We are on the Verge of Economic Catastrophe

[jonatha]

I asked SPECIFICALLY about stablecoins. These are supposedly tied, for better or worse, to the U.S. dollar. $100 in "stablecoins are supposed to provide $100 in US Dollars when you cash out.

So tell me again what their "purpose" is.

To (in effect) do cash transactions over the internet.

 

[RVonse]

I'm afraid I'll be accused of being a "gold bug" but gold glitters, it feels heavy, and it is readily distinguished from gilted tungsten. (And if I wanted to transport gold across a border, I could convert it shares in the SGOL ETF.)

Shares in SGOL ETF are easily controlled by our government. The same government that will save itself at any cost during a currency crises, they will enact controls to make sure you can not move your ETF so they can steal it from you.

The government can not do this with bitcoin or gold (which can be hidden).

 

[RVonse]

Are you blaming "the fed"?

Yes. The fed prints (counterfeits) more dollars into circulation causing the existing dollars to be worth less (inflation).

A nation can not be a world class producer without an honest currency that does not continually inflate itself away. Producers and business need this stability to know for certain what their real costs and overhead is.

 

[Swammerdami]

Are you blaming "the fed"?

Yes. The fed prints (counterfeits) more dollars into circulation causing the existing dollars to be worth less (inflation).

Wrong. The Fed delivers paper money to (or more commonly, credits accounts of) its Member Banks in exchange for lawful U.S. money or for Treasury obligations purchased openly at the market price. Most U.S. "money" (as measured by M2) is created by private banks.

A nation can not be a world class producer without an honest currency that does not continually inflate itself away. Producers and business need this stability to know for certain what their real costs and overhead is.

Wrong again. The U.S. Fed has set a target inflation rate of 2.0% (on CPILFESL) and, with a few exceptions, has done a good job of adhering to that target rate. Businesses know this is the target rate and plan accordingly. Inflation did exceed 4% during 1967-1971, 1973-1983, 1989-1991, and 2021-2023. Fluctuations in price levels were much more severe than this during the Gold Standard era. I've attached an image to help you appreciate that. Annual deflation of 4% to 10% or more was common during the first half of the 19th century. Inflation was huge during the Civil War and during WWI -- and these periods were during the Gold Standard era! See from the graph that beginning in the mid-1980's we live in an era of relatively stable prices. (Again: PREDICTABLE low-level inflation, e.g. 2%, IS stable.)

By way of comparison, Japan's annual CPI inflation exceeded 20% throughout the mid 1970s while U.S. inflation barely exceeded 11% during this time.

By the way, Brent crude oil was $21 in 2001 and $139 in 2008. Other commodities have also shown sharp fluctuations. This leads us to ... Spoiler alert: prices fluctuate independent of any conspiracy of Hillary's deep state or Jewish bankers or wtf you or Alex Jones think controls prices.

Now 2% inflation is NOT the same as 0% inflation. A prudent saver might try to seek a 2% safe return rather than keeping his banknotes under his mattress. The advantages of 2% compared with 0% have been explained to you over and over and over and over and over and over. If you are STILL confused about this, ask us to suggest some search terms, or for help composing an AI chatbot query.

 

[Swammerdami]

I asked SPECIFICALLY about stablecoins. These are supposedly tied, for better or worse, to the U.S. dollar. $100 in "stablecoins are supposed to provide $100 in US Dollars when you cash out.

So tell me again what their "purpose" is.

To (in effect) do cash transactions over the internet.

PayPal, etc., bank apps. Even *I* can transfer via phone and I'm almost a Luddite. I live in Chiang Mai and many people here NEVER use cash -- Just to buy a Coke™ (and whether it's sold by human or kiosk) they point their phone at a QR code. (To transfer more than $3000 or so the app will turn on my camera and tell me when to blink my eyes.)

Yes, the bank will know whom I paid and the government can send in jack-booted storm troopers to force the bank to divulge my Coke™ purchase. But what is the (non-criminal) reason I should prefer to spend stable-coin?

 

[jonatha]

I asked SPECIFICALLY about stablecoins. These are supposedly tied, for better or worse, to the U.S. dollar. $100 in "stablecoins are supposed to provide $100 in US Dollars when you cash out.

So tell me again what their "purpose" is.

To (in effect) do cash transactions over the internet.

