it doesn't get more and more expensive every year,

Again with the wonderful, beautiful theory that hasn't happened yet, while complete ignoring of reality and mathematics.

Again, wait until you get into the real world, and you'll care less about theory, and much more about reality.

Okay, I'm going to try to refocus and summarize this bullshit into a few key points.

Fine, let's address the summary of your bullshit.

1) Is inflation/printing money theft? ...But so do taxes

Yes it's a form of theft, as shown. Rationalizing that other things are theft doesn't change your argument here. Two wrongs don't make a right (even if the latter isn't necessarily a wrong).

2) Does inflation hurt savings? This depends on the medium in which you're saving, and the yearly return rate.

Yes, as shown. No matter what medium you're saving in, no matter what the return rate, the actual rate is reduced via inflation. Do you understand this? Let's go over it carefully, because you'll need to know this in the real world:

Suppose I invest in a CD at 10% (heh, when I was a broker in the 80's, I sold CDs at rates higher than this). Inflation is 2%.

So, inflation hurts my rate of return, I'm only getting 8% (ish, bear with me on the minor discrepancy). 20% of my profits are slurped away by the 'tiny' 2% inflation. You saying "hey, it could be worse" doesn't change the fact that my rate of return is reduced via inflation. When you consider there's no way to know exactly what it is, that's bad.

3) Does inflation destroy economies?

Yes, as shown. It sucks the wealth out of people, leaving them without savings and vulnerable to the slightest unfortunate event. It destroys producers, who cannot determine a profitable price to charge for their product because they can't know what the currency is actually worth. Ultimately, countries use the printing press to cover deficit spending leading to massive debts at the soveriegn level, payment of the interest on such debts generally leads to the final demise.

Yes, there are exceptions, sort of.

Your counter-argument that other things can destroy economies doesn't in any way refute these directly observed results.

[Quantumboost]

Here's a completely identical situation to the inflation problem, and looks the same, and involves taking money from no one.

1) Inflation is 0.0%.
2) Over the course of a year, your wages gradually decrease from 100% to 96-97% of what they were.
3) At the end of the year, they reset to 100%.

Nobody got anything stolen from their pocket, yet we completely mimicked the effects of inflation over the course of that year.

Seriously, you're so far in wtf-land I can't even address the confusion of ideas here. Can anyone tell me what he's trying to say with this? Every interpretation I come up with has it come out as total garbage as an approximation.

He's normalizing your wages and inflation itself to inflation. Wages are set at a particular amount of money at the beginning of the year, as per a typical employment contract. At the end of the year your wages are adjusted up according to inflation if you work for a reputable employer. That is mathematically equivalent to your wages starting at a particular value, being decreased until the "wage inflation-adjustment" occurs, and then being reset to 100% (i.e. adjusted).

Inflation-adjusted inflation is, of course, zero.

This is mathematically equivalent to how it works for a salaried or constant-hours employee of an organization that accounts for cost-of-living increases on an annual basis. Also, in this model, someone working for an employer that doesn't compensate for COL increases is basically just a rough exponential decay in wages paid by the employer.

[Doom]

Thank you for confirming my best guess as to what was being attempted.

So basically just bogus theorycraft... It approximates theoretical wages under hypothetical inflation, and absolutely nothing else. I certainly don't think anyone has ever worked under such terms. While nothing is taken out of pocket, the employee is getting less than the agreed upon salary, so still demonstrating a loss.

At best, this shows that theft is morally equivalent to a form of contract violation. Eh, I'll leave that to the philosophers.

This still, of course, completely neglects the slurping away of any savings or cash in hand, or the effects of inflation on any investments.

Anyway, back to the whole "transition period" post-Fed. A contract is either valid, or invalid. Similarly, money is either bogus, or not bogus.

