INFLATION is actually a tool utilised by the rich and powerful to enslave poor / ignorant people and - Politics Forum.org | PoFo

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#15143253
INFLATION is actually a tool utilised by the rich and powerful to enslave poor / ignorant people and to keep them enslaved ('employed') and busy producing the goods and services that rich people want.
Agree?

I.e. https://www.brookings.edu/blog/up-front ... ment-mean/

Poor/ ignorant people (inflation is like the wheel provided by rich and powerful people for the poor to constantly run on, until they die from exhaustion):
Image
#15143260
BicCherry wrote:INFLATION is actually a tool utilised by the rich and powerful to enslave poor / ignorant people and to keep them enslaved ('employed') and busy producing the goods and services that rich people want.
Agree?

I.e. https://www.brookings.edu/blog/up-front ... ment-mean/

Poor/ ignorant people (inflation is like the wheel provided by rich and powerful people for the poor to constantly run on, until they die from exhaustion):
Image


No shit and so what.
#15143263
Of all the things that can/are being used by wealthy individuals... inflation does not even crack top 10. For one... inflation affects wealth disproportionally vs income. If you save 1 million today, it buys far less shit in 20 years than it does today. However, if you are just "earning an income" this income still tends to grow. Depending on your career path, it might grow less than inflation but in plenty of cases it is the opposite and you outearn inflation.
Seriously, loopholes and tax breaks for wealthy individuals and influence on politics is BY far a much larger issue than inflation.
#15143268
XogGyux wrote:Of all the things that can/are being used by wealthy individuals... inflation does not even crack top 10. For one... inflation affects wealth disproportionally vs income. If you save 1 million today, it buys far less shit in 20 years than it does today. However, if you are just "earning an income" this income still tends to grow. Depending on your career path, it might grow less than inflation but in plenty of cases it is the opposite and you outearn inflation.
Seriously, loopholes and tax breaks for wealthy individuals and influence on politics is BY far a much larger issue than inflation.

I don't disagree, but inflation is what makes the rich very wealthy also, especially if they own physical properties, paintings, antiques, stocks, gold, etc assets.

Yes, salaries increase with inflation but those who rent their abode also need to continue working (almost for life) or be destitute on the streets.

If inflation is needed to creat jobs, then these are just shitty jobs, provided by shitty companies and shitty investors, who invest not because they have something good to contribute but merely out of fear of financial impecunity .

Ultimately the whole system will fall like a house of cards.

Someone said USA now has lotsa problems due to wealth inequality, breakdown of public services and unsafe bridges or infrastructure overdue for refurbishment.
Last edited by BicCherry on 14 Dec 2020 23:55, edited 1 time in total.
#15143274
BicCherry wrote:I don't disagree, but inflation is what makes the rich very wealthy also, especially if they own physical properties, paintings, antiques, stocks, gold, etc assets.

Yes, salaries increase with inflation but those who rent their abode also need to continue working (almost for life) or be destitute on the streets.

If inflation is needed to creat jobs, then these are just shitty provided by shitty companies and shitty investors, who invest not because they have something good to contribute but merely out of fear of financial impecunity .

Ultimately the whole system will fall like a house of cards.

Someone said USA now has lotsa problems due to wealth inequality, breakdown of public services and unsafe bridges or infrastructure overdue for refurbishment.


First the disclaimer. My field of expertise is not economics. I do follow many finantial podcasts/forums/etc for education/entertainment + random courses taken during undergrad so I have a basic understanding.
I think you are confusing many issues. For one, those items you mentioned physical properties, paintings, antiques, stocks, gold, etc assets prices are not due to inflation. Let me illustrate it. A 250 ferrari GTO in the 1960's when brand new was about 18,000 price. Adjusted for inflation in today's money, this would be a little under 160k. Which seems like a lot, until you realize that many of these cars sells in the multi-million range (a few years back there was one for 38M, and more recently one for 70M).
Gold time and time comes around being thrown but it is almost universally sought as the "investment of the fool" by people that actually know about the matter since it can barely keep up with inflation most of the time while plenty other investments actually outearn inflation.
Other than gold, the rest of your examples, similarly to the ferrari example I gave you, goes up on value because of appreciation rather than inflation. Inflation applies to the economy as a whole, while appreciation/depreciation affects individual "investments" above whatever level of "inflation/deflation".
In the hands of a novice, most of those things that you mentioned are akin gambling. Buying a painting with the expectation that it will go up in value, only has a moderate chance of success if you are reasonably well versed on the field of art/art dealings/trends. Same thing applies to real state, if you just blindly bought anything in 2005-2007 you would know what I mean.
#15143275
BicCherry wrote:INFLATION is actually a tool utilised by the rich and powerful to enslave poor / ignorant people and to keep them enslaved ('employed') and busy producing the goods and services that rich people want.
Agree?

