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from the should-not-embrace-deflation-either dept.
Currently we can observe a general slowdown in the annual growth rate in price inflation across major countries around the world. [...] Most commentators are of the view that deflation generates expectations for a decline in prices. As a result, it is held, consumers are likely to postpone their buying of goods at present since they expect to buy these goods at lower prices in the future. This weakens the overall flow of spending and in turn weakens the economy. Hence, such commentators believe that policies that counter deflation will also counter the economic slump.
Inflation is not about general increases in prices as such, but about the increase in the money supply. [...] For instance, if the money supply increases by 5% and the quantity of goods increases by 10%, prices will fall by 5%. A fall in prices however, cannot conceal the fact that we have inflation of 5% here because of the increase in money supply. The reason why inflation is bad news is not of increases in prices as such, but because of the damage inflation inflicts to the wealth-formation process.
The economic effect of money that was created out of thin air is the same as that of counterfeit money — it impoverishes wealth generators. The money created out of thin air diverts real wealth towards the holders of new money. [...] So, countering a falling growth momentum of the CPI by means of loose monetary policy (i.e., by creating inflation) is bad news for the process of wealth generation and hence for the economy. [...] Furthermore, if a fall in the growth momentum of prices emerges on the back of the collapse of bubble activities in response to a softer monetary growth, then this should be seen as good news. The less non-productive bubble activities the better it is for the wealth generators and hence for the overall pool of real wealth.
https://mises.org/wire/central-banks-shouldnt-fight-deflation
(Score: 1) by khallow on Thursday March 28 2019, @11:30PM (5 children)
Here, it's upward social mobility. You got the direction wrong.
(Score: 3, Insightful) by Immerman on Friday March 29 2019, @02:41PM (4 children)
Where is "here"?
In the U.S. virtually the entire population is facing downward mobility as wealth concentrates amongst the top few percent.
It's not about wealth, it's about power. Everyone can be getting wealthier, but if the rich are getting wealthier faster than everyone else, concentrating the wealth distribution, then they're also concentrating the power distribution, and democracy becomes more of a lie with every passing day.
(Score: 1) by khallow on Friday March 29 2019, @10:45PM (3 children)
Not true, even if the wealth in question were correctly valued and really was concentrating amongst the top few percent. Every one is getting wealthier, even if the rich might be getting wealthier at a rate you don't like. I use the term "might be" because wealth valuation of the sorts that the most wealthy own is notorious for being low value for the value and risk. Can't eat credit default swaps after all.
(Score: 2) by Immerman on Saturday March 30 2019, @12:03AM (2 children)
Again - wealth concentration itself is is not the real problem. The real problem is power concentration.
(Score: 1) by khallow on Saturday March 30 2019, @03:45AM (1 child)
Which let us note is more a problem of government. Wealth just isn't that powerful. In a conflict between a billionaire and a high level bureaucrat in US intelligence, for example, I'd bet on the latter.
(Score: 2) by Immerman on Saturday March 30 2019, @01:40PM
How about the way the desires that large campaign contributors and lobbyists almost always find their way into law, while those of the working class almost never do? A great many of our laws were actually originally written by corporations as proposals, and then mysteriously are among the few that find broad cross-party support.
And then the bureaucrat implements the law.
The most potent power is not the ability to triumph in a head-to-head conflict - it's to be able to shape the environment so that the conflict never happens.