Dumb money should go to Zero - ie: inflation is necessary.

[LargoWinch]

Re: Dumb money should go to Zero - ie: inflation is necessary.

(I realize a lot of iTulipers are going to take offense to this. But the reason I post this here and not elsewhere is because I think the iTulip crowd is one of the smartest around, if a bit misguided)

Basically - inflation means that dumb money should go to zero.

Simply sitting on a pile of gold coins does nothing for the economy and the world.

Structurally, we need inflation to force people with money to invest. Buy businesses, create businesses, invest in businesses.

There must be something that erodes the savings of people who are not TAKING RISKS.

Because it is risk taking which naturally moves the world forward. It's taking chances, making mistakes, trying new things.

People who consume too much are bad for the world, but so are people who SAVE too much.

What we really want are people who INVEST.

Inflation forces people to invest.

Blaze, I have to disagree with your comments: I think savers should be able to keep their purchasing power no matter what.

It is false to assume that all participants would become like squirrels and keep only gold under a mattress. There will always be gamblers and risk-takers attracted by profit, excitement and al.

In a market with plenty of savers and few investors, the investors' opportunities are so much greater and the risks so much smaller; hence providing further incentive for savers to become investors.

[jtabeb]

Re: Dumb money should go to Zero - ie: inflation is necessary.

Blaze,

The money managers started that way.

But over time, the better ones (by various measures, mostly their own short term ones) demanded more and more.

Eventually you get what we have now: 2 and 20.

Unless the government mandates pay rates for money managers, this is always going to happen. And if the government does, then the money managers will likely go somewhere else where they can make more money.

It is very Schiller-like (Boston Brahmin leftie) to believe government can provide a solution via wage controls.

My point again is that there is no reason why everyone should be forced to play the money management game.

IF Blaze's premise was correct, there would have been NO INVESTMENT during the gold standard and before that when hard money was in use.

Was there NO INVESTMENT during these times? IF not, doesn't that kind of shoot the theory all to hell?

[sutro]

Re: Dumb money should go to Zero - ie: inflation is necessary.

Sales at my reused building materials yard was up 16% in November and the customer count was 20% up at the recycling yard. There are opportunities....

[Moe_Gamble]

Re: Dumb money should go to Zero - ie: inflation is necessary.

I don't see value anywhere yet.

Strong buy signal on oil the other day, as well as a number of energy stocks.

I also agree with the people in here who are investing in various forms of energy efficiency.

I'm also looking at farmland.

I also strongly agree with Blazes. (More importantly, Bernanke agrees.) Inflation is like the ante in a poker game. Without an ante, nobody plays. Everyone just sits there, waiting for aces.

The higher the inflation, the more it rewards energy and intelligence, as opposed to rewarding inherited wealth. That's why the edge available to a professional player in poker tournaments is 200%, while the edge available in a no-limit cash game is around 3%. Poker tournaments, in effect, are about forced play in the face of rising inflation (rising blinds). The "inflationary effect" of the rising blind, by forcing play, provides a bigger reward for the most intelligent play.

But you'll never convince the tight guys, Blazes.

[grapejelly]

Re: Dumb money should go to Zero - ie: inflation is necessary.

is this a troll topic or is it for real?

1. Inflation is a tax on savers, wage earners and investors.

2. Deflation favors those classes. It favors lenders over borrowers, the thrifty over the spendthrifts.

3. When we have had commodity money, the rule since the Industrial Revolution started has been for prices of goods and rents to decline broadly and steadily, while the prices of labor has risen. The result has been a steady increase in living standards.

4. Inflation is a tax, pure and simple. It is a tax that is not voted on (as if that matters) and that is not understood by most of those who are affected. Those who create money get the benefit, the last in line for spending that money are the victims.

5. Inflation is a tax used to fund foreign aggression and wars. Voters don't have to approve the expenditures used for the aggression. Inflation is responsible for the great wars of the Twentieth Century, the hundreds of millions killed. Look at every war, and you will find inflation as its major source of financing.

Those who grew up in inflation cannot understand easily the negatives of it, and can't imagine life without it. But life without it means actually producing and inventing and investing. Life with it means that the best and brightest people, and those aspiring to be rich, work mostly at speculating by purchasing assets with borrowed capital, instead of actually producing something.