PayPal, etc., bank apps. Even *I* can transfer via phone and I'm almost a Luddite. I live in Chiang Mai and many people here NEVER use cash -- Just to buy a Coke™ (and whether it's sold by human or kiosk) they point their phone at a QR code. (To transfer more than $3000 or so the app will turn on my camera and tell me when to blink my eyes.)

Yes, the bank will know whom I paid and the government can send in jack-booted storm troopers to force the bank to divulge my Coke™ purchase. But what is the (non-criminal) reason I should prefer to spend stable-coin?

The main attribute of cash is anonymity, which may be desired for noncriminal reasons.

 

[RVonse]

Are you blaming "the fed"?

Yes. The fed prints (counterfeits) more dollars into circulation causing the existing dollars to be worth less (inflation).

Wrong. The Fed delivers paper money to (or more commonly, credits accounts of) its Member Banks in exchange for lawful U.S. money or for Treasury obligations purchased openly at the market price. Most U.S. "money" (as measured by M2) is created by private banks.

A nation can not be a world class producer without an honest currency that does not continually inflate itself away. Producers and business need this stability to know for certain what their real costs and overhead is.

Wrong again. The U.S. Fed has set a target inflation rate of 2.0% (on CPILFESL) and, with a few exceptions, has done a good job of adhering to that target rate. Businesses know this is the target rate and plan accordingly. Inflation did exceed 4% during 1967-1971, 1973-1983, 1989-1991, and 2021-2023. Fluctuations in price levels were much more severe than this during the Gold Standard era. I've attached an image to help you appreciate that. Annual deflation of 4% to 10% or more was common during the first half of the 19th century. Inflation was huge during the Civil War and during WWI -- and these periods were during the Gold Standard era! See from the graph that beginning in the mid-1980's we live in an era of relatively stable prices. (Again: PREDICTABLE low-level inflation, e.g. 2%, IS stable.)

By way of comparison, Japan's annual CPI inflation exceeded 20% throughout the mid 1970s while U.S. inflation barely exceeded 11% during this time.

By the way, Brent crude oil was $21 in 2001 and $139 in 2008. Other commodities have also shown sharp fluctuations. This leads us to ... Spoiler alert: prices fluctuate independent of any conspiracy of Hillary's deep state or Jewish bankers or wtf you or Alex Jones think controls prices.

Now 2% inflation is NOT the same as 0% inflation. A prudent saver might try to seek a 2% safe return rather than keeping his banknotes under his mattress. The advantages of 2% compared with 0% have been explained to you over and over and over and over and over and over. If you are STILL confused about this, ask us to suggest some search terms, or for help composing an AI chatbot query.

View attachment 52038

If you are wanting to be technical then inflation starts with the fed and gets implemented by the banks. And if this is your idea of 2% inflation I do not want any part of it:

The Purchasing Power of the Dollar -What is $100 worth in 1913 over time?​

1913: $100
1923: $57.89
1933: $76.15
1943: $57.23
1953: $37.08
1963: $32.35
1973: $22.30
1983: $9.94
1993: $6.85
2003: $5.38
2013: $4.25
2019: $3.87

And if I have a dollar today why do I even want to worry about earning more than 2% interest just to stay even? I would rather put it in the bank and have it be worth more tomorrow with deflation (despite all the nay saying you will give us here). Or better and simpler yet. Just put a dollar in the bank so I have exactly a dollar to spend when I become too old to work. Is a stable currency too much to ask for from a government who wants to help everyone else on the planet except for the middle class?

*It should be noted that we got the horrible creation of the fed in 1913.

 

[RVonse]

But what is the (non-criminal) reason I should prefer to spend stable-coin?

Your question should not be whether you are the non-criminal, your question should be whether the government is going to be the criminal during a monetary reset. And the spoiler alert is that we already know how the US government treated its (then) gold owning citizens during the great depression. The people who owned gold back then took a haircut thanks to Roosevelt making them turn it in right before he revalued it. That is just one small example how your government is going to treat you when faced with its own problems.

The sophisticated intelligent people are simply buying bitcoin as not to expose themselves.

 

[Patooka]

The sophisticated intelligent people are simply buying bitcoin as not to expose themselves.

Wow. That's some Alex Jones bullshit right there.

 

[Jimmy Higgins]

Are you blaming "the fed"?