I.e. https://www.brookings.edu/blog/up-front ... ment-mean/

Poor/ ignorant people (inflation is like the wheel provided by rich and powerful people for the poor to constantly run on, until they die from exhaustion):
Image


Not really. Even the rich don't like sky high inflation, even when they have more means to defend their purchasing power.

And usually deflation also hurts everyone, too.
#15143294
That's a well known fact. Inflation has always been the easiest way for the sovereign to rob the people.

It's not true that inflation hits the rich and powerful in the same way. Quite on the contrary, while the public debt in the US increased by several trillions in the last few months, the richest Americans have increased their assets by hundreds of billions in just a few months.

The rich and powerful can hire financial advisors with inside information so that they can increase their wealth even during an economic recession. They have perfected the art of shorting to make profit from the ruin of others.
#15143310
Atlantis wrote:That's a well known fact. Inflation has always been the easiest way for the sovereign to rob the people.

It's not true that inflation hits the rich and powerful in the same way. Quite on the contrary, while the public debt in the US increased by several trillions in the last few months, the richest Americans have increased their assets by hundreds of billions in just a few months.

The rich and powerful can hire financial advisors with inside information so that they can increase their wealth even during an economic recession. They have perfected the art of shorting to make profit from the ruin of others.


That has nothing to do with inflation though. In some cases, it is appreciation, not inflation.
#15143312
XogGyux wrote:First the disclaimer. My field of expertise is not economics. I do follow many finantial podcasts/forums/etc for education/entertainment + random courses taken during undergrad so I have a basic understanding.
I think you are confusing many issues. For one, those items you mentioned physical properties, paintings, antiques, stocks, gold, etc assets prices are not due to inflation. Let me illustrate it. A 250 ferrari GTO in the 1960's when brand new was about 18,000 price. Adjusted for inflation in today's money, this would be a little under 160k. Which seems like a lot, until you realize that many of these cars sells in the multi-million range (a few years back there was one for 38M, and more recently one for 70M).
Gold time and time comes around being thrown but it is almost universally sought as the "investment of the fool" by people that actually know about the matter since it can barely keep up with inflation most of the time while plenty other investments actually outearn inflation.
Other than gold, the rest of your examples, similarly to the ferrari example I gave you, goes up on value because of appreciation rather than inflation. Inflation applies to the economy as a whole, while appreciation/depreciation affects individual "investments" above whatever level of "inflation/deflation".
In the hands of a novice, most of those things that you mentioned are akin gambling. Buying a painting with the expectation that it will go up in value, only has a moderate chance of success if you are reasonably well versed on the field of art/art dealings/trends. Same thing applies to real state, if you just blindly bought anything in 2005-2007 you would know what I mean.

Haha, so selective, the Ferrari u mentioned, probably is a rare antique model. In the first place, one must be quite rich to begin with ("in today's money, this would be a little under 160k. Which seems like a lot" by your own acknowledgement). This riches begets riches and the constant rate of inflation is guaranteed income for rich people, especially for world renown fine art, luxury antique cars (all possibly symbols of vintage wealth), thus highly sought after.

The house price, I assume u refer to the Lehman bubble period in USA (sub prime crisis period), yup, that is an anti-example, but another forummer also pointed out that the richest have economic advisors, so they may not be caught out in the property bubble. Yup, property bubble is one way in which greed can catch anyone out, but it is the odd example of certain bubble, overbought years (banks being over generous with cheap loans, in itself a product of FED artificially and deliberately pushing up inflation levels, as a substitute for proper government fiscal policies which sustainability help people (better education, global diplomacy, real infrastructure investment, equitable taxation etc).