[D-Mack]

Re: Dumb money should go to Zero - ie: inflation is necessary.

Strong buy signal on oil the other day, as well as a number of energy stocks.

I also agree with the people in here who are investing in various forms of energy efficiency.

I'm also looking at farmland.

I also strongly agree with Blazes. (More importantly, Bernanke agrees.) Inflation is like the ante in a poker game. Without an ante, nobody plays. Everyone just sits there, waiting for aces.

The higher the inflation, the more it rewards energy and intelligence, as opposed to rewarding inherited wealth. That's why the edge available to a professional player in poker tournaments is 200%, while the edge available in a no-limit cash game is around 3%. Poker tournaments, in effect, are about forced play in the face of rising inflation (rising blinds). The "inflationary effect" of the rising blind, by forcing play, provides a bigger reward for the most intelligent play.

But you'll never convince the tight guys, Blazes.

I wonder what Phil Hellmuth would say, maybe he only wins No Limit Holdem where there is no ante




Meanwhile Hudson tries to differentiate

Today’s desperate U.S. attempt to re-inflate post-crash prices cannot cure the bad-debt problem. Foreign attempts to do this will merely aid foreign bankers and financial investors, not the domestic economy. Countries need to invest in their real economy, to raise productivity and wages. Governments must punish speculation and capital gains that merely reflect asset-price inflation, not real value. Otherwise, the real economy’s productive powers and living standards will be impaired and, in the neoliberal model, loaded down with debt. Policies should encourage enterprise, not speculation. Investment seeks growing markets, which tend to be thwarted by macroeconomic targets such as low inflation and balanced budgets. We are not arguing that inflation and deficits can be ignored, but rather that inflation and deficits are not all created equally. Some variants hurt the economy, while others reflect healthy investment in real production. Distinguishing between the two effects is vital, if economies are to move forward to achieve self-dependency.

http://www.globalresearch.ca/index.p...t=va&aid=11381

[LargoWinch]

Re: Dumb money should go to Zero - ie: inflation is necessary.

is this a troll topic or is it for real?

1. Inflation is a tax on savers, wage earners and investors.

2. Deflation favors those classes. It favors lenders over borrowers, the thrifty over the spendthrifts.

3. When we have had commodity money, the rule since the Industrial Revolution started has been for prices of goods and rents to decline broadly and steadily, while the prices of labor has risen. The result has been a steady increase in living standards.

4. Inflation is a tax, pure and simple. It is a tax that is not voted on (as if that matters) and that is not understood by most of those who are affected. Those who create money get the benefit, the last in line for spending that money are the victims.

5. Inflation is a tax used to fund foreign aggression and wars. Voters don't have to approve the expenditures used for the aggression. Inflation is responsible for the great wars of the Twentieth Century, the hundreds of millions killed. Look at every war, and you will find inflation as its major source of financing.

Those who grew up in inflation cannot understand easily the negatives of it, and can't imagine life without it. But life without it means actually producing and inventing and investing. Life with it means that the best and brightest people, and those aspiring to be rich, work mostly at speculating by purchasing assets with borrowed capital, instead of actually producing something.

4 words: "Quote of the Week".

Magnificent post GJ!

[blazespinnaker]

Re: Dumb money should go to Zero - ie: inflation is necessary.

is this a troll topic or is it for real?

1. Inflation is a tax on savers, wage earners and investors.

Yes, that is self evident. However, it's a useful tax.

2. Deflation favors those classes. It favors lenders over borrowers, the thrifty over the spendthrifts.

How does deflation favor investors? That's absurd. Investors lose money during deflation.

3. When we have had commodity money, the rule since the Industrial Revolution started has been for prices of goods and rents to decline broadly and steadily, while the prices of labor has risen. The result has been a steady increase in living standards.

Only investment improves living standards.

Investors lose out when deflation occurs and therefore will invest less if there is a risk of deflation (they will want to stay in CASH, which doesn't lose in inflation).

Therefore, we need to remove the threat of deflation so that people are discouraged from staying in cash.

4. Inflation is a tax, pure and simple. It is a tax that is not voted on (as if that matters) and that is not understood by most of those who are affected. Those who create money get the benefit, the last in line for spending that money are the victims.