Consider carefully the writing on this $500 bill from 1928:

http://www.usarare.com/192850070.jpg

(Note for pedants: I haven't confirmed every single word on this site is the absolute truth, I'm simply showing a picture of a bill)

Read the small print on the top left (while this is a high denomination, all bills of this era had comparable contract terms written on them). Now, as discussed earlier, it wasn't possible to, as the print says, 'redeem in gold on demand', neither theoretically, nor, a mere 5 years after this bill was printed out of thin air, literally. The contract was void when printed, and officially voided later.

In short, there was no 'transition' here, the money was paper.

(As an aside, note how the bill says "will pay to the bearer on demand $500...this piece of paper isn't money, it's representing money. I encourage you to pull a bill out of your pocket and read how the writing has changed on these slips of paper)

[MfA]

If you started a foreign bank you could have redeemed it in gold.

[Doom]

Well, 40% of it, anyway (if you'll forgive the hyperbole). But, alas, most US citizens really weren't in a position to start a foreign bank.

[DSMatticus]

Except, I did. Jeesuz, dude, seriously.

Except you didn't - or rather you did it by 'adding' to my quote. And at that point, it's hardly what I said, is it? So yes, I reiterate, find what I actually said, and see if it says what you think it does (it doesn't).

@Gold-backed during Depression

You are being ridiculously obstinant about something remarkably stupid. People turned in their money for gold during the early phases of this, foreign banks did that, and some even bought gold on an open market using their dollars. A half-decade into the Great Depression, they stopped letting people do that. Keyword there is 'INTO,' as in 'already in the midst of,' or 'well after the damage was done,' or 'too fucking late, sorry.'

If the dollar corresponded to some value, ANY value in gold held in reserve somewhere (even though it was only 40%), that is a partial gold-backed economy. That is not a fiat economy. You can seriously google the fucking definitions and see this. If you had any conceptual understanding of how economics works, you would see this. It doesn't even matter if you can exchange or not, as long as that gold exists, is held in reserve, and contributes to the value of the dollar such that the two are linked. Though, exchange is generally held as a 'pure gold-standard' requirement, since it's a way of holding the government to the claim that "the dollar is worth its value in gold." If that's the case, getting the gold equivalent shouldn't cause any problems, so if you're withholding the gold it's implied something is shady is going on.

But in the Great Depression, it wasn't shady - they had a 40% gold standard, and you could for some time literally go in and make the trade. Foreign banks made the trade. Etc, etc. And fiat money, by definition, must be intrinsically without value. If every dollar is mapped to 4/10th's of a dollar in gold, that is not fiat. You are fucking wrong, sorry.

The Great Depression did not happen under a fiat economy, and your insistence that it did is among the stupidest things you've claimed here, and it's something that is demonstrably wrong beyond any reasonable interpretation of history or definitions. And once you realize that, and exclude the Great Depression from the 'fiat economy,' it turns out our fiat economy had much less overall recession than the gold-backed one.

But you're actually claiming 2 + 2 = 5, and you've been saying it over and over....and you're still wrong, no matter HOW many times you repeat it.

And a 'NO U' to you too. Unfortunately, you're wrong because the definition of fiat economy says so, and I am apparently wrong because "someone who doesn't understand the definition of fiat currency said so on the internet." There's an objective measure here - what fiat currency actually means. You are not using this definition. And you are therefore objectively wrong.

Already demonstrated. Again, please, reread again. Do I really need to cut and paste, you seem to forget so fast.

No, you really haven't. You will have to make a clear case why someone living at a high quality of life with a small nest egg for emergencies is economically crippled from inflation. "Not being able to save without the savings depreciating minutely in value" is not the definition of "economically crippled." Show me how it's truly ruining them, or don't claim it's ruining them.

Too bad that's now how people living paycheck to paycheck live. They go from one crisis to the next. When you live this way, a $1000 repair bill on your car is devastating, even though this is a natural part of modern life. A $200 emergency room bill is crushing and means asking Mom for more money, again. Paying an extra $30 a week on gas is backbreaking.