Yes. The fed prints (counterfeits) more dollars into circulation causing the existing dollars to be worth less (inflation).

Wrong. The Fed delivers paper money to (or more commonly, credits accounts of) its Member Banks in exchange for lawful U.S. money or for Treasury obligations purchased openly at the market price. Most U.S. "money" (as measured by M2) is created by private banks.

A nation can not be a world class producer without an honest currency that does not continually inflate itself away. Producers and business need this stability to know for certain what their real costs and overhead is.

Wrong again. The U.S. Fed has set a target inflation rate of 2.0% (on CPILFESL) and, with a few exceptions, has done a good job of adhering to that target rate. Businesses know this is the target rate and plan accordingly. Inflation did exceed 4% during 1967-1971, 1973-1983, 1989-1991, and 2021-2023. Fluctuations in price levels were much more severe than this during the Gold Standard era. I've attached an image to help you appreciate that. Annual deflation of 4% to 10% or more was common during the first half of the 19th century. Inflation was huge during the Civil War and during WWI -- and these periods were during the Gold Standard era! See from the graph that beginning in the mid-1980's we live in an era of relatively stable prices. (Again: PREDICTABLE low-level inflation, e.g. 2%, IS stable.)

By way of comparison, Japan's annual CPI inflation exceeded 20% throughout the mid 1970s while U.S. inflation barely exceeded 11% during this time.

By the way, Brent crude oil was $21 in 2001 and $139 in 2008. Other commodities have also shown sharp fluctuations. This leads us to ... Spoiler alert: prices fluctuate independent of any conspiracy of Hillary's deep state or Jewish bankers or wtf you or Alex Jones think controls prices.

Now 2% inflation is NOT the same as 0% inflation. A prudent saver might try to seek a 2% safe return rather than keeping his banknotes under his mattress. The advantages of 2% compared with 0% have been explained to you over and over and over and over and over and over. If you are STILL confused about this, ask us to suggest some search terms, or for help composing an AI chatbot query.

View attachment 52038

If you are wanting to be technical then inflation starts with the fed and gets implemented by the banks. And if this is your idea of 2% inflation I do not want any part of it:

The Purchasing Power of the Dollar -What is $100 worth in 1913 over time?​

1913: $100
1923: $57.89
1933: $76.15
1943: $57.23
1953: $37.08
1963: $32.35
1973: $22.30
1983: $9.94
1993: $6.85
2003: $5.38
2013: $4.25
2019: $3.87

And if I have a dollar today why do I even want to worry about earning more than 2% interest just to stay even? I would rather put it in the bank and have it be worth more tomorrow with deflation (despite all the nay saying you will give us here). Or better and simpler yet. Just put a dollar in the bank so I have exactly a dollar to spend when I become too old to work. Is a stable currency too much to ask for from a government who wants to help everyone else on the planet except for the middle class?

*It should be noted that we got the horrible creation of the fed in 1913.

The whole point is to spend the damn money. An economy is dead if money isn't moving. If someone has a $100 bill that they got in 1913 in their possession today... I'm sorry they decided not to spend it sometime in the last 112 years. Otherwise, your stats are a ridiculous red herring.

 

[RVonse]

The whole point is to spend the damn money. An economy is dead if money isn't moving. If someone has a $100 bill that they got in 1913 in their possession today... I'm sorry they decided not to spend it sometime in the last 112 years. Otherwise, your stats are a ridiculous red herring.

If the point is to spend the money there should be better ways to do that then to devalue our currency.

That does however beg another question why a country devoid of manufacturing even should want to spend money to improve the economy. Because the money spent goes to whoever produced the product.

And now days that ain't America.

 

[bilby]

The Purchasing Power of the Dollar -What is $100 worth in 1913 over time?​

1913: $100
1923: $57.89
1933: $76.15
1943: $57.23
1953: $37.08
1963: $32.35
1973: $22.30
1983: $9.94
1993: $6.85
2003: $5.38
2013: $4.25
2019: $3.87

And if I have a dollar today why do I even want to worry about earning more than 2% interest just to stay even? I would rather put it in the bank and have it be worth more tomorrow with deflation (despite all the nay saying you will give us here). Or better and simpler yet. Just put a dollar in the bank so I have exactly a dollar to spend when I become too old to work. Is a stable currency too much to ask for from a government who wants to help everyone else on the planet except for the middle class?