This is not the problem of inflation. This is a problem of how the central bank is structured and the general level of economic ignorance of people.

5. Inflation is a tax used to fund foreign aggression and wars. Voters don't have to approve the expenditures used for the aggression. Inflation is responsible for the great wars of the Twentieth Century, the hundreds of millions killed. Look at every war, and you will find inflation as its major source of financing.

True, but see above. This is not the problem of inflation, this is the problem of ignorance.

But life without it means actually producing and inventing and investing. Life with it means that the best and brightest people, and those aspiring to be rich, work mostly at speculating by purchasing assets with borrowed capital, instead of actually producing something.

No. When inflation is not present, deflation is a real risk. When deflation occurs people are rewarded for staying in cash, ie, not trying to intelligently decide what to do with their money.

[WDCRob]

Re: Dumb money should go to Zero - ie: inflation is necessary.

Strong buy signal on oil the other day, as well as a number of energy stocks.

I also agree with the people in here who are investing in various forms of energy efficiency.

I'm also looking at farmland.

I also strongly agree with Blazes. (More importantly, Bernanke agrees.) Inflation is like the ante in a poker game. Without an ante, nobody plays. Everyone just sits there, waiting for aces.

The higher the inflation, the more it rewards energy and intelligence, as opposed to rewarding inherited wealth. That's why the edge available to a professional player in poker tournaments is 200%, while the edge available in a no-limit cash game is around 3%. Poker tournaments, in effect, are about forced play in the face of rising inflation (rising blinds). The "inflationary effect" of the rising blind, by forcing play, provides a bigger reward for the most intelligent play.

But you'll never convince the tight guys, Blazes.

And for the vast majority of people who aren't interested in living in casino?

[blazespinnaker]

Re: Dumb money should go to Zero - ie: inflation is necessary.

Blaze, I have to disagree with your comments: I think savers should be able to keep their purchasing power no matter what.

It is false to assume that all participants would become like squirrels and keep only gold under a mattress. There will always be gamblers and risk-takers attracted by profit, excitement and al.

In a market with plenty of savers and few investors, the investors' opportunities are so much greater and the risks so much smaller; hence providing further incentive for savers to become investors.

The problem is when inflation is not a risk, deflation becomes a huge risk.

Investors are generally not rewarded during periods of deflation, and so would be less likely to invest their money.

I was thinking about this a bit more though, especially after reading the poker ante analogy above.

Maybe what we need is simply that, an ante - a direct tax on savers.

Basically, a way to create a significant incentive to invest without letting the CB arbitrarily screwing with the base currency as if it were their only personal ATM.

That way people wouldn't hoard their money in gold or whatever and we'd deal with all the monetary corruption that grape jelly was talking about.

[rj1]

Re: Dumb money should go to Zero - ie: inflation is necessary.

No. When inflation is not present, deflation is a real risk. When deflation occurs people are rewarded for staying in cash, ie, not trying to intelligently decide what to do with their money.

So per you, I should always go up to my boss asking for a pay raise? Because if there is continuous inflation, if I have a set salary or hourly wage, I should be consistently seeking a pay raise because the set amount of money I am making would buy less for my set standard of living that my salary is supposed to represent.

blaze, I understand your point, but you're still wrong. You're not rich I'm assuming, otherwise you most likely wouldn't be on this board. Certain people benefit from consistent inflation, and they're not my class or the class of most people on here. Why? Because most of us make set wages. We "make things" for a living. We're not bankers, we're not financial engineers, or people that put a bunch of numbers on a spreadsheet and that's supposed to make money. So having consistent inflation benefits the people that get their hands on the money first because they can spend the money first while the rest of us don't, while the rest of us see our standard of living decline a little bit, and they get to pay back what they borrowed first with cheaper dollars (which is what is going on now for those in debt).

In reality, it's something to not worry about. If I see high inflation, I'm going to put my money into items that take advantage of high inflation while everyone else around me sees their wealth eroded away. If I see deflation, I'm going to keep my money. It's not my job to singlehandedly fix the economy. It's my job to take care of myself, my family, and our financial future.

[jtabeb]

Re: Dumb money should go to Zero - ie: inflation is necessary.