Yes, there are certain problems with the explicit number I provided. Thankfully it's completely arbitrary, and we can increase it. People expecting higher emergencies have bigger nest eggs. If you're pointing out, "our healthcare costs are too high," and "we're too dependent on oil, whose price is controlled by a monopolistic collective," I agree. These are not comments about inflation. There is some reasonable nest egg you can hold, that can be spent and replenished at some rate, held in a manner that has little to no loss from inflation while being easily accessible (a savings account). For me, that happens to be about a thousand. I have good health insurance and live in a big city where public transit is an option - my emergency costs are low. When you depend on a car and have shitty health insurance, your emergency costs are high, and your savings should be higher.

Nevertheless, it totally stands that saving accounts, which are regularly spent from and refilled, do not suffer heavily from inflation. The only assets inflation hurts are the ones that linger for a very long time without being used/added into, and only then if their interest rate is lower than inflation. You can maintain an emergency nest egg in an economy with inflation, even if its interest rate is less than the inflation rate, as long as you SPEND from it quickly enough and REFILL it appropriately.

Again, you can't seem to grasp this. Even in an interest bearing account, inflation still slurps away constantly. If the interest is above inflation, the slurping isn't as bad...but it's still there. If the interest is below the inflation, the constant slurping is devastating, as shown.

So, then, you think it's a god given right that your money should reproduce to make more money without any work or investment on your part? That it is a requirement that you ALWAYS make a net profit over inflation just by holding money in your hands?

Let's assume that's true, and money should reproduce to make you wealthier - you do fucking realize that when inflation is higher, interest rates can be higher? It literally fucking balances itself. Higher inflation -> higher investment interest rates. Lower inflation -> lower investment interest rates (assuming all other factors remained equal). So no, it slurps away fucking nothing at all. Higher inflation ALLOWS you to have a higher interest rate, such that you make the same ratio of profit as you could have in a 0.0% inflation rate economy.

Again, simply saying it doesn't make it so.

Then you should stop trying to do that like it means a damn thing. I've refuted pretty much every god damn thing you've said, and your only response has been to repeat yourself.

Seriously, you're so far in wtf-land I can't even address the confusion of ideas here. Can anyone tell me what he's trying to say with this? Every interpretation I come up with has it come out as total garbage as an approximation.

Quantumboost basically got it - are you sure we should be talking economics? You're missing some crucial knowledge here.

Inflation causes prices to go up. Following that, if the economy is of equal strength before and after, your wages should go up in pace. This means the variation between what you can get for your money varies only by the compound inflation rate between any two pay raises. This is a largely measurable quantity (average inflation rate * time), so it's effectively the same as getting paid less and less until you get yor next pay raise.

Not everyone gets annual COL increases, though, assuming the measurements are accurate. In fact, the vast majority of people don't. Even minimum wage doesn't increase every year.

And that accurately reflects the fact that our economy is getting weaker because we do less and less useful shit. It's pretty hard to maintain any economy, gold or fiat, when your major export is 'jobs.' That, and corporations are getting greedier (worker wages stay flat, high-level execute pay spikes ridiculousy, corporate profits spike ridiculously). Again, this isn't actually inflation-related. This is a problem with the fact that overpopulation massively cheapens labor costs, and our society encourages a growing wealth divide. These problems would exist if we were gold-backed. Well, that's not completely true - these problems end a lot faster in gold-backed economies, because countries actually have an incentive to cash you in and take your gold (because gold is valuable, whereas cashing in a fiat debt is likely to ruin that debt and shutdown very profitable trade relations, because your trading partner's economy just collapsed when you asked for everything he owned). So, yeah, if we were gold-backed we probably wouldn't exist right now.

Again, you're confused. It's not the meat rotting, it's a guy coming in and eating the meat against my wishes, that's the problem.

I agree, taxes are bad. Oh wait, we're talking about inflation - it's hard to tell because that argument applies equally well to both.