A stable currency is fine for a stable (aka "stagnant") economy, where nothing changes, nobody invents anything new, nobody wants a better life than their father, or grandfather, or great-grandfather.

The medieval period saw very low inflation, and very little change; There's a readin why describing a modern country, such as North Korea, as "medieval" is not a complement.

What kind of flat-screen TV could you buy with $100 in 1913? Or even with the $2,584 1913 dollars that $100 2019 dollars are worth?

Is keeping the value of the dollar at its 1913 rate worth living a 1913 lifestyle to you?

 

[Swammerdami]

I'm afraid I'll be accused of being a "gold bug" but gold glitters, it feels heavy, and it is readily distinguished from gilted tungsten. (And if I wanted to transport gold across a border, I could convert it shares in the SGOL ETF.)

Shares in SGOL ETF are easily controlled by our government. The same government that will save itself at any cost during a currency crises, they will enact controls to make sure you can not move your ETF so they can steal it from you.

The government can not do this with bitcoin or gold (which can be hidden).

Protip: If you want to transport gold through border checkpoints your chance of success is MUCH greater if you just memorize a brokerage password than if you pack gold bars into a suitcase.

If the dystopia is so bad that the broker is useless, your gold will probably be stolen en route.

 

[Swammerdami]

The whole point is to spend the damn money.... your stats are a ridiculous red herring.

If the point is to spend the money there should be better ways to do that then to devalue our currency.
...
And now days that ain't America.

Judging by his repeated interjections, RVonse has an abiding fascination with finance and monetary theory. Humans right here at IIDB have tried to help him, but to no avail. I suggested that RVonse consult any of several chatbots but perhaps RVonse lives in a country where access to chatbots is prohibited. I do NOT recommend that RVonse install a VPN to gain access to a chatbot: Some VPNs are full of malware.

While I was scrolling through my 113 open tabs in Firefox just now, wondering if there were any that had outlived their utility, I noticed a DeepSeek tab I hadn't used for months. I was reminded of RVonse's desire to learn.

DISCLAIMER and WARNING:

DISCLAIMER: AI Chatbots are NOT intelligent. They might be compared to the Dustin Hoffman character in Rain Man who memorized a phone-book. Despite their "stupidity", on about 97% of queries they produce output more correct and informative than would be produced by over 99% of adult humans (or perhaps 97% of active message-board participants.

WARNING: The rest of this post was produced by an AI chatbot. It has come to my attention that some Infidels have a visceral if irrational aversion to chatbot output. If this is you, I suggest you

• STOP reading now.
• Click the Ignore option on Swammi.
• Go take a shower with plenty of soap to reduce the stenched feeling of almost reading AI output.

I am proud -- and some of the other Infidels should be also -- that the chatbot's answer is very similar to what we have tried to explain; I think we've covered all the points that DeepSeek covers.
Congrats to RayJ whose software was able to format the DeepSeek output automatically with local tags.

If RVonse remains confused, I suggest he ask follow-up questions to a Bot, rather than continuing to embarrass himself here.

Please explain why predictable 2% inflation is better than zero inflation.

Of course. This is a fundamental concept in modern economics, and it's excellent that you're asking about it. The preference for low, predictable inflation (like 2%) over zero inflation is not about inflation being "good" in itself, but about the benefits it provides as a buffer and a lubricant for the economy.
Here’s a breakdown of the key reasons, from most to least important.

1. It Provides a Buffer Against Deflation​

This is the single most important reason. Deflation (a general decrease in prices) is considered extremely dangerous and difficult to escape.

• The Debt Deflation Spiral: If prices fall, the real value of debt increases. If you took out a $200,000 mortgage and your house's value drops to $180,000, you still owe $200,000. This becomes a crushing burden for businesses and households, leading to defaults, bankruptcies, and bank failures.
• Delayed Spending (The Paradox of Thrift): Why buy a TV today if it will be cheaper next month? Consumers delay purchases, hoping for better deals. This collapse in demand forces businesses to cut prices further, lay off workers, and reduce investment, which further reduces demand—a vicious cycle.
• Real Wage Rigidity: It's very difficult to cut nominal wages (the actual dollar amount on a paycheck). Workers resist pay cuts. In a deflationary environment, if prices fall by 3% and wages stay the same, real wages (wages adjusted for purchasing power) actually rise by 3%. This sounds good for workers, but it's terrible for employers. Their labor costs become unsustainably high, forcing them to lay people off instead.

