Because "muh inflation Weimar Germany had to burn paper money to stay warm ect ect"
there is truth to this but for a country like the US they can mostly print money without many consequences. Inflation only happens if there is too much money backed by too little real economic assets. Since the US is the biggest economy and they have the biggest military (no international debt collectors will hound them about debt) they have a lot of room to play with fiscal and monetary policy.
This article is about fiscal stuff, which is what Congress and the government spends. That is a looot of money, but in the US, inflation really grows or falls off the back of monetary policy which is the federal reserve's thing. They deal with banks and how banks can loan their money and how much. Jerome Powell has been very loose with the money printer and interest rate due to the Coronavirus, and inflation has gone up because of that. They like to have to about 2% inflation annually but it is 5.4% right now. Generally you want your inflation to match your annual GDP growth rate. Well we had a GDP contraction of -3.51% in 2020, though this year we are expected to bounce back with like 6% growth or something, which is pretty close to our inflation this year.
The point is that people with money (capitalists) smell trouble when your inflation and GDP growth is too far apart, it is a sign that your currency does not reflect the truthful value of your economy. If you are small country with no influence, this is when the creditors start demanding IMF neoliberal structural reform, payment in USD, downgrade your national credit rating, force floating exchange rates and all that imperialist shit. If you say no, they say they can't trust your economy and pull out everything and ruin you (unless you successfully decouple your country from foreign influence like the DPRK).
Generally you want your inflation to match your annual GDP growth rate.
Holy fuck, does that immediately imply that the rich get richer and the poor get poorer?
Given the fact that most of that growth gets distributed to the top, what, 10%, if even that? So the the goal is to cancel overall growth with inflation, but the growth was concentrated in one sector. Then relatively speaking, wealth was funneled from the non-fast-growing sector (the poors) to the fast-growing sector (the non-poors).
Those two together just seem to imply they consciously said “yeah it’s ok if the masses are always worse off as time progresses (since they’re only worse-off relatively speaking)”. It just seems seems like such a bad idea to play with fire like that but go off ya fucking landlords I guess lol
does that immediately imply that the rich get richer and the poor get poorer
considering that debt is especially sensitive to inflation, yes definitely. With high inflation, debtors can pay back their debt easier since inflation eats a percentage of the principle every year. (You pay the same amount but that amount is worth less in real terms). Banks and capitalists obviously mald because they are losing a couple percent of profit (not losing money mind you, they still charge interest!! in fact some really awful loans make your interest rise with inflation)
The Gold Standard was originally there just so rich British bankers could literally put a hard cap on money and thus inflation. They even caused deflation, to the determent of the rest of the economy and especially poor debtors, just because they felt like making more money.
Because "muh inflation Weimar Germany had to burn paper money to stay warm ect ect"
there is truth to this but for a country like the US they can mostly print money without many consequences. Inflation only happens if there is too much money backed by too little real economic assets. Since the US is the biggest economy and they have the biggest military (no international debt collectors will hound them about debt) they have a lot of room to play with fiscal and monetary policy.
This article is about fiscal stuff, which is what Congress and the government spends. That is a looot of money, but in the US, inflation really grows or falls off the back of monetary policy which is the federal reserve's thing. They deal with banks and how banks can loan their money and how much. Jerome Powell has been very loose with the money printer and interest rate due to the Coronavirus, and inflation has gone up because of that. They like to have to about 2% inflation annually but it is 5.4% right now. Generally you want your inflation to match your annual GDP growth rate. Well we had a GDP contraction of -3.51% in 2020, though this year we are expected to bounce back with like 6% growth or something, which is pretty close to our inflation this year.
The point is that people with money (capitalists) smell trouble when your inflation and GDP growth is too far apart, it is a sign that your currency does not reflect the truthful value of your economy. If you are small country with no influence, this is when the creditors start demanding IMF neoliberal structural reform, payment in USD, downgrade your national credit rating, force floating exchange rates and all that imperialist shit. If you say no, they say they can't trust your economy and pull out everything and ruin you (unless you successfully decouple your country from foreign influence like the DPRK).
Holy fuck, does that immediately imply that the rich get richer and the poor get poorer?
Given the fact that most of that growth gets distributed to the top, what, 10%, if even that? So the the goal is to cancel overall growth with inflation, but the growth was concentrated in one sector. Then relatively speaking, wealth was funneled from the non-fast-growing sector (the poors) to the fast-growing sector (the non-poors).
Those two together just seem to imply they consciously said “yeah it’s ok if the masses are always worse off as time progresses (since they’re only worse-off relatively speaking)”. It just seems seems like such a bad idea to play with fire like that but go off ya fucking landlords I guess lol
considering that debt is especially sensitive to inflation, yes definitely. With high inflation, debtors can pay back their debt easier since inflation eats a percentage of the principle every year. (You pay the same amount but that amount is worth less in real terms). Banks and capitalists obviously mald because they are losing a couple percent of profit (not losing money mind you, they still charge interest!! in fact some really awful loans make your interest rise with inflation)
The Gold Standard was originally there just so rich British bankers could literally put a hard cap on money and thus inflation. They even caused deflation, to the determent of the rest of the economy and especially poor debtors, just because they felt like making more money.