No; I've shown in detail the immense flaws and risks of fiat economies, highlighting how much they harm human beings. You maintain sacrificing human beings is acceptible for the good of the economy.

And I've shown you how you can have your cake and eat it too. No one needs to be sacrificed. At all. And in exchange, you get a stronger economy (and you really haven't refuted this at all, except a hilarious 'million-dollar grain of sand BS example').

Still counts, though, since inflation rates are just averages. Some things will be higher than the average, by definition, and these will wipe people out. And so, shown again how bad inflation is, being mathematically certain to destroy people.

Yeah, that's not the definition of inflation. Inflation is MEASURED as an average, because the best we can do is guess. There is a 'true' value of inflation, it's just that it's hidden in such a complex system of equations that there is absolutely NO way to tell what the true value of inflation is. So we take the price change over an average of a bunch of things, and we HOPE the volatility of all the markets balances out and gives us the real inflation.

In an ideal world, where inflation was the ONLY effect, everything would go up by the inflation rate. When things go up by different rates, what you're actually experiencing is inflation + other shit. Like the volatility of certain markets, or perhaps industry revolutionizing production techniques, or simple corporate greed/price-hiking. The medical industry is not experiencing 'only inflation.' They're experiencing very little inflation, and a whole lot of 'other shit.' You can't blame other shit on inflation anymore than a farmer can blame the weather on inflation. Both affect the price of his good, from two different sources.

Again with the wonderful, beautiful theory that hasn't happened yet, while complete ignoring of reality and mathematics.

Except in the countries where it has, which would be nearly every other developed country in the world. So yes, except for all the places that handle healthcare well, you can't handle healthcare well.

Yes it's a form of theft, as shown. Rationalizing that other things are theft doesn't change your argument here. Two wrongs don't make a right (even if the latter isn't necessarily a wrong).

So inflation is theft because it takes money against your will. Taxes also take money against your will, so it must be theft. Inflation being theft makes inflation bad. Taxes being theft must also make taxes bad. We should get rid of inflation because it is bad. We should also get rid of taxes, because they are bad.

Are you prepared to say taxes, like inflation, must be stopped? If so, you are a nutjob, and you scare me. If no, then you're violating your own argument. Which is fine with me - if you want to invalidate your position on your own, that makes my job a lot easier.

Yes, as shown. No matter what medium you're saving in, no matter what the return rate, the actual rate is reduced via inflation. Do you understand this? Let's go over it carefully, because you'll need to know this in the real world:

Except your return rates can be higher when the inflation rate is higher, leading to (all other factors being equal) identical profit.

I.e., in a 0.0% inflation economy, you get an 8% return. In a 2.0% inflation economy, you get a 10% return (and you're right, let's ignore the actual mathematics of that - adding interest rates is a little more complex than that). Inflation actually increases your rate of return, then it takes that increase away, resulting in no net change.

Yes, as shown. It sucks the wealth out of people, leaving them without savings and vulnerable to the slightest unfortunate event.

Except I've shown why this doesn't happen. Turns out you can save when inflation exists! Yay!

It destroys producers, who cannot determine a profitable price to charge for their product because they can't know what the currency is actually worth.

Except they can and do, and they make shit tons of money doing so. This is an argument against 'hyper-inflation,' where the changes in currency value change rapidly and in leaps and bounds. With moderate inflation, prices need only be updated every few months or even years. Unless you think producers have trouble selling goods to Americans? I wasn't aware I was at a lack of shit to buy.

countries use the printing press to cover deficit spending leading to massive debts at the soveriegn level

Wow! Running a debt is bad? Hey, there's good news - fiat economies don't have to run debts anymore than gold economies. It just turns out they can handle debts better (trying to recall the debt will immediately make the debt less valuable, meaning recalling the debt is a dumb idea, so nobody does it like that - in gold economies, cashing in your debt means getting gold, which is valuable).

So once again you've shown that we're doing something stupid, you just haven't shown inflation is that stupid thing.