A 2% inflation target creates a safety zone. It ensures that even if inflation dips slightly, it's very unlikely to cross the threshold into deflation.

2. It Gives Central Banks More Room to Maneuver​

Interest rates are the primary tool central banks use to manage the economy. During a recession, they cut rates to stimulate borrowing and spending.

• The Zero Lower Bound (ZLB): Nominal interest rates cannot practically go far below zero. Why would you put money in a bank that charges you 2% to hold it when you could just hold cash at 0%?
• The Problem with Zero Inflation: If inflation is at 0% and a severe recession hits, the central bank might need to set real interest rates (nominal rate - inflation) deeply negative to stimulate the economy. But if the nominal rate is already at 0%, it can't go any lower. The bank is out of ammunition. This is often called a "liquidity trap."
• The Advantage of 2% Inflation: With 2% inflation, the central bank can set the nominal interest rate at 0%, which results in a real interest rate of -2%. This negative real rate encourages borrowing and spending and provides powerful stimulus even when the nominal rate is at zero.

3. It Greases the Wheels of the Labor Market​

This relates to the issue of wage rigidity mentioned above.

• In a dynamic economy, some sectors grow while others shrink. Wages need to adjust between these sectors.
• It's much easier for a company to give workers in a shrinking sector a 2% raise (a real wage cut when inflation is 3%) than it is to cut their nominal wages by 1%. The former feels like a reward (even if a small one), while the latter is demoralizing and often leads to higher turnover and conflict.
• Low, predictable inflation allows for this subtle adjustment of real wages across the economy without the painful and politically difficult process of cutting nominal wages.

4. It Helps Relative Price Adjustments​

Not all prices change at the same rate. Some goods and services become more expensive, while others become cheaper.

• Inflation makes these necessary relative price changes smoother. A company might be able to hold its price steady for a year, which is effectively a price cut relative to the inflation rate, without having to officially lower its price and signal weakness.
• In a zero-inflation environment, any price change for a specific good is a real price change. This can make markets more rigid and less efficient.

---

Addressing the Counterargument: "Isn't Zero Inflation Perfect Price Stability?"​

It seems intuitive that zero inflation would be ideal. You worked for a dollar, and a year from now, that dollar buys exactly the same thing. The problem is that the economy isn't static. The dangers of accidentally tipping into deflation (points 1 and 2) far outweigh the minor benefits of perfect price stability for the average saver.
Furthermore, measured inflation (e.g., the Consumer Price Index) is known to have a slight upward bias—it tends to overstate true inflation by perhaps 0.5% to 1%. Therefore, a 2% target likely results in something closer to true price stability in reality.

Summary Table​

Feature	Zero Inflation	Predictable 2% Inflation
Risk of Deflation	High risk. Easy to slip into a dangerous deflationary spiral.	Low risk. A 2% buffer protects the economy.
Central Bank Flexibility	Limited. Hits the "zero lower bound" quickly during crises.	High. Can implement negative real interest rates to fight recessions.
Wage Adjustments	Difficult and painful. Requires nominal wage cuts.	Easier. Can adjust real wages via small nominal raises.
Consumer Psychology	Can encourage hoarding cash and delaying spending.	Encourages productive investment and spending.

In conclusion, economists and central banks view a predictable 2% inflation rate not as a desirable tax on money, but as a "lubricant" for the economy. It provides a critical safety buffer against the severe dangers of deflation, gives policymakers the tools needed to fight recessions, and allows for necessary economic adjustments to happen more smoothly. The costs of this mild inflation are seen as a worthwhile price to pay for a much more stable and resilient economy.

 

[Jimmy Higgins]

The whole point is to spend the damn money. An economy is dead if money isn't moving. If someone has a $100 bill that they got in 1913 in their possession today... I'm sorry they decided not to spend it sometime in the last 112 years. Otherwise, your stats are a ridiculous red herring.

If the point is to spend the money there should be better ways to do that then to devalue our currency.

That does however beg another question why a country devoid of manufacturing even should want to spend money to improve the economy. Because the money spent goes to whoever produced the product.

