[honeybooboo123]

Spoken like a true sophist.

So anything that's not mainstream is just as crazy as thinking that the earth is flat, huh?

For example, it's decidedly mainstream to believe that ~2% inflation is a good thing, mostly because governments say so.

But it's plain crazy to disagree, realizing that not a single sane person on earth actually wants his purchasing power to decrease, but that's exactly what the 2% inflation does to us.

[divegeek]

Inflation doesn't decrease your purchasing power unless you're living on a fixed, non inflation-adjusted income, or from a limited pool of wealth which you keep in cash.

If you're doing productive work, you can expect your wages to keep pace with inflation, and if they're not, it's very likely that without inflation you'd be seeing wage cuts; your relative value as a worker is independent of inflation. If you're living off of stored wealth, you need to store it in the form of goods, not cash. Real estate, stocks, etc.

There are advantages to inflation. One is that it encourages people to keep their wealth invested in production (aside: This is also part of the economic value proposition for property taxes, which discourage non-productive land-hoarding). Another is that it discounts debt. Because debt payments are not inflation-adjusted and wages effectively are, making your payments gets easier over time. This isn't a good in and of itself, but it's a good when considered against the alternative possibility of deflation, which tends to create insolvency among borrowers. Of course, inflation can harm creditors who don't factor it into their interest rate, but this is less harmful to the economy as a whole.

The ideal would be a money supply that exactly kept pace with growth in production resulting in neither inflation nor deflation. But that's hard. Because mild inflation is not particularly harmful, and deflation is really bad, policymakers prefer to aim for mild inflation as a hedge against deflation.

[honeybooboo123]

Yes, salaries are a variable, but even if salaries do rise in sync with inflation, that doesn't make inflation good. It's still bad.

Nope, we can't expect our salaries to rise along with inflation - not in today's insane world.

  - http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/
  - http://www.theguardian.com/money/2011/nov/23/uk-household-earnings-fall

.. and whatever you'd feel like Googling up.

>> There are advantages to inflation. One is that it encourages people to keep their wealth invested in production

That's not an advantage. Inflation does punish saving (which is bad to begin with), but also encourages risky investments. The higher the inflation, the higher the return on investments you need to not lose wealth, and the riskier your investments, the more likely you're to lose them.

So no, that's not good. Purchasing power increases are good.

>> Another is that it discounts debt.

Yes, this is why governments keep lying to us that inflation is good for us. They're trying to manage their massive debts, but they'll ultimately fail.

How about just not using money you don't have, or money you can't afford to borrow? Oh but that would curtail politicians' crony-capitalist spending, so we can't have that.

>> The ideal would be a money supply that exactly kept pace with growth in production resulting in neither inflation nor deflation

You're basically suggesting that our purchasing power should not increase. That's just absurd.

>> Because mild inflation is not particularly harmful

So even you acknowledge that it is harmful, even if not to a large extent. But what do you get if there's 2% inflation for 10 years? It keeps compounding you know. How much of your purchasing power will you have lost by then?

>> deflation is really bad

No it's not. It's your purchasing power increasing. Everyone wants to get more for less, and that's what (price-)deflation means.

[divegeek]

Sorry, you're badly confused about a lot of things, but it's not worth the effort to me to educate you. I'll just let you have the last word.

[laichzeit0]

> not a single sane person on earth actually wants his purchasing power to decrease

As with all things in life, this is a tradeoff. I'm willing to concede decreasing purchasing power in exchange for some other advantage. Like I'm willing to exchange shitty battery life for a better and faster web browsing experience on my phone, or how I'm willing to exchange years off my life for some added pleasures like cigarettes and alcohol.

[honeybooboo123]

>> I'm willing to concede decreasing purchasing power in exchange for some other advantage

That may be, but that's something everyone should get to choose for themselves. In today's world, we don't, and that's wrong.

Besides, we're not even getting any advantages "in exchange" for losing our purchasing power to the machinations of governments and central banks everywhere. We're just getting milked and fleeced six ways from Sunday all the time.

[mikeash]

Are you proposing that each person should be able to choose the level of inflation that their own assets are subject to? How would that work?

[honeybooboo123]

Nope, I'm suggesting that we should be able to choose which currency to use. But now we can't.

If we could, we'd choose a sound currency, and then our purchasing power would keep increasing steadily (because of productivity improvements and wealth accumulating over time).

[mikeash]

We can't? I mean, I have to obtain USD to pay my taxes, but otherwise I can use currencies at will. I have a hard time finding anyone local who will accept or pay me in anything besides USD, but that's their own choice to do so.