Forum Post: Price inflation - is it good or bad?
Posted 10 years ago on Nov. 12, 2014, 5:07 p.m. EST by grapes
(5232)
This content is user submitted and not an official statement
I learnt in school long time ago that price inflation is the general rise in prices of goods and services.
I generally dislike keeping two sets of books for financial numbers, nominal and inflation-adjusted. However, I learnt through living through decades of inflation that the powers that be seemed to require the survivors to do just that. Here I am whom flip calls an "old white (fairly dumb) man from 1950" so let us get a more modern review of what price inflation is and whether it is good or bad and for whom.
Please weigh in, stating from where you are viewing inflation. My experience was that there are at least two parties to every financial transaction so there are probably losers and winners depending on which side one is coming from.
I found the urban dictionary to be superior to my urbane dictionary as far as seeing what the people freely define so this is inflation by vox populi.
Inflation in reality is the deflation of the value of money.
The mistake most people make is that they value most every thing in terms of money. But money in and of itself is nothing but paper, or electronic digits these days. What has value is material and intellectual things and such; i.e tangible property. Would it not make more sense then to value money in terms of property? From that perspective one can see it is the money that is losing value, and not really any property.
One then also comes to see how the 1% manage to con us regular folks out of our property..
From the urban dictionary, the second definition still has inflation defined as "n. An increase in price for goods and services. Also when money loses value, decline in the purchasing power of money. ..."in inflation everything gets more valuable except money"... by OliverS May 15, 2005 138 50"
The quote clearly shows the ignorance of the poster, it should be, "...in inflation nothing else becomes less valuable except money..." The Wrong value judgment has been voted rather popular which shows that the mass delusion goes on so the fed can continue to steal value from everyone who holds money in any savings, retirements, insurance policies, etc. to give to the financial thieves who by the way are the banksters, fiduciaries, insurance companies, etc. to whom people entrust their life savings.
The really rich people hold most of their net worth in real assets because they understand this truth. The poor working folks are under the delusion that the fed is stealing value from the money stash of the rich. The rich have huge debts so they benefit greatly from the fed's flooding the economy with proto-money created from the thin air. They tend to have sufficient money to stay liquid but their huge debts actually net them far more value than they lose in the money they keep for liquidity.
The U.S. as a country does the same thing to exercise its license to steal. I know a financial ignoramus whenever they utter, "The U.S. is the richest country in the world!" Actually, it is the country which owes the Most in the world. The sloshing around of the money creates the trappings of apparent wealth, especially if you can increase any amount needed by creating it from the thin air. Japan and soon EU have caught on to this wonderful game, too. Savers worldwide will be screwed. The rich folks live well off of the stupidity of the working class (many live in China - those who live in the U.S. clamor for the pseudo-truth that more money creates jobs which they may need FOUR to make ends meet).
I don't see inflation in and of itself as being good or bad. It's the rate, the cause, and the people impacted that I would look at and judge. Simplified, if inflation is occurring at a rate that negatively effects the standard of living of a majority, then it would be bad. If incomes go up at the same rate, it can still hurt those that loan money, but help those that borrow. To judge that you need to know more on a case by case basis.
Wise answer. The context is important. Maybe it is really a moot issue for all. We always get some kind of policy anyway from our (Non-)U.S. (Non-)Federal (No-)Reserve. Figuratively speaking, I feel a bit dizzy driving around looking through a warping windshield and rearview mirrors. I definitely look at the on-board crash avoidance system called the fed. The markets freeze up before any announcement of the fed. It is really easy to get quick payoffs from fed-watching but fussing with the on-board video game while driving often results in huge crashes from time to time.
The Fed manipulates things for some grand plan the rest of us are too stupid to see. They seem obsessed with propping up the stock market. I agree that their tampering could produce unintended consequences.
The fed props up asset prices with trillions of dollars worth of created-out-of-thin-air credit/money to buy up the many trillions of dollars worth of debts that would otherwise turn bad still lingering from the Great Recession. They hope that the wealth effect will propel the economy forward so everything bad will be papered over.
It is exactly the same reason that video games reward players with so many points. Every average Joe or Jill likes seeing big numbers in their 401(k) statements and feeling rich. The fed can certainly help with that.
A child presented me with a bank withdrawal order slip for $10,000,000! No problem for me to satisfy that. Hahahaha! Everything is possible in the world of make beliefs so I just create a check with lots of 0's.
Venezuela is giving people 2-day workweek and price inflation is very high there.
Now people, especially flip, please explain to me why the people of Venezuela are being fried by the inflation instead of being glad to have inflation that our fed told us was good for us.
Can someone explain how the bird's wing has been broken?