Guess it is unwise just to be selective in citing certain outlying examples, suffice to say, all this quantitative easing, artificial interest rates reductions and even negative interest rates can be very destructive to society in the long run, especially when they also come at the expense of a rotten/ absent government fiscal policy which only creates more social problems (ghettos, poor public health, low education, social violence, high poverty and crime rates etc etc).
#15143315
XogGyux wrote:That has nothing to do with inflation though. In some cases, it is appreciation, not inflation.

An inflating of the wealth that rich people have..
Last edited by BicCherry on 15 Dec 2020 10:07, edited 1 time in total.
#15143335
BicCherry wrote:Haha, so selective, the Ferrari u mentioned, probably is a rare antique model. In the first place, one must be quite rich to begin with ("in today's money, this would be a little under 160k. Which seems like a lot" by your own acknowledgement). This riches begets riches and the constant rate of inflation is guaranteed income for rich people, especially for world renown fine art, luxury antique cars (all possibly symbols of vintage wealth), thus highly sought after.

The house price, I assume u refer to the Lehman bubble period in USA (sub prime crisis period), yup, that is an anti-example, but another forummer also pointed out that the richest have economic advisors, so they may not be caught out in the property bubble. Yup, property bubble is one way in which greed can catch anyone out, but it is the odd example of certain bubble, overbought years (banks being over generous with cheap loans, in itself a product of FED artificially and deliberately pushing up inflation levels, as a substitute for proper government fiscal policies which sustainability help people (better education, global diplomacy, real infrastructure investment, equitable taxation etc).

Guess it is unwise just to be selective in citing certain outlying examples, suffice to say, all this quantitative easing, artificial interest rates reductions and even negative interest rates can be very destructive to society in the long run, especially when they also come at the expense of a rotten/ absent government fiscal policy which only creates more social problems (ghettos, poor public health, low education, social violence, high poverty and crime rates etc etc).


That is not the example I selected, but the one that you did. Cars, in general, are awful investments. They depreciate faster than a falling rock. Only like 0.1% or perhaps far less of cars actually appreciate after many years when they reach "classic status." I can buy a second-hand Mercedez for half the price after a few years. And this is where the "buying shit with the expectation will go up in price as a novice is akin to gambling". The vast majority of cases, you don't know which cars are the ones that will become highly-sought-after collectibles/classics, after all there are plenty of Ferraris that you can buy today for less than the price of a fully-loaded Toyota, probably none of which will ever be multi-million dollar gems at any point in history, a handful that might...

But again, we are talking about appreciation now, not inflation.

Inflation is what you can see when a brand new Honda accord cost 25k in 2010 and 30k in 2020. Both are the same "trim levels", the "same brand", yet 10 years later you pay roughly ~20% more. Let's just say it is not the worse boogy man out there when it comes to income inequality. For instance, salaries have come up quite a bit as well. This very event happend to my family, I just bought a new 2020 Accord to replace the hand-me down Accord that my mother gave me when I sold my previous car. There was ~5k difference in price in the last 10 years. However, for reference the minimum wage in my state back then was 7.25 (equal to federal min. wage) and currently it is 8.56 again, just below 20% increase. So in this case, minimum wage kept with the inflation of an arbitrary product (a honda accord). Now the math does become murky because it is not necesarily true that someone that made $2 above minimum wage 10 years ago, continues to make $2 above the current minimum wage, maybe now this person only makes $1 over minimum wage for same workload). But understand that we are dealing with tiny numbers over long periods of time. This is not some sort of "tool to enslave poor".

Inflation affects stagnant, "money under the mattress" money. Poor people don't tend to have huge sums of money saved up in cash stashed away for decades... if they do... they are not poor :lol:. If anything... inflation affects wealthy, finantially illiterate people (aka your crazy uncle that has 80K stored in a safe and 100k in the bank and no investments because he is scared of the stocks tanking).

Again... property price bubble is not really inflation, I understand that many use that term but I think it is being used inappropriately. What happened was appreciation, not inflation. In fact... when the "bubble bursted" where did the prices fall to? they fell to the "expected inflation line". See this:
Image
You cannot argue that the crisis was caused by too much government meddling... when in fact it was de-regulation after de-regulation that eventually snowballed into what happened.

