It’s becoming really annoying.

  • partial_accumen@lemmy.world
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    5 months ago

    Short answer: Inflation encourages spending, because if you don’t spend it, it will be worth less in the days, weeks, years ahead as inflation eats away at the value. If your money is worth more by saving (deflation), then you wait to spend because the thing you want to buy will be cheaper tomorrow, and cheaper yet the next day. If people stopped spending the economy grinds to a halt. Everyone loses their jobs.

      • MudMan@fedia.io
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        5 months ago

        Yes, not all demand is the same, but the idea isn’t to increase the demand of bread, it’s to increase investment. If sitting on cash gets you more interest from the bank you’re going to let it sit more. If it loses value you’re going to spend or invest it more. And yeah, this does happen, among other things because inflation affects everybody, not just consumers, although this also influences how likely individual people are to buy things on credit. Companies and governments also care about this.

        As always with economics things aren’t straightforward, and you get lots of weird paradoxical behaviors, but the big lines of this one are easy to see. If you have some inflation and low interest rates you’re gonna be more likely to make big purchases or investments on credit. And the real problem is once you have those and are paying them back if inflation flips and suddenly the 100 bucks you pay each month for that credit go up in value to 110 you may find yourself losing money on that investment or being unable to afford it, which is a big problem when that happens to literally everybody who owes money (including the government) all at once.

        And since the people you owe money to are mostly just a handful of banks… well, that’s not a great wealth redistribution technique, is it?

    • atro_city@fedia.io
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      5 months ago

      No wonder the degrowth movement exists. It’s because of this bullshit that we harm everything around us.

      • partial_accumen@lemmy.world
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        5 months ago

        No wonder the degrowth movement exists. It’s because of this bullshit that we harm everything around us.

        Economists and those that made political theory have been looking for better alternatives since the formation of civilization.

        What is your suggestion for a better system?

          • partial_accumen@lemmy.world
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            5 months ago

            Degrowth

            From your source:

            "For world economic equality to be achieved with the currently available resources, proponents say rich countries would have to reduce their standard of living through degrowth. "

            Can I ask what measures you’ve taken in your life to reduce your standard of living to match the degrowth goal?

            • atro_city@fedia.io
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              5 months ago

              Can I ask what measures you’ve taken in your life to reduce your standard of living to match the degrowth goal?

              Buy local products, buy conflict-free, slave-free, or fair trade products whenever possible, most of my belongings are second hand or have been in my possession for a long time (the oldest piece of clothing I was gifted is about 40 years old, the oldest I bought about 20), don’t own a car and public transport is taken whenever possible, short distances are by bike or foot, food waste is nearly 0, etc.

              How about you?