The US could see inflation drop like a rock without hitting a recession, Bank of America says

It depends where you sit in society. If you are working class, or someone who's income is based on a salary, inflation hurts...a lot. If you are wealthy and have your wealth in various assets, like the stock market or real estate, inflation is great. As the dollar declines in value your assets increase.

For most people though, salaries don't increase, or at least not to the level of even keeping up with inflation. However you may be one of those people in the asset owning classes who has profited by inflation. You certainly seem to be a booster.

 

Nyet, comrade.

Separate from monetary inflation, however, we have seen costs of living go up disproportionately in certain areas, such as college tuition, health care and real estate prices. But these are not the same type of inflation with the same root causes. They reflect problems that Republicans in particular perpetuate to benefit their wealthy donors and, well, their wealthy selves.

 

You were talking about inflation, not the cost of living (closely related I know). Tuition, and health care have specific reasons why they go up not related to the inflation rate and real estate, also well studied, is another kettle of fish. But your claim that we benefit from inflation is only true if, as I already stated and you failed to respond to, you are in the wealthy class that owns assets rather than a class that earns wages.

 

I was speaking in macro terms there. Economic growth depends in part on monetary inflation. Individually and in the shorter term, inflation is generally not rapid enough to affect anyone that greatly. If you have savings and they're not under a mattress, they should be accruing interest or capital gains in excess of the rate of inflation, and that benefits anybody of any "class."

 

People on fixed incomes certainly care. Savers and investors are hurt by it.

Your comments are opinion, not fact, and they are not backed by facts. You are entitled to opinions. I'll leave you to them since my comments don't matter to you.

You will not find an economy with a government that does not inflate its money supply.

No logical reason for that at all. You can't explain why you think that way because it makes no sense. It has no effect on liquidity and hoarding money is a wise thing to do for people who want a more useful retirement. Even money savers spend money. You have fallen prey to what helps the government, not the economy.

 

Inflation only helps borrowers like the federal government. It allows them to repay in cheaper dollars. Everyone else is hurt by it. Government supports it because it is in its interest.

 

Hoarding money is bad for the economy. Got to have a good flow of money for businesses to have money available to expand and keep hiring, employing and paying workers. This is why modern investments put that money to work rather than having it sit under a mattress or in Uncle Scrooge's money bin. It's a great system that generally works very well.

With growth, we also need to have a growing money supply to keep it all covered and keep it going. It reflects the growing population and the overall increase in economic activity and wealth. We would never want to run short of money.

And all that growth gets put back into growing investments and benefiting investors. Fixed incomes obviously need to be adjusted to keep up with inflation, same as wages and salaries.

 

OK, I get it, I just disagree with you that economic growth depends on monetary inflation. Expansion of the money supply yes, inflation no.

 

Apparently it's popular with both the wealthy and leftists too.

 

It is definitely not popular with the wealthy that oppose government growth. It is only popular with leftist borrowers or those that support federal government growth.

 

Sorry, I'm finished with repeating myself. Enjoy your day.

 

There is no need to worry about it, because at that point wages raise faster than inflation. Inflation being down to 4% from over 9% is certainly the right direction and USD compared to other currencies it doing fairly well. USD vs Euro is same as pre Covid, and same it true with Gold.

Having 5.25% CD rates helps anyone who invests part of their money in CDs. A million in CDs brings in $50K per year.

 

I disagree vehemently. No need to repeat what I said earlier.

 

Disagree......with the CD interest rates, or inflation rate, or USD vs other currencies and gold? All are factually correct, but you are free to believe otherwise of course.

Bu-bue.

 

Bu-bue too.

 

Maybe, but their opposition would be ideological, not financial. The rich, as they always have been, will be fine with inflation.

 

Inflation is expansion of the money supply. I doesn't fuel economic growth. It only prevents the dollar from gaining value. A more valuable dollar makes debt repayment more expensive. That has nothing to do with economic growth. Economic growth is fueled by business profits.