Also, keep in mind that inflation/deflation happens regardless of government intervention. Government does try to fine-tune it with an overall expected target, but it is not as if the government would suddenly stop interfering this would suddenly mean flat, zero inflation... rather it would simply mean that the government would not be the one controlling (or attempting to control it). In that case... it would probably be the market doing it all on its own. That is both good and bad.
#15143349
wat0n wrote:Not really. Even the rich don't like sky high inflation, even when they have more means to defend their purchasing power.

And usually deflation also hurts everyone, too.

Hi wat0n,
Think if u think of it, properly, the FED is as much to blame for the "deflation", as it is to be blamed for the sub prime great recession (2008 Lehman brothers collapse).

Same game plan they used, then as they do now.

Lots of cheap money at low interest rates, few/no checks to borrow, ends up there is so much dead wood, zombie equity with very very high paper values which when the bubble bursts, is not even worth the paper that the ownership title deed is printed on.

So by printing money and distributing it irresponsibly, the FED is not solving deflation but instead inducing it.

Money is a highly addictive drug (like alcohol) which makes people do bad things, but somehow giving more in higher dose can make people somewhat behave, but only for a short while before they misbehave again.

Never mind if confused by last paragraph. Just imagine, would 2008 Lehman crisis have happened but for FED printing money and giving out cheap loans (ostensibly to achieve their inflation targets iirc), likewise, why would goods be scarce in a deflationary setting but for the reason that they were produced by zombie companies which were unproductive and loss making to begin with and only surviving vz cheap perpetual securities and loans and the use of disgusting accounting tricks, such that once the easy access to money dried up, they were sued by their own employees whom many owed significant wages at the false promise of business upturn, only achievable by even easier and cheaper access to 'free money' corporate loans.
#15143366
BicCherry wrote:Hi wat0n,
Think if u think of it, properly, the FED is as much to blame for the "deflation", as it is to be blamed for the sub prime great recession (2008 Lehman brothers collapse).

Same game plan they used, then as they do now.

Lots of cheap money at low interest rates, few/no checks to borrow, ends up there is so much dead wood, zombie equity with very very high paper values which when the bubble bursts, is not even worth the paper that the ownership title deed is printed on.

So by printing money and distributing it irresponsibly, the FED is not solving deflation but instead inducing it.

Money is a highly addictive drug (like alcohol) which makes people do bad things, but somehow giving more in higher dose can make people somewhat behave, but only for a short while before they misbehave again.

Never mind if confused by last paragraph. Just imagine, would 2008 Lehman crisis have happened but for FED printing money and giving out cheap loans (ostensibly to achieve their inflation targets iirc), likewise, why would goods be scarce in a deflationary setting but for the reason that they were produced by zombie companies which were unproductive and loss making to begin with and only surviving vz cheap perpetual securities and loans and the use of disgusting accounting tricks, such that once the easy access to money dried up, they were sued by their own employees whom many owed significant wages at the false promise of business upturn, only achievable by even easier and cheaper access to 'free money' corporate loans.


I don't think we have the same understanding of what happened in 2008.
Here is my take:
What happened in 2008 is not "because the FED had a trigger finger on the interest rate and/or messing around with inflation". The government has plenty of blame, but not in the way you are picturing it. Deregulation is the main sin of the government in that case.

Again, even though in layman terms people use the term "inflation" (perhaps because it already lends itself to the use with the bubble analogy), I think the correct term you are looking is actually appreciation. If inflation were to be the reason for the housing crash... then there would also be a crash on car values, on bicycle values, on boats, on pepsi and on crackers, because inflation applies to the economy as a whole, not just houses.
The main issue with the 2008 crash is that banks were getting greedy.