That ship has sailed. Why some people feel the need to argue about ghosts in beyond my imagination. The US is mainly a services and high level tech economy.

Looking at crypto right now, there are scams all over the place and it is rife as the next S&L collapse.

 

[RVonse]

The whole point is to spend the damn money.... your stats are a ridiculous red herring.

If the point is to spend the money there should be better ways to do that then to devalue our currency.
...
And now days that ain't America.

Judging by his repeated interjections, RVonse has an abiding fascination with finance and monetary theory. Humans right here at IIDB have tried to help him, but to no avail. I suggested that RVonse consult any of several chatbots but perhaps RVonse lives in a country where access to chatbots is prohibited. I do NOT recommend that RVonse install a VPN to gain access to a chatbot: Some VPNs are full of malware.

While I was scrolling through my 113 open tabs in Firefox just now, wondering if there were any that had outlived their utility, I noticed a DeepSeek tab I hadn't used for months. I was reminded of RVonse's desire to learn.

DISCLAIMER and WARNING:

DISCLAIMER: AI Chatbots are NOT intelligent. They might be compared to the Dustin Hoffman character in Rain Man who memorized a phone-book. Despite their "stupidity", on about 97% of queries they produce output more correct and informative than would be produced by over 99% of adult humans (or perhaps 97% of active message-board participants.

WARNING: The rest of this post was produced by an AI chatbot. It has come to my attention that some Infidels have a visceral if irrational aversion to chatbot output. If this is you, I suggest you

• STOP reading now.
• Click the Ignore option on Swammi.
• Go take a shower with plenty of soap to reduce the stenched feeling of almost reading AI output.

I am proud -- and some of the other Infidels should be also -- that the chatbot's answer is very similar to what we have tried to explain; I think we've covered all the points that DeepSeek covers.
Congrats to RayJ whose software was able to format the DeepSeek output automatically with local tags.

If RVonse remains confused, I suggest he ask follow-up questions to a Bot, rather than continuing to embarrass himself here.

Please explain why predictable 2% inflation is better than zero inflation.

Of course. This is a fundamental concept in modern economics, and it's excellent that you're asking about it. The preference for low, predictable inflation (like 2%) over zero inflation is not about inflation being "good" in itself, but about the benefits it provides as a buffer and a lubricant for the economy.
Here’s a breakdown of the key reasons, from most to least important.

1. It Provides a Buffer Against Deflation​

This is the single most important reason. Deflation (a general decrease in prices) is considered extremely dangerous and difficult to escape.

• The Debt Deflation Spiral: If prices fall, the real value of debt increases. If you took out a $200,000 mortgage and your house's value drops to $180,000, you still owe $200,000. This becomes a crushing burden for businesses and households, leading to defaults, bankruptcies, and bank failures.
• Delayed Spending (The Paradox of Thrift): Why buy a TV today if it will be cheaper next month? Consumers delay purchases, hoping for better deals. This collapse in demand forces businesses to cut prices further, lay off workers, and reduce investment, which further reduces demand—a vicious cycle.
• Real Wage Rigidity: It's very difficult to cut nominal wages (the actual dollar amount on a paycheck). Workers resist pay cuts. In a deflationary environment, if prices fall by 3% and wages stay the same, real wages (wages adjusted for purchasing power) actually rise by 3%. This sounds good for workers, but it's terrible for employers. Their labor costs become unsustainably high, forcing them to lay people off instead.

A 2% inflation target creates a safety zone. It ensures that even if inflation dips slightly, it's very unlikely to cross the threshold into deflation.

2. It Gives Central Banks More Room to Maneuver​

Interest rates are the primary tool central banks use to manage the economy. During a recession, they cut rates to stimulate borrowing and spending.

• The Zero Lower Bound (ZLB): Nominal interest rates cannot practically go far below zero. Why would you put money in a bank that charges you 2% to hold it when you could just hold cash at 0%?
• The Problem with Zero Inflation: If inflation is at 0% and a severe recession hits, the central bank might need to set real interest rates (nominal rate - inflation) deeply negative to stimulate the economy. But if the nominal rate is already at 0%, it can't go any lower. The bank is out of ammunition. This is often called a "liquidity trap."
• The Advantage of 2% Inflation: With 2% inflation, the central bank can set the nominal interest rate at 0%, which results in a real interest rate of -2%. This negative real rate encourages borrowing and spending and provides powerful stimulus even when the nominal rate is at zero.

