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CPI Inflation Rate Highest In 39 Years
- Thread starter esmith
- Start date
Inflation can be a good thing for the economy and considering the Dow Jones closed a little higher following the news what's to complain about?
oldbadger
Skanky Old Mongrel!
Yeah....it's a similar situation all over.
Martin
Spam, wonderful spam (bloody vikings!)
Is this a result of the Covid pandemic?
What's good about it?
- Stocks go up in price cuz it takes more devalued
dollars to reflect the same value.
- Selling stocks results in phantom profit cuz it takes
more devalued dollars to reflect the same value.
- Income tends to rise with inflation, but not for all.
- Rising income sends us into higher tax brackets.
- Cash on hand loses value.
One positive...
- Whoever has debt watches that debt decline cuz
it's measured in dollars that decline in value. But
this is a negative for lenders. So no real net benefit
for society.
If wages keep up then it can stimulate consumer demand and consumption thus bolstering the economy.
People will buy now if they expect prices to rise in the near future
When it combats the effects of deflation it can't be bad
Helps the stock market and thus the economy
If wages & prices go up at he same rate,
will there really be an increase in consumption?
Consider too that one's income tax rate increases
with rising wages. So buying power erodes.
And is increasing consumption really good?
Oh, boy...hoarding & speculation.
Deflation sees tax rates being lowered.
This could actually increase buying power,
while encouraging saving & conservation.
Rising stock prices don't help the economy.
They only help (or merely protect) stockholders.
Financiers seem to think otherwise, so do i take the word of an engineer in brass and scrap iron or financiers?
Whatever works
Not in my experience.
Yes they do, when big companies are worth more then the economy is that much better
Financiers are in a position to take advantage of
inflation (ie, currency devaluation). So one might
see a personal interest bias there.
So I recommend looking at the consequences of
inflation, eg, taxation, prices rising, wages rising,
hoarding, speculation, reduced saving, higher
interest rates. Consider those things...do we
really want them?
Simplistic claims devoid of analysis that inflation
is good for the economy aren't convincing.
In a system with progressive tax rates, making less
income tends to put one in lower marginal tax brackets.
Perhaps you Limeys & Froggies don't have those.
Are they actually worth more in real value?
Or are they merely worth more dollars because it takes
more devalued dollars to reflect the same value?
A hypothetical example.
You buy stock. It increases in value 100%.
You sell it. You pay taxes on the profit.
You want to buy a house. But house prices
have gone up 100% since you bought the stock.
You actually lost equity paying taxes on gain
that merely kept pace with inflation.
I am working from works on economics and finance, not hypothetical engineering manuals.
I said can be good for the economy, there is a difference.
Economists are interesting animals.
Tis easy to find opposing views. They often stem
from beliefs held before getting their PhDs. Paul
Krugman & Milton Friedman wouldn't see the same
data, & reach the same conclusions. Economics
tends to be value laden, making it less a hard science
than something like physics.
So I prefer to not treat any economist as delivering
the gospel...does their argument have merit? Does
it comport with reality.
A friend was working on his PhD in economics.
He built elaborate mathematical models of systems.
But he discovered that such models in general were
sensitive to initial conditions (chaotic behavior).
There was little real predictive value.
He left the field for health care analysis.
Tiz a bit of word salad to say yes we both have points. Thanks
I'm not seeing agreement about inflation
(ie, currency devaluation) being positive.
No one likes it. But as i say, it can be good for the economy of a country, it has its good and bad sides. I am just saying that there are good sides, your agreement is not required
I answered your question.....
"Inflation can be a good thing for the economy and considering the Dow Jones closed a little higher following the news what's to complain about?"
Twilight Hue
Twilight, not bright nor dark, good nor bad.
My biased opinion.....
Every single time a Democrat is elected, inflation rages to new heights..
Voters are correct: Biden is to blame for inflation
Last edited:
Twilight Hue
Twilight, not bright nor dark, good nor bad.
The Dow was mentioned in the OP link which is why IT IS RELEVANT to this thread