Inflation as the only tax

[Sibirsky]

Hey, we already got this but it is called quantitative easing, sounds better than printing lots of new money. So if this counts as a tax then we already got it.

It's not the only tax. And quantitative easing is essentially the same thing.

[Trotskylvania]

We've also been having almost no inflation for the past two years. QE seems to be doing it's job.

[Sibirsky]

We've also been having almost no inflation for the past two years. QE seems to be doing it's job.

The job of QE is to keep interest rates low. And we've had no inflation if you ignore what's happened to food and energy. Except for the little overlooked problem that regular people still have to pay for food and energy.

[Londim]

We should just go back to the bartering system. Shopping would be much more interesting if haggling was involved.

[South Lorenya]

OP, think about it this way: suppose we have three triplets who all make $60,000 a year:

A tends to save money whenever he can. He only buys cheap things, as he wants to retire comfortably.
B tends to splurge; on the rare occasions where he does save, the money won't stay there for long.
C is in between; he saves (but not as much as A), and dips into his savings more often (but not as often as B).

When they reach the age of 70 and retire, B is hosed -- he spent all his money by then! C will also be forced to make cutbacks, as he has less cash than A.

Now, if you use the inflation-as-tax method, B is still screwed by not having savings, A is ALSO screwed because his savings get worth less every year, and -- to complete the polar opposite of the hat trick -- C also finds his meager savings even more meager.

[Sibirsky]

OP, think about it this way: suppose we have three triplets who all make $60,000 a year:

A tends to save money whenever he can. He only buys cheap things, as he wants to retire comfortably.
B tends to splurge; on the rare occasions where he does save, the money won't stay there for long.
C is in between; he saves (but not as much as A), and dips into his savings more often (but not as often as B).

When they reach the age of 70 and retire, B is hosed -- he spent all his money by then! C will also be forced to make cutbacks, as he has less cash than A.

Now, if you use the inflation-as-tax method, B is still screwed by not having savings, A is ALSO screwed because his savings get worth less every year, and -- to complete the polar opposite of the hat trick -- C also finds his meager savings even more meager.

[Trotskylvania]

We've also been having almost no inflation for the past two years. QE seems to be doing it's job.

The job of QE is to keep interest rates low. And we've had no inflation if you ignore what's happened to food and energy. Except for the little overlooked problem that regular people still have to pay for food and energy.

What the hell are you talking about?

Food prices have been stagnant since the start of the recession. This is reflected in the CPI. And energy costs have plummeted since the recession. QE is the only reason we're not having deflation right now.

[Sibirsky]

The job of QE is to keep interest rates low. And we've had no inflation if you ignore what's happened to food and energy. Except for the little overlooked problem that regular people still have to pay for food and energy.

What the hell are you talking about?

Food prices have been stagnant since the start of the recession. This is reflected in the CPI. And energy costs have plummeted since the recession. QE is the only reason we're not having deflation right now.

First of all, the CPI excludes food and energy because they are volatile. Second of all, while plummeting at the start of the recession, energy costs have rebounded, and continue to increase.

[Trotskylvania]

What the hell are you talking about?

Food prices have been stagnant since the start of the recession. This is reflected in the CPI. And energy costs have plummeted since the recession. QE is the only reason we're not having deflation right now.

First of all, the CPI excludes food and energy because they are volatile. Second of all, while plummeting at the start of the recession, energy costs have rebounded, and continue to increase.

Only for sufficiently obtuse definitions of "food" and "energy". CPI deals with finished goods primarily, not raw commodities. I'm still paying the same amount for bread, milk, eggs, etc. That I did two years ago. You're full of it.

[Sibirsky]

Only for sufficiently obtuse definitions of "food" and "energy". CPI deals with finished goods primarily, not raw commodities. I'm still paying the same amount for bread, milk, eggs, etc. That I did two years ago. You're full of it.

That would be you, that's full of it. You think producers will continue to have increased costs of production without raising the price?

[Yootwopia]

Yeah Sibirsky is generally full of shit but I've been paying more for my food and utilities across the board.

[Pesda]

I don't know much about economics, but considering what happened in Zimbabwe, I'd be strongly against.

[Coccygia]

You know, upon reflection, I realized that the proposal in the OP is not that far from what the US has been doing for the past 30 years anyway...not that this could or would be done by a "responsible government", which we do not and have not had for the past 30 years anyway.

[Charlotte Ryberg]

We've also been having almost no inflation for the past two years. QE seems to be doing it's job.

The job of QE is to keep interest rates low. And we've had no inflation if you ignore what's happened to food and energy. Except for the little overlooked problem that regular people still have to pay for food and energy.

If interest rates are kept too low then savings accounts would become unattractive.

[NotnotgnimmiJymmiJ]

What the hell are you talking about?

Food prices have been stagnant since the start of the recession. This is reflected in the CPI. And energy costs have plummeted since the recession. QE is the only reason we're not having deflation right now.

First of all, the CPI excludes food and energy because they are volatile.

Wrong. Only core CPI excludes food and energy. CPI has still been flat.

[United Gackle]

Yeah Sibirsky is generally full of shit but I've been paying more for my food and utilities across the board.

