It's more about people holding out on buying things because they believe it will be cheaper later. Food is a bad example because people will always buy food, regardless of the cost. But why would you buy a car if it might be $2,000 cheaper in a few months? Then a few months pass and now it looks like that car might be even cheaper, will you spend now or keep holding out to see if it goes lower?
It's such a bad system when the logic follows the other path too. "I should buy a car now because it's only likely to get more expensive, while my income stagnates"
yes that's the entire point, to make money move(also known as an economy), instead of having money hoarders that just hold money for no goal and so does nothing for anyone.
Oh wait, that's what's happening right now as the flow of the economy goes into the glorified hoarders of the top 1% and the real economy is rotting from the inside out.
Tax the rich hard and make the money move again into the real economy.
Yeah, I don't disagree on most of what you're getting at. I just disagree that the inflationary pressure is the main, or should be the main driver of consumer spending (I should buy now cause it'll be more expensive later). Normal consumers are buying as they need.
Give 300 people $1, and they'll spend it in their local economy. Give 1 person $300, and they're saving. The velocity of money increases when it's returned to normal consumers.
I agree with the sentiment that aggressive inflation shouldn't be used as the sole tool of moving money around. Decades of purposeful mismanagement of the economy to favour the few as got us into this position.
taxing the higher brackets like we used to would spread out the money throughout the economy and we could go back to sensible regulations that stamp down on the excesses of the stock market, so the money can get invested into more diversified spread of the economy that would help build out the middle class again.
inflation is already a tax, so higher inflation means rich people get taxed, while average consumers with no savings basically don t, the real problem here is where the inlfation is localized, being converged to consumers good rather than technology development.
Because of this, Joe that spent 10% of its salary on food now spends 15%, while Elon instead of spending 1$ on his egg spends 2$ which doesn t matter to him.
You can see the problem is that the inflation is caused by consumer goods being scarce rather than having inflation caused by economic pressure. Or even better the economic pressure pushes the industries to invest more using more water electricity and land that was used to make food, washing machines or just space to build houses which weighs even more on the average joe as economic pressures and products being scarce sum their weight.
Inflation hits people at the bottom way harder than people at the top because the things they need to live become more expensive and they have to choose between rent and food.
Thats a whole different level to “my portfolio didn’t outperform inflation over 5 years”.
Inflation is a devaluation of currency, not a tax; there is a major difference. The rich do not have their money sitting as cash, being devalued by inflation. Quite the opposite, they usually have it in assets, which appreciate alongside inflation, and benefit from governmental spending/money printing. This is historically the case. The gains to assets are generally higher than inflation, and are used as non-taxable loan collateral, not taxable income.
Normal people are hurt by inflation due to real increasing prices and stagnating income. Savings are devalued: Any cash on hand can now purchase less. If you have 0 savings, and income increases alongside inflation, the net outcome is neutral. This is almost never the case. The devaluation of current and future purchasing power is the point.
The inflation we've seen since 2019 is not tied to normal inflationary pressures nor scarcity. It's tied to profit seeking behavior, and maximizing profits per transaction. Sure, total inventory and manufacturing capacity can drive up prices, but so can collusion and price fixing behavior (chip industries come to mind).
That's a given that inflation to input costs impact sales price and margin. These are real costs.
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u/Grouchy_Theme1461 9h ago
bruh u gotta explain it