3. It Greases the Wheels of the Labor Market​

This relates to the issue of wage rigidity mentioned above.

• In a dynamic economy, some sectors grow while others shrink. Wages need to adjust between these sectors.
• It's much easier for a company to give workers in a shrinking sector a 2% raise (a real wage cut when inflation is 3%) than it is to cut their nominal wages by 1%. The former feels like a reward (even if a small one), while the latter is demoralizing and often leads to higher turnover and conflict.
• Low, predictable inflation allows for this subtle adjustment of real wages across the economy without the painful and politically difficult process of cutting nominal wages.

4. It Helps Relative Price Adjustments​

Not all prices change at the same rate. Some goods and services become more expensive, while others become cheaper.

• Inflation makes these necessary relative price changes smoother. A company might be able to hold its price steady for a year, which is effectively a price cut relative to the inflation rate, without having to officially lower its price and signal weakness.
• In a zero-inflation environment, any price change for a specific good is a real price change. This can make markets more rigid and less efficient.

---

Addressing the Counterargument: "Isn't Zero Inflation Perfect Price Stability?"​

It seems intuitive that zero inflation would be ideal. You worked for a dollar, and a year from now, that dollar buys exactly the same thing. The problem is that the economy isn't static. The dangers of accidentally tipping into deflation (points 1 and 2) far outweigh the minor benefits of perfect price stability for the average saver.
Furthermore, measured inflation (e.g., the Consumer Price Index) is known to have a slight upward bias—it tends to overstate true inflation by perhaps 0.5% to 1%. Therefore, a 2% target likely results in something closer to true price stability in reality.

Summary Table​

Feature	Zero Inflation	Predictable 2% Inflation
Risk of Deflation	High risk. Easy to slip into a dangerous deflationary spiral.	Low risk. A 2% buffer protects the economy.
Central Bank Flexibility	Limited. Hits the "zero lower bound" quickly during crises.	High. Can implement negative real interest rates to fight recessions.
Wage Adjustments	Difficult and painful. Requires nominal wage cuts.	Easier. Can adjust real wages via small nominal raises.
Consumer Psychology	Can encourage hoarding cash and delaying spending.	Encourages productive investment and spending.

In conclusion, economists and central banks view a predictable 2% inflation rate not as a desirable tax on money, but as a "lubricant" for the economy. It provides a critical safety buffer against the severe dangers of deflation, gives policymakers the tools needed to fight recessions, and allows for necessary economic adjustments to happen more smoothly. The costs of this mild inflation are seen as a worthwhile price to pay for a much more stable and resilient economy.

I have no problem what so ever reading from AI but in this case the data simply regurgitates what the prevailing economists (of our day) have said. Besides disagreeing with prevailing economists of our day we know they can not be right or we would have full employment and no inflation. With the proper argument I would be willing to admit they might be "righter" than I am. However the 2% inflation (really a tax to us all) is not without a real and substantial cost to middle class Americans who are already overtaxed.

I also take immediate issue to a couple of the ridiculous arguments that always come out of this:

• Delayed Spending (The Paradox of Thrift): Why buy a TV today if it will be cheaper next month? Consumers delay purchases, hoping for better deals. This collapse in demand forces businesses to cut prices further, lay off workers, and reduce investment, which further reduces demand—a vicious cycle

A ridiculous argument that can not be true. Because if it were true we would not have flat screen tv's and computer hardware costing almost nothing. Nobody would ever have replaced their tube television because they knew prices were coming down even more. Why do Apple customers wait in line to buy another smart phone when they know good and well waiting will save them money? Same with the Tesla customers when they first came out. Lower prices in the future (deflation) is a GOOD thing for the middle class.

• Real Wage Rigidity: It's very difficult to cut nominal wages (the actual dollar amount on a paycheck). Workers resist pay cuts. In a deflationary environment, if prices fall by 3% and wages stay the same, real wages (wages adjusted for purchasing power) actually rise by 3%. This sounds good for workers, but it's terrible for employers. Their labor costs become unsustainably high, forcing them to lay people off instead.

Does anyone really feel sorry that Bezo's might have to pay more if prices should fall faster than wages? I for one don't. So why do people like Swammerdani enjoy worshiping the oligarchs while spitting on the middle class?