You are very good at making the wrong arguments.

At best, this shows that theft is morally equivalent to a form of contract violation. Eh, I'll leave that to the philosophers.

Except the contract in the example is written such that it depreciates in value over the year. (You're seeing it ahead of time). There's no violation of anything - it's plain as day. Nobody is being told, "we don't have inflation! Inflation is 0.0%!"

[Doom]

So that picture of a bill, that doesn't exist either?

I mean, seriously, I thought things were getting loopy with the countries but now? Please, let's have this conversation again after you've grown a little, I think it'll help.

[DSMatticus]

That bill is completely irrelevant. The only real question is, "is being 40% backed by gold being 40% backed by gold?" Which is a hilariously obvious tautology, and it means it's not a fiat economy.

But more on topic, you seem to be fixed on the idea that 'inflation sometimes takes my money, it must be bad,' even though taxes do the exact same thing. And that is the closest thing to a good argument you've made, but the fact that that argument invalidates taxes as well as inflation should make you realize how foolish it is.

But you are right about one thing - we should probably stop, again. This is more tedious than its worth, especially as you're just rehashing old points without meaningfully addressing my responses to them.

[DSMatticus]

P.S. Where I live, the firefighters are all volunteers

That's actually an interesting concept. It works better for small communities than large communities, though - in a small community, maintaining a collective of individuals who are specialized in firefighting is kind of silly, since emergencies of that sort are rarer. It isn't cost-benefit effective to have people do that as a specialized career.

Bigger communities have emergencies of that sort frequency, and having specialized individuals dedicated to that who do it as their primary career makes sense (and is in fact more effective).

I'm not sure if that's related to any point you made at all... I just thought it was an interesting observation about specialization. If you have something that needs done once every few months, paying someone year-round to dedicate and specialize in that task is kind of silly. But when that task needs done daily, it might be worthwhile to let people make a career of it.

[PoliteNewb]

He's normalizing your wages and inflation itself to inflation. Wages are set at a particular amount of money at the beginning of the year, as per a typical employment contract. At the end of the year your wages are adjusted up according to inflation if you work for a reputable employer. That is mathematically equivalent to your wages starting at a particular value, being decreased until the "wage inflation-adjustment" occurs, and then being reset to 100% (i.e. adjusted).

This is mathematically equivalent to how it works for a salaried or constant-hours employee of an organization that accounts for cost-of-living increases on an annual basis. Also, in this model, someone working for an employer that doesn't compensate for COL increases is basically just a rough exponential decay in wages paid by the employer.

I have never (until the past year, when I went to work for the State of Alaska) had a job that gave me regular pay raises to adjust for inflation. Are you saying all my past employers were disreputable?

Anyone have any idea what percentage of employers in the US include automatic COL increases in their work agreements?

[Doom]

That bill is completely irrelevant.

That bill demonstrates the money was bogus...fiat money. It doesn't matter if the Fed could theoretically honor 40% of their contract. You're young, so you don't realize how bad it is when contracts aren't honored fully.

Get a contractor to put a roof on your house...honest, if he only does 40% of the roof, you'll have a very solid claim in court that he didn't honor the contract.

You can say it as loud as you want, but, no, the contracts on those slips of paper were void the second they were printed, making them just slips of paper, even if, theoretically, some people got lucky.

The only real question is, "is being 40% backed by gold being 40% backed by gold?" Which is a hilariously obvious tautology, and it means it's not a fiat economy.

You forgot: you couldn't actually cash in the bills for gold. This is actually an important part of a contract where you're supposed to be able to cash in the bills for gold.

But more on topic, you seem to be fixed on the idea that 'inflation (always) takes my money, it must be bad,' even though taxes do the exact same thing.

Getting kicked in the nuts is ok because you're getting kicked in the ribs? Such non-thinking. You forget: even if taxes were wrong (topic for another thread), two wrongs don't make a right.