Yes, that is self evident. However, it's a useful tax.


How does deflation favor investors? That's absurd. Investors lose money during deflation.



Only investment improves living standards.

Investors lose out when deflation occurs and therefore will invest less if there is a risk of deflation (they will want to stay in CASH, which doesn't lose in inflation).

Therefore, we need to remove the threat of deflation so that people are discouraged from staying in cash.



This is not the problem of inflation. This is a problem of how the central bank is structured and the general level of economic ignorance of people.



True, but see above. This is not the problem of inflation, this is the problem of ignorance.



No. When inflation is not present, deflation is a real risk. When deflation occurs people are rewarded for staying in cash, ie, not trying to intelligently decide what to do with their money.

TRIPE is too kind a description for the arguments presented here.

A$$HOLE, savings are necessary for capital formation you dipsh!t. When you destroy savings, you destroy capital formation. What don't you get about this? It is not enough for me to save to give to someone else so that they can USE MY SAVINGS and produce. I SAVE so that I can do that. Inflation destroys MY SAVINGS, therefore I CAN'T start the business that I want to. I can't put my capitalistic skills at play because the barrier to entry is so high that by the time I save enough money, it is no longer enough.You "solution" is exactly the damn problem. My capital is destroyed faster than I can put it away. Is that helpful for starting a new business? This is what is driving Amercia and the world into the shitter and you want more of it?!?

My god man, do you also hope for nuclear wars too?

DEFLATION is the only thing that restores balance to the system. It makes capital come out of hiding WHEN PEOPLE FIND VALUE. Inflation causes them to waste capital in anything and everything that will protect principle (purchasing power).

You SCARE ME, man!:mad:

[GRG55]

Re: Dumb money should go to Zero - ie: inflation is necessary.

And for the vast majority of people who aren't interested in living in casino?

Unfortunately life on this planet Earth is a casino. Fate plays a bigger role than most wish to acknowledge. Starting with where, and into which family one is born.

Those who wish for certainty in their lives I have found almost inevitably gravitate to a position of desiring the government to provide it. Once we expect the government to "level the playing field" based on equality of outcome instead of equality of opportunity...well you can quickly figure out where that's headed...:p

[LargoWinch]

Re: Dumb money should go to Zero - ie: inflation is necessary.

The problem is when inflation is not a risk, deflation becomes a huge risk.

Investors are generally not rewarded during periods of deflation, and so would be less likely to invest their money.

I was thinking about this a bit more though, especially after reading the poker ante analogy above.

Maybe what we need is simply that, an ante - a direct tax on savers.

Basically, a way to create a significant incentive to invest without letting the CB arbitrarily screwing with the base currency as if it were their only personal ATM.

That way people wouldn't hoard their money in gold or whatever and we'd deal with all the monetary corruption that grape jelly was talking about.

Blaze, what got into you my friend? Look, I agree with GJ on this one.

A direct tax on savers? Man! c'mon. Who benefit from it; yeah right...the government, which brings me to my next point:

Inflation is a tax on savers and the poorest people of society period. It is highly immoral and unfair. I am sure you understand that, but I cannot believe you actually rooting for this evil.

[tsetsefly]

Re: Dumb money should go to Zero - ie: inflation is necessary.

(I realize a lot of iTulipers are going to take offense to this. But the reason I post this here and not elsewhere is because I think the iTulip crowd is one of the smartest around, if a bit misguided)

Basically - inflation means that dumb money should go to zero.

Simply sitting on a pile of gold coins does nothing for the economy and the world.

Structurally, we need inflation to force people with money to invest. Buy businesses, create businesses, invest in businesses.

There must be something that erodes the savings of people who are not TAKING RISKS.

Because it is risk taking which naturally moves the world forward. It's taking chances, making mistakes, trying new things.

People who consume too much are bad for the world, but so are people who SAVE too much.

What we really want are people who INVEST.

Inflation forces people to invest.

no no no...
First off the industrial revolution took place during the era of gold standard.

Profit is what motivates investment and desire for a greater standard of living stimulates consumption.

Inflation only leads to misallocation of resources as people try to spend/invest according to inflation.

Even worse, only those who spend or get the money first benefit from inflation, its a direct tax on savings, as everyone has said.