2. It Gives Central Banks More Room to Maneuver​

I say fuck the banks! The taxpayers bailed them out 100% back in 2008 so they could give themselves more bonuses! Its time to give the middle class more "room to maneuver".

3. It Greases the Wheels of the Labor Market​

This relates to the issue of wage rigidity mentioned above.

• In a dynamic economy, some sectors grow while others shrink. Wages need to adjust between these sectors.
• It's much easier for a company to give workers in a shrinking sector a 2% raise (a real wage cut when inflation is 3%) than it is to cut their nominal wages by 1%. The former feels like a reward (even if a small one), while the latter is demoralizing and often leads to higher turnover and conflict.
• Low, predictable inflation allows for this subtle adjustment of real wages across the economy without the painful and politically difficult process of cutting nominal wages.

No. Predictable 2% inflation will be paid for and by middle class Americans to help out the oligarchs and the bankers. Full stop. Most people are too busy working to notice how much 2%inflation fucks them over by the end of their useful work life. After a lifetime of toil they have no quality savings to retire on because our government (controlled by oligarchs) decided it needed to be inflated away.

4. It Helps Relative Price Adjustments​

Not all prices change at the same rate. Some goods and services become more expensive, while others become cheaper.

• Inflation makes these necessary relative price changes smoother. A company might be able to hold its price steady for a year, which is effectively a price cut relative to the inflation rate, without having to officially lower its price and signal weakness.
• In a zero-inflation environment, any price change for a specific good is a real price change. This can make markets more rigid and less efficient.

You mean business has to compete or die without an extraneous advantage? That is called capitalism. We can survive and flourish even better without crony capitalism!

 

[RVonse]

The Purchasing Power of the Dollar -What is $100 worth in 1913 over time?​

1913: $100
1923: $57.89
1933: $76.15
1943: $57.23
1953: $37.08
1963: $32.35
1973: $22.30
1983: $9.94
1993: $6.85
2003: $5.38
2013: $4.25
2019: $3.87

And if I have a dollar today why do I even want to worry about earning more than 2% interest just to stay even? I would rather put it in the bank and have it be worth more tomorrow with deflation (despite all the nay saying you will give us here). Or better and simpler yet. Just put a dollar in the bank so I have exactly a dollar to spend when I become too old to work. Is a stable currency too much to ask for from a government who wants to help everyone else on the planet except for the middle class?

A stable currency is fine for a stable (aka "stagnant") economy, where nothing changes, nobody invents anything new, nobody wants a better life than their father, or grandfather, or great-grandfather.

The medieval period saw very low inflation, and very little change; There's a readin why describing a modern country, such as North Korea, as "medieval" is not a complement.

What kind of flat-screen TV could you buy with $100 in 1913? Or even with the $2,584 1913 dollars that $100 2019 dollars are worth?

Is keeping the value of the dollar at its 1913 rate worth living a 1913 lifestyle to you?

I reject that a stable currency can not be maintained without stunting technology. We know this because from the 1870's to 1900 the US had an extremely non inflationary currency while at the same time having a high degree of technical progress.

 

[laughing dog]

Two observations.

First, the monetary value of any asset is determined by the interplay of demand and supply of that asset. The only ways an asset can have a stable value is to have stable demand and supply or have exact offsetting changes in one determinant when the other determinant changes.

Second, looking at the change in purchading power of currency requires also looking at what one can purchase. $ 1000 in 1900 or 1950 couldn’t purchase a cellphone or laptop computer or effective

 

[laughing dog]

I reject that a stable currency can not be maintained without stunting technology. We know this because from the 1870's to 1900 the US had an extremely non inflationary currency while at the same time having a high degree of technical progress.

The world was on the gold standard and most economic activity world wide was either labor intensive agriculture or manufacturing at that time - much different now. The gold standard “genie” is out of the bottle and won’t grant your wish no matter how hard you rub it.

Moreover, the period you cite had more deflation than inflation, including a couple of 5%+ deflationary years. Deflation hits debtors hard.

 

[RVonse]

Judging by his repeated interjections, RVonse has an abiding fascination with finance and monetary theory.

No. I have a total disregard and loathing for our oligarch controlled government that has made savings for retirement a difficult task at best so that certain actors can flourish at the cost of the average wage earner.