This is more tedious than its worth, especially as you're just rehashing old points without meaningfully addressing my responses to them.

You keep crying this over and over again, but your intellectual dishonesty does not serve you well.

Recall, you first said

people living paycheck to paycheck, which is a looot of people.

as people not victimized by inflation. I casually shredded this, of course, as these people have had their savings destroyed, and live only on their wages. Since wages always lag behind inflation, they're being hurt, relatively speaking, worse than most. In addition, their lack of assets means they get no "benefit" from asset prices rising strictly from inflation.

You shriek and shriek how this isn't meaningful, and says nothing. And yet, you change the goalposts to:

I actually meant was they maintain a small nest egg proportional to their expected emergency costs, and don't save much beyond that.

If I truly didn't show anything, why did you bother to move the goalposts? Do you know you're lying to yourself?

No matter, of course, and I casually kick another through the posts, pointing out that if they're saving anything, those savings are constantly being undermined by inflation (before you forget: I've already shown, no matter WHAT rate of return on savings is, those profits are reduced, often significantly, by inflation), and such folk are still nonetheless quite vulnerable to being wiped out by major expenses; it's impossible to perfectly predict 'emergency costs', especially in inflation scenarios.

You screech again that I've not said anything relevant, and that my reply has no value. And yet, and yet, you move the goalposts again to:

living at a high quality of life with a small nest egg for emergencies

If I've said nothing meaningful, why did you bother to move the goalposts again? You're being very dishonest.

I didn't bother demonstrating the new goalposts still have a nest egg regardless of this 'high quality of life' that has now appeared, and are still subject to victimization by inflation, since it's obvious. I'm tired with dealing with such dishonesty. I'm obviously getting through to you, and that's really all I'm shooting for. In the years to come, you'll understand better, I promise.

[Quantumboost]

I have never (until the past year, when I went to work for the State of Alaska) had a job that gave me regular pay raises to adjust for inflation. Are you saying all my past employers were disreputable?

Anyone have any idea what percentage of employers in the US include automatic COL increases in their work agreements?

Actually, this is probably me speaking from inexperience with employers. I *think* Microsoft did this sort of thing when I worked for them.

Disreputable is probably a bad word if that isn't common. Though that's mostly because it indicates that that's *relative* to other businesses. In any case, your contract with the employer is decreasing in value to you as time goes on if they don't readjust, and you *will* have to renegotiate at some point.

[Doom]

Absolutely, but usually such renegotiations focus around improved skills and (local) market conditions. Inflation is just too slippery a topic to justify a raise.

After all, when we had deflation, I don't think there was any talk of reducing anyone's pay. I could be wrong, though.

[DSMatticus]

@The partial gold-standard thing

And none of that shit you said (which is about 40% truth, worth noting) makes it a fiat economy. You just pointed out how it was a shitty gold-backed economy.

That bill demonstrates the money was bogus...fiat money. It doesn't matter if the Fed could theoretically honor 40% of their contract. You're young, so you don't realize how bad it is when contracts aren't honored fully.

The contract was for 40% gold. In that sense, the contract is completely fulfilled. If you entered into a contract to get 40% of a roof, you'd get 40% of a roof.

But more importantly, your definition of fiat money is fucking wrong. It just doesn't mean what you think it does, and that's not something that's debatable.

You forgot: you couldn't actually cash in the bills for gold. This is actually an important part of a contract where you're supposed to be able to cash in the bills for gold.

Except people and foreign banks totally did? So except that it happened, you're right, it didn't happen. A revisionist take on history does change things, I admit.

Getting kicked in the nuts is ok because you're getting kicked in the ribs? Such non-thinking. You forget: even if taxes were wrong (topic for another thread), two wrongs don't make a right.

Listen, this is the meat of the argument you provided.
1) Inflation is theft because it lightens the contents of people's wallet against their will.
2) Things that are theft are bad.
3) We can't have bad things like that in our economy, so we must remove inflation.