Flamebait much???

[Riffasia]

It occurs to me that people would generally not hold currency because of it's continually declining value, would demand high interest raqtes on investments to exceed the govt inflation rate, would gravitate to hard asset value storage, and may prefer more stable value foreign currency for trade. Basically Argentina since 2001.

[Sibirsky]

The job of QE is to keep interest rates low. And we've had no inflation if you ignore what's happened to food and energy. Except for the little overlooked problem that regular people still have to pay for food and energy.

If interest rates are kept too low then savings accounts would become unattractive.

When have savings accounts been attractive? The Fed thinks buy lowering interest rates, money becomes cheaper and people and businesses will borrow more for projects and to spend.

[Lacadaemon]

When have savings accounts been attractive? The Fed thinks buy lowering interest rates, money becomes cheaper and people and businesses will borrow more for projects and to spend.

Actually, I'm pretty sure the fed is just interested in price targeting at this point, more than business investment. So...interest rates down = people have to invest in riskier assets to meet investment goals (i,e, not living on catfood in retirement) = stock, bond and commodity prices up = YAY economy saved .

But the number of ppl on food stamps increased by about 17% this year, and it's nearly 50,000,000. And at the same time wages are stagnant or falling for a large swath of the lower income ppl. And you have a rogue branch of the 'government' intentionally increasing the cost of food and energy - which is what most of the poor people's income goes on.

And none of this is going to fix housing, probably make the sitch worse in fact. Not to mention all the fraudy business is starting to come to light (somewhat - though that may not matter because the government will probably just declare it legal or someshit and take the losses out of people's pensions).

I'll repeat what I said back in 2007 when Bernanke thought he could fix this by fucking around with the normal operation of the markets. He is a dangerous lunatic that is psychologically incapable of what is going on. He should have stayed in Academe. This will end with his head on a fucking pike and he can forget any hope of a fat job on Wall Street, because those guys are jocks, and once he isn't useful anymore they have no need for a nerd like him and he will carry too much baggage. (Inasmuch as Gordon Brown can't find a fat job either, unlike T.Blair).

[Sibirsky]

When have savings accounts been attractive? The Fed thinks buy lowering interest rates, money becomes cheaper and people and businesses will borrow more for projects and to spend.

Actually, I'm pretty sure the fed is just interested in price targeting at this point, more than business investment. So...interest rates down = people have to invest in riskier assets to meet investment goals (i,e, not living on catfood in retirement) = stock, bond and commodity prices up = YAY economy saved .

But the number of ppl on food stamps increased by about 17% this year, and it's nearly 50,000,000. And at the same time wages are stagnant or falling for a large swath of the lower income ppl. And you have a rogue branch of the 'government' intentionally increasing the cost of food and energy - which is what most of the poor people's income goes on.

And none of this is going to fix housing, probably make the sitch worse in fact. Not to mention all the fraudy business is starting to come to light (somewhat - though that may not matter because the government will probably just declare it legal or someshit and take the losses out of people's pensions).

I'll repeat what I said back in 2007 when Bernanke thought he could fix this by fucking around with the normal operation of the markets. He is a dangerous lunatic that is psychologically incapable of what is going on. He should have stayed in Academe. This will end with his head on a fucking pike and he can forget any hope of a fat job on Wall Street, because those guys are jocks, and once he isn't useful anymore they have no need for a nerd like him and he will carry too much baggage. (Inasmuch as Gordon Brown can't find a fat job either, unlike T.Blair).

Ironically, interest rates went up on Wednesday. Anyway, agreed on this.

[Lacadaemon]

Ironically, interest rates went up on Wednesday. Anyway, agreed on this.

Yes. He is targeting only the middle of the curve, and his actions are inflationary, so further out loses value. Last time he did QE interest rates on the 10yr went up too. Then reversed themselves when ppl. believed he would stop.

He will never stop until removed. He has gone full retard.

[Sibirsky]

Ironically, interest rates went up on Wednesday. Anyway, agreed on this.

Yes. He is targeting only the middle of the curve, and his actions are inflationary, so further out loses value. Last time he did QE interest rates on the 10yr went up too. Then reversed themselves when ppl. believed he would stop.

He will never stop until removed. He has gone full retard.

I don't see Obama replacing him though.

Just for laughs, what if Obama replaces Bernanke with Thomas Hoenig?

[Dazchan]

There was a politician in Australia who wanted to do something similar - reduce all taxes to 2% and print more money to make up the difference. She was laughed out of parliament.

[Neu Leonstein]

Just for laughs, what if Obama replaces Bernanke with Thomas Hoenig?

Then the Fed goes passive and it'll be up to Congress to do stuff.

Lol.

[Czardas]

You're full of it.

That would be you, that's full of it.

Yeah Sibirsky is generally full of shit

Really? I know you guys to be more mature than that. "You're full of shit", "No u"? What next, is someone going to trot out the "I'm rubber and you're glue" argument?

(These posts were raised in Moderation after being mistakenly unaddressed -- due to the 48-hour difference and the situation not escalating, I'm not warning anyone, but this is not the kind of behavior I'm interested in seeing repeated.)