How so?
Well, banks realized that they could start lending money to people that did not truly qualified for loans, and then get those loans and put them together as a package and sell it to someone else. Incidentally, those packages were also "rated" much higher erroneously/fraudulently which in turn hid the real risk of the asset class to those that bought the packages. How did this lead to bubble? Well, it is the classic scenario of supply and demand. By banks lending to large numbers of "sub-prime" lenders, they are increasing the demand for houses. However, the supply of houses is roughly stable, or perhaps increased slightly but not to keep pace with the newly created demand for houses... therefore you get the appreciation of the asset class (houses/real state). However, to add insult to injury, banks started luring people with introductory rates that were very attractive, which of course only lasted for a while and when shit hit the fan, the dominos started falling. Bunch of people could no longer afford their houses so they defaulted and were foreclosed, this leads to an increase in supply of houses (more houses to sell in the market) but at the same time, the demand is also low (banks are now afraid due to the defaults and are not lending, or worse, cannot lend at all). This means that depreciation issues (high supply, low demand) and houses start falling sharply in prices. Meanwhile, you have people that can actually afford to pay their houses, but realize that it does not make finantial sense. For instance, say that you bught your house for 500k at the peak of the market, and you gave 20% down, you have 100k equity, own 400k... But now, houses prices fell sharply to roughly about half of what it was at its peak. So your nightboor is now selling the exact same house as yours, with about the same size, in the same zone, similar contruction, similar year, etc... for 250k. Now suddently you realize that despite having 100k in equity in your house you would end up paying 400k for a house that is worth 250k now, essentially you already wasted 100k, and are about to waste 150k if you continue with your mortgage... so now... do you save your credit score and bite the bullet for those extra 150k? :knife: And this goes on, and on, and on, further fueling the problem.

Search NINJA loans.

The role of inflation and/or the fed's interest rate has very little influence if any at all as far as I understand it. Unless you have something to add. For instance, in the period of 2000 to 2010, the highest interest rate by the fed was ~5%. Not even close to the ~20% in the early 1980's or the ~10% in the late 1980's and even through the 1990's interest rate was around 5%.

Now... certainly the banks are "the bad guys" but they are not the only ones employing this dubious method of luring people and then sticking them in the skewer. Take for instance car companies... zero down, no payments until next year... does it sound familiar? Seriously, do you think a person that cannot afford any money at all down payment and/or payments for 3-6 months is in good financial shape to be buying a fucking new car?
What about furniture? They lure you in for a sofa with "zero % interest for 36 months". People still get fucked on those things all the time and ruin their finantial future because they have little understanding of basic finances/economics. It is not quite the "cnn/msnbc 24/h housing crisis non-stop" spectacle, but at the end of the day, the results are similar. Debt that accumulates faster than you can pay it off, bankrupcies, repos, etc.
#15143394
BicCherry wrote:INFLATION is actually a tool utilised by the rich and powerful to enslave poor / ignorant people and to keep them enslaved ('employed') and busy producing the goods and services that rich people want.

Agree?

Not in general. If wages are also rising or leading the inflation, purchasing power is redistributed to wage earners.

Also, debtors tend to gain from inflation because they repay creditors with a quantity of money worth less in real terms. And, almost by definition, creditors tend to be richer than debtors.

That's why political parties representing the creditor/employer class rail against it. If anything, the inflation boogeyman is "the tool of the rich and powerful".

I.e. https://www.brookings.edu/blog/up-front ... ment-mean/

Doesn't support the contention - rather the opposite if you read the bit about NAIRU etc.
#15143406
BicCherry wrote:Hi wat0n,
Think if u think of it, properly, the FED is as much to blame for the "deflation", as it is to be blamed for the sub prime great recession (2008 Lehman brothers collapse).

Same game plan they used, then as they do now.

Lots of cheap money at low interest rates, few/no checks to borrow, ends up there is so much dead wood, zombie equity with very very high paper values which when the bubble bursts, is not even worth the paper that the ownership title deed is printed on.

So by printing money and distributing it irresponsibly, the FED is not solving deflation but instead inducing it.

Money is a highly addictive drug (like alcohol) which makes people do bad things, but somehow giving more in higher dose can make people somewhat behave, but only for a short while before they misbehave again.

Never mind if confused by last paragraph. Just imagine, would 2008 Lehman crisis have happened but for FED printing money and giving out cheap loans (ostensibly to achieve their inflation targets iirc), likewise, why would goods be scarce in a deflationary setting but for the reason that they were produced by zombie companies which were unproductive and loss making to begin with and only surviving vz cheap perpetual securities and loans and the use of disgusting accounting tricks, such that once the easy access to money dried up, they were sued by their own employees whom many owed significant wages at the false promise of business upturn, only achievable by even easier and cheaper access to 'free money' corporate loans.


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