At step 1+3, we can replace inflation with taxes, and the argument maintains all integrity. Your argument is equally valid against inflation and taxes (both are kicks to the ribs, in this case). The point isn't that your argument revolves around two wrongs not making a right - your argument is that if it's wrong, it must be stopped. By your argument, we can have neither inflation NOR taxes.

You don't get to pick and choose what your argument applies to - you are making concrete, logical claims that we can analyze, and this is the logical conclusion of those claims. If you don't like that conclusion, you have to refine your argument.

Here are your options:

1) Parse out the difference between inflation and taxes that makes one wrong and not the other. Saying "one is bad, but I like it," and "the other is bad, but I don't," is a bullshit argument nobody cares about, so tell me why I should care/think inflation is bad if I don't care/think taxes are bad.

2) Claim that taxes, like inflation, are theft, and we have to get rid of both. At this point, you're an idiot, because you are advocating dismantling the premise of modern societies, and if your ideas were allowed to fruition you would ruin millions of people's lives, set our economy and society back a hundred years, and generally be the harbinger of the apocalypse. At which point, fuck you.

3) Admit the fallaciousness of the argument. Maybe you like that taxes exist, and believe in their necessity, so you abandon the parts of your argument that work equally well on taxes as inflation.

4) Make some sort of BS argument "taxes are a necessary evil, because they are morally wrong but confer benefits on society." The only problem with that is all we have to do is satisfy some threshold of benefits that inflation provides that makes it an acceptable evil, too. And personally, I think going from 22 years of recession to 8 and becoming one of the strongest economies in the world is pretty kickass. Is that all a fiat economy? Probably not, but it's certainly had some effect.

as people not victimized by inflation. I casually shredded this, of course, as these people have had their savings destroyed

1) Your definition of 'victimized by inflation' is 'not saving.' By your definition, Bill Gates would be 'destroyed' by inflation if he went out and spent his entire massive fortune on a small country, and then continued to spend the money he earned off that ad-infinitum, blah blah blah. It doesn't take into account, "am I getting what I want from my money?" It's just, "what have you got in the bank account? Nothing? YOU'RE A FAILURE!" "But... I have a significant percentage of stock in one of the most successful tech companies in the world." "Oh, you poor, economically destroyed soul. Inflation has hurt you so bad."

2) In a strong economy, wages go up with inflation. Our economy is getting weaker, so this isn't true in all sectors. That's not a problem with inflation - that's the equivalent of getting a paycut. Which is a bad thing, but has nothing to do with inflation.

Or are you trying to point out... "if the time between pay raises is 1 year, and the time between inflation-adjusted price raises is 3 months, for 3-6 months you are 1/4th the inflation rate behind, at 6-9 months you are 1/2th the inflation rate behind, and 9-12 months you are 3/4th the inflation rate behind." Then your wages update, and you're back to square one.

If you think that's a problem, you're a moron. We can zero that equation for any given value of inflation, such that for the first six months you get paid 'slighly more than you should' and in the last six months you get paid 'slightly less than you should.' It's a mathematical equation with a clear solution. If you get paid X in wages, X*.375*(inflation rate) = real wage. This equation can be further abstractified, to apply for ANY time frame of price updates/wage updates.

The moral of the story is that the actual value of your wage is not what's written directly on the paper, it's what's written on the paper when ran through a simple mathematical function dependent on input wage, wage-update period, price-update period, and inflation. And there's no reason that should bother you.

If I truly didn't show anything, why did you bother to move the goalposts? Do you know you're lying to yourself?

I didn't move them so much as you misinterpreted them - and I have now provided arguments for how, at BOTH goalposts (people with no savings, people with fluid nest eggs) neither is hurt by inflation. You brought in a completely different issue (people living paycheck to paycheck are subject to emergency expenditures), which has nothing to do with inflation, so I tried to remove that by redefining the problem. I didn't have to, I did it so hopefully you'd be able to focus for a little bit on inflation, as opposed to tons of other shit.