 

Ok Keynes, calm down.

That doesn't work in the long run, that simply kicks the can down the road.

You, as with Keynes, are restricting your timescale to basically be about your lifetime only.
"In the long run we're all dead" IE Yes I know this doesn't work for anyone but some of us right now, but who cares I got mine.

Profligate spending and money printing is not 'stable economic growth'. Inflating and popping bubbles are by definition not stable.

 

Nice cherry picking. I'm sure you are aware that many more predict the exact opposite, you just didn't want to post those links.

 

You're mixing different issues here. I'm talking about monetary inflation, not inflating and popping bubbles. We get the latter from too little regulation of the market, though too much regulation is also likely to have a stifling effect.

Not sure what you mean about kicking a can down the road. I'm certainly not referring to just the span of a human lifespan. Our economy has been growing for about that long, though, if we look at the period from the Great Depression onward. The overall economic model we have been developing and using since then has been great on the whole, even if there have been issues along the way, such as with bursting bubbles. I never said we have a perfect system.

 

Inflation is when the money supply increases faster than the actual economy. Inflation isn't a result of normal monetary expansion.

 

You're treating these things like they act in isolation. They do not. They are inextricably intertwined. How do businesses operate? With capital granted by loan or as payment for an asset (ownership share). When you continuously print that capital and shove it around all over the place doling it out, you not only cause monetary inflation but you ALSO cause various projects which are a profligate risk to be taken up because you've expanded the supply of (inflated) capital so much that lenders put the greed goggles on like hogs at the trencher.
Example: Look at the housing bubble that came during the crazy low interest rates recently. RE that simply wasn't worth what was being paid for it, loaned out to people over extended, in a line never go down line only go up style deal (IE one where when prop values drop or interest rates rise, the deal becomes uneconomic, but the regards simply claim values can't go down and interest just won't go up. )
Don't even get me started of how many variable rate regards there are out there now.
Banks don't make money on a foreclosure, they make money getting paid payments over 30 years. INTEREST is how they get paid and they don't get that at foreclosure.
That means they loaned money, on the idea they would turn a profit, and instead it costs them to take the property back, fix it, market and sell it.
And the prices keep inflating until eventually you find that new buyers are priced out of the market, and what we end up with is institutionals like Blackrock buying all the ****ing housing.
You think that's stable? Sustainable? You think that's GROWTH?

 

But that does that really matter unless you have dollars in a mattress. Now if you do have dollars hidden under your bed, you took a beating in the last 50 years. but the 99.5 percent of us whose savings are tied to their 401 and house it is just an abstract. Like you, in 1972 I paid 2500 for a ford Maverick I made 2.25 per hour about 25% more than min wage. Th MA min wage is now $15 so 25% more is close to 20 per hour. about 1100 hours to pay for the car. An equivlent type bare bone entry level compact is now about 22,000 Excell, Rio etc so about the same

 

You're focusing on real estate, where I agree the situation is not good. I hate to see property prices skyrocketing, ditto health care and tuition, all vitally important things that are increasingly unaffordable. I just don't see those prices as being linked to monetary inflation, since they've been going up at a much higher rate and are obviously driven by other factors.

https://www.pbs.org/newshour/nation/5-reasons-housing-is-so-expensive-right-now
https://research.com/universities-colleges/why-is-college-in-america-so-expensive
https://www.hsph.harvard.edu/news/h...why-health-care-costs-in-the-u-s-are-so-high/

These are all areas that need better regulation to keep the greedy vultures from tearing the flesh from our limbs, but those responsible donate bigtime to politicians who prevent that.

 

The wage/price spiral doesn't affect anything positively. It is bad news for retirees, savers and investors. It is perfect for federal government. I remember a few years ago when people were complaining that wages handn't increased in decades. Actually they had but inflation had increased to a greater degree. That people like you accept government overspending and money creation is a real problem.