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We keep measuring everything's value with something that continuously loses value over time
(self.showerthoughts)
this post was submitted on 29 Apr 2024
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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.
Yeah, but... that's the point. That's an investment. You just said the same thing I said.
For sure that can create imbalances in itself, and that's where other government intervention is required through other tools, but what we're saying here is that inflation encourages you to use the money (say, by buying a house through a mortgage), as opposed to sitting on a pile of cash or keeping it in the bank.
But this is only meaningful if your income is also going up, right? Otherwise you're still getting fucked by inflation. You're paying the same percentage of your income towards that mortgage but all your other expenses are going up.
Absolutely. Inflation isn't just inflation, different things move at different rates, and that includes salaries.
But that's why you want collective bargaining and an ongoing conversation about salaries, including periodic revisions of minimum wage regulations. We shouldn't let oligarchs tell us that inflation is what degrades salaries, it's the mismatch between salary growth and inflation. Inflation should be part of the calculation and salaries should be negotiated on a regular basis and regulated to prevent the system from breaking at the bottom.