(before you forget: I've already shown, no matter WHAT rate of return on savings is, those profits are reduced, often significantly, by inflation)

And higher inflation rates support higher interest rates. You are depending on two assumptions, which are not universally true.

1) It is a right that money breeds. We're used to this, but it certainly doesn't seem 'fair.' You're being rewarded, with money, for... having money. I'll grant this, because I don't care to argue it, but it certainly sounds strange, though it turns out there are benefits to doing it.

2) The interest rate with inflation is the same as interest rate without inflation. Which turns out not to be true. Having a 10% interest rate investment in a 2% inflation situation is roughly equivalent to having an 8% interest rate investment. This is something you can totally look at and assess. This is something you can be cognizant about, and make intelligent consumer decisions about. And it turns out, this is nearly equivalent to buying an 8% interest rate investment in a 0.0% inflation situation. Interest rates commonly go up with inflation.

And it should be obvious that if the inflation rate raises your interest rates by an appropriate amount, you aren't actually losing money.

[Doom]

The contract was for 40% gold.

Uh, no. Read the bill yourself. There's nothing on it saying 40%. READ THE BILL YOURSELF. Prove me wrong: where on the contract on that bill does it say you only get 40% back?

You probably don't realize this, but contracts generally have to be complete, there can't a be 'hidden clause' not even referenced in the contract that says there are additional terms. It doesn't work that way, as much as you might wish it.

But, please, demonstrate you can read at some point, and look at the bill yourself. That you haven't done so before now betrays willful ignorance on your part.

Except people

No, it was illegal for them to do so. You keep forgetting this, for some reason. Even in the period when it was legal, it was *impossible* for everyone to do so. Those that did so, still ended up turning in their gold anyway because the law obliged them to do so. Nothing about the the terms on the bill was legitimate, I'm afraid, and your filibusters change nothing.

Incidentally, after the law was enacted, the government officially devalued the bogus currency, by making gold $35 an ounce, instead of $20.

At step 1+3, we can replace inflation with taxes,

Ah, another error, as step 1 totally is false when you replace words. People actually can vote down taxes. People can even NOT PAY taxes as a form of protest. When people do pay, they actually know what they're paying, and when. Inflation through money printing doesn't have any of these defenses, in addition to the many problems shown earlier. I thought you knew this already, my bad.

- you are making concrete, logical claims that we can analyze, and this is the logical conclusion of those claims. If you don't like that conclusion, you have to refine your argument.

Or I can clear up your ignorance. Having done so, we've established your counter-argument null.

Even if it weren't simple ignorance on your part, and step 1 was valid, identifying something else as bad doesn't change anything with respect to inflation through money printing. Cancer is bad, getting shot in the head is bad....it's pretty retarded to say people shouldn't avoid cancer, because people also get shot in the head. And yet, this is your argument. A nested fallacy. Hell, you could replace "parking tickets" in line 1 and get the same result.

Get it, yet? Do you truly not understand this, too? Don't answer.

The rest of your filibuster is crap; you know you don't believe it, yourself, so I need not spend time on it.

I do have to laugh at one thing, though:

I have now provided arguments for how, at BOTH goalposts

Ok, so you didn't move them, you just built multiples. Damn, you split hairs well.

The lesson's over; your intellectual dishonesty is revealed to all. Please stop embarrassing yourself.

[Username17]

Doom, making a moral argument against inflation is just... that's really weird. I don't think anyone on this forum is going to take that argument seriously. You need to drop that entire line of argument if you want to not get regarded as a crank.

So let's go to the practical side. Hoarding: it's bad. Even the Romans understood that hoarding was bad for the economy. Reducing the velocity of money is just like having less money in the whole economy. So given that society wants to limit hoarding because it is destructive to GDP in an extremely measurable way: why is inflation a bad thing in your model?

-Username17