What's the point of inflation?

[BrothaZay]

This may be a dumb question but what is the point of inflation if everything else like pay and wages go up as well?

 

[Throwbacksample]

Pay wont go up though. So much money is in circulation and that causes prices to go up cause demand goes up.

 

[I Really Mean It]

Inflation, at least with regards to the U.S. economy, is a buzzword thrown about by fear mongering free market capitalists who like to feign disgust at running deficits whenever the money is allocated for purposes beyond enriching wealthy white people. Whenever you hear someone decrying the onset of inflation,

 

[HotStewPot]

Inflation, at least with regards to the U.S. economy, is a buzzword thrown about by fear mongering free market capitalists who like to feign disgust at running deficits whenever the money is allocated for purposes beyond enriching wealthy white people. Whenever you hear someone decrying the onset of inflation,

Can you explain how the cost of goods going up is a good thing when wages haven’t risen to meet those costs?

If inflation increases and your wage hasn’t, that means your standard of living has dropped.

 

[I Really Mean It]

Can you explain how the cost of goods going up is a good thing when wages haven’t risen to meet those costs?

If inflation increases and your wage hasn’t, that means your standard of living has dropped.

Who makes the decisions about whose wages increases and whose doesn't? Executives aren't seeing their wages plateau. And the "cost of goods" is another arbitrary metric that is subject to the whims of those with money. Most goods that are sold in this country cost pennies on the dollar to make, manufactured by peasants in third world countries before being shipped to markets around the globe to be sold at astronomical markups. Again, "inflation" is an imaginary tactic employed by the elites to buttress their wealth from the prying hands of the lowly riffraff in the streets.

 

[chineebai]

Inflation affects middle and poor people because it's basically a transfer of wealth to the rich. Most people have fixed and inflexible incomes so when inflation happens, salaries do not go up the same rate as goods and services. Those that provide the goods and services are usually those with flexible and higher incomes.

 

[HotStewPot]

Who makes the decisions about whose wages increases and whose doesn't? Executives aren't seeing their wages plateau. And the "cost of goods" is another arbitrary metric that is subject to the whims of those with money. Most goods that are sold in this country cost pennies on the dollar to make, manufactured by peasants in third world countries before being shipped to markets around the globe to be sold at astronomical markups. Again, "inflation" is an imaginary tactic employed by the elites to buttress their wealth from the prying hands of the lowly riffraff in the streets.

Inflation benefits the rich because they own high value assets so I don’t quite understand the point you’re making. When inflation rises so does the price of their properties, stocks etc. Far more so than the hit they take paying for things so it’s in their interest for inflation to go up.

It’s not the “executives” you should be going after but the Federal Reserve.

 

[ThrobbingHood]

It’s not really straight forward. When you look at inflation you have to look at interest rates, wages, exchange rates etc. It’s about looking how much people spend when the economy grows.

If a carrot cost 30 in 1999, then it would be silly if it didn’t cost more 10 years later as people’s wages increase. That would devalue a carrot if the price stayed the same. The price of it has to correspond with people’s spending/wages.

The problem is, it’s not easy to get the right balance because different regions have different standards of living, wages, house prices etc. That’s where interest rates come in to try and balance it out.., if it costs more to borrow then people are less likely to spend and have more of an incentive to save. However, that’s easier said then done.

 

[I Really Mean It]

Inflation affects middle and poor people because it's basically a transfer of wealth to the rich. Most people have fixed and inflexible incomes so when inflation happens, salaries do not go up the same rate as goods and services. Those that provide the goods and services are usually those with flexible and higher incomes.

This is patently false. History shows, during times of inflation, that corporate profits increase right along with executive salaries. And this isn't because of inflation; rather, it's because profits are still being raked in. The only class of people who don't benefit during inflation are the middle class and working poor, whose wages stagnate while the price of goods rises. If there were caps of executive salaries during "inflationary" periods, including a freeze on stock purchases and bonuses, wages of workers could rise and an equilibrium between that and cost of living would be met.

 

[ThrobbingHood]

This is patently false. History shows, during times of inflation, that corporate profits increase right along with executive salaries. And this isn't because of inflation; rather, it's because profits are still being raked in. The only class of people who don't benefit during inflation are the middle class and working poor, whose wages stagnate while the price of goods rises. If there were caps of executive salaries during "inflationary" periods, including a freeze on stock purchases and bonuses, wages of workers could rise and an equilibrium between that and cost of living would be met.

San Francisco is a perfect example of this.

 

[invalid]

That would devalue a carrot if the price stayed the same. The price of it has to correspond with people’s spending/wages.

Sorry, I didn't pay attention in economics class....I thought the price of a product corresponds with supply and demand?

 

[ThrobbingHood]

Sorry, I didn't pay attention in economics class....I thought the price of a product corresponds with supply and demand?

That comes into it too. The more money/disposable income people have, the more likely they are to spend. So if the costs of products don’t go up with wages, then naturally there would be more demand than supply... but as we know, there are other external factors that can affect supply/demand:

Exchange rate.
Season/Weather.
Unemployment.

 

[King_Sage]

Inflation allows the owner of an asset to control the flow of supply/demand while capitalizing.

Example: You are selling fruit, you get to your last case and there are 100 people that want the last case. Are you going to give it the first person you see or are you going to give it to the highest bidder?

some say this is wrong, but the pendulum goes the other way too.. where you can have deflation because their is too much supply and not enough demand

 

[How Sway?]

Inflation has been a facade since 1971 when the U.S. completely left the gold standard.

 

[TL15]

@BrothaZay you got range breh