How come we experience so much more inflation than deflation? in other words, why does our buying power decrease far more often than it increases? : asklemmy

[–] [email protected] 0 points 1 year ago (1 children)

Inflation (of the supply of money in circulation) is caused by an increase in the supply of money in circulation. As the number of US dollars in circulation increases, inflation (of the money supply) is experienced.

We experience inflation instead of deflation because the ones who control the supply of money have chosen it.

And while many commenters are defending inflation as good and necessary, there is an argument that inflation punishes individuals who save or are on fixed income. Inflation of money supply is also described as "devaluation of currency"- it is becoming less valuable over time. Inflation could also be described by a "loss of purchasing power" which means a person can buy fewer goods and services with the same amount of money as the currency loses its value.

[–] [email protected] 1 points 1 year ago

To offset this "tax", people must put their money in places that will grow. Government bond's interests are close to inflation, for example, and are seen as the safest of investments.

[–] [email protected] -2 points 1 year ago (2 children)

Because our monetary supply is controlled by an entity that can print new money but doesn’t have any good way to take money out of circulation.

[–] [email protected] 1 points 1 year ago (1 children)

Consider a series of transactions for a certain amount of money. Each transaction has a tax cost, that reduces that "certain amount" of money. On average, six transactions return all of that "certain amount" of money back to the treasury/ per Krugman.

[–] [email protected] 1 points 1 year ago (1 children)

Taxes don’t take money out of circulation. The government spends that money.

[–] [email protected] 1 points 1 year ago

Taxes take the money out of circulation, and the government AGAIN spends the money. It is two transactions. This technicality is important. Following where the money goes and the steps that it takes to how it gets there is how you get some understanding of economics. Government bonds are the safe haven in that largely stays even with inflation. That funds the government in a large way. Taxes, to an increasing degree, pay the interest on that debt. The interest rates set by the government set the interest rates of corporate bond, of the giants to the little consumer rates by risks taken. These, together, fund loans, which fuels America's economic engine. High interest means slowed growth. Low rates spurs growth.

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[–] [email protected] -3 points 1 year ago

Poor people are dependent of governments to survive. And when people are dependent, they’re easier to control when you can threaten to take that away.

[–] [email protected] -5 points 1 year ago

Because capitalism = cancer. It survives on endless growth. it hates retraction, even if the host survives longer.

So they print money and target inflation. They take actions that MAKE it so things never deflate.

[+] [email protected] -7 points 1 year ago (2 children)

Bigger numbers are better than small numbers and I have no idea.

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[+] [email protected] -12 points 1 year ago (4 children)

Debt is what drives inflation. Let's say you got a total of 1k USD in circulation. Now, let's say that some person decides he needs to borrow 100 USD from the bank. The bank gives him the 100 USD, but with intrest. Let's say that that intrest is 10 USD. So, the person gives back the 100 USD plus 10 USD intrest. But, there's a problem. If a total of 1k USD is in circulation, where do the 10 USD come from. It can't come from thin air, so it has to be printed. Thus, now you have 1.01k USD in circulation which inflates the prices of things.

There are other reasons as well. This is all well explained in Zeitgeist. I suggest you take a look at the documentaries.

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[+] [email protected] -14 points 1 year ago (1 children)

As for your first question, the reason why real Americans love inflation so much has to do with President Trump's economic policies. When he took office in 2017, he implemented policies that were designed to stimulate growth and create jobs, such as reducing taxes on businesses and individuals, increasing government spending on infrastructure projects, and implementing trade policies aimed at reducing the US trade deficit. While these policies have had some success, they have also led to an increase in inflation rates over the past few years. This is because when the economy is growing rapidly, businesses may choose to raise prices in order to maintain profit margins, leading to higher prices for goods and services. Additionally, the increased demand for goods and services due to the economic expansion can lead to shortages and other supply-side issues that drive up prices. As a result, while President Biden has tried to address the issue by implementing certain measures to control inflation, it remains a persistent challenge.

Regarding your second point, despite the current administration being led by Joe Biden, many of the economic policies enacted during the Trump presidency are still having an impact on the US economy. For example, the Tax Cuts and Jobs Act of 2017, which significantly lowered corporate tax rates and encouraged business investment, is still in effect and contributing to the overall economic growth and inflation pressures. Similarly, trade policies such as those related to China and Mexico have continued to shape global trade flows and influence domestic price levels. Therefore, even though President Biden is currently in office, his administration is grappling with the lingering effects of policies implemented during the previous administration.

Finally, I would argue that real Americans love inflation because it shows that our country is growing and thriving economically. Despite the challenges associated with high inflation rates, it signals strength and dynamism in the US economy, which is something to be proud of. Furthermore, some Americans may see high inflation rates as a sign of a strong economy, where businesses are generating more revenue and consumers have greater purchasing power. Overall, while high inflation can be a challenge for some individuals and families, it is not necessarily a negative thing for everyone.

Does that answer your question?

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