I think the fact that the US hasn't gotten rid of the penny has less to do with zinc lobbyists and more to do with the fact that doing so would be acknowledgement that the dollar is experiencing inflation
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@valleyforge I'm not sure its either of those to be honest. I think it has more to do with the fact that it would devalue the money supply. A penny is worth more than a penny in terms of raw material, many people keep huge quantities of pennies for their intrinsic rather than implied value.
In addition it means rounding loss for the government on things like taxes. If you buy 1.05 in stuff and tax comes to 0.19 (random numbers) you'd only be able to pay 0.15 in sales tax and the government would have lost out on nearly 25% of their tax in that particular transaction.
@freemo @valleyforge Easy solution! Just multiply all costs by a factor of 5, now that you don’t have the penny to remind people that money used to be worth something.
Then they buy 5.15 in stuff and tax comes to 0.95, easily payable in nickels.
No, no you don’t need to thank me. I’m just glad I solved this conundrum.
(Wait what do you mean the rich are demanding we take nickels out of circulation??)
That wouldnt do anything anyway. Youd get the sazme effect if we all just called a penny "five cents" from now on and called every bill by 5x its face value and pretended it was worth more. The effect would be the same
@freemo @valleyforge The thing is that pennies do cost some amount to produce. The government tries to debase their currency with common metals, but now they’ve inflated the economy so much that even the penny is worth less than the metal it’s made out of.
I’m pretty sure it’s a small effect, but that’s why the government goes after pennies. Removing another minor limit to inflation, it helps hide just how much the central bank is ripping us off. Ever hear the phrase “Shave and a haircut: 2 bits?” As long as people remember that, they’ll know how much was taken from us by the ones destroying our economy.
@cy
Are you suggesting inflation is a universally bad thing? It isnt, though it cam be under certain situations. A healthy economy should undergo a slow and reasonable rate of inflation.
@valleyforge
@freemo Well, I mean, it is institutionalized theft from old grannies and handicapped people. Most people would have a hard time not calling that a bad thing. It’s like a prank war, where each prank has to exceed the previous one. It’s not too destructive if it’s slow to escalate, but it does eventually get to be a problem.
I’ll concede that inflation is a good thing when everyone’s income inflates at the same rate.
> Well, I mean, it is institutionalized theft from old grannies and handicapped people.
Can't imagine how. Presuming you follow responsible guidlines for your money whatever money you have would be in a retirement fund, either 401K or IRA/Roth IRA. Inflation in an healthy economy means such funds would be increasing, not decreasing, so not theft.
inb4: no need for them to know how to invest either, most such funds put your money automatically in a highly safe mutual fund
inb4: even in the off chance that such a person were irresoonsible with their money and kept it in a bank account rather than a 401K/IRA for at least the past 5 decades the average national interest rate from long-term savings accounts (CDs) has consistently been higher than the inflation rate. So their money still grew rather than lost.
So really by no measure is it theft, and peoples income inflating at the same rate is an issue different than inflation, in that case we are talking about living wages and has no relationship to inflation.
Really the only way the normal and expected inflation rate in a healthy economy could actually harm you, old granny or otherwise, is if you keep all your saffings in a sock under your bed for 20 years and never touch it. If you are doing that, well, thats your fault, that isnt healthy for the economy or your own wallet and should be discouraged. Money hoarding isnt really what money is for, if you want to hoard something buy gold.
@freemo Also buying gold on any sort of scale is illegal in the USA, so I don’t know that the cops wouldn’t be paying you a visit about that.
@cy That is also completely false. You can buy gold, and you are permitted to have as much gold as you wish.
What you cant do is use gold as legal tender. That means you cant pay off public debts with gold, nor can a store only take gold as a payment for goods.
Basically all that means is that if you use gold as form of savings in order to spend your savings you must first sell your gold, converting it back to money, and then use the money for your purchases. But using gold as a way of saving money is perfectly legal.
Since we already covered that even simply keeping your money in a bank and not investing at all still causes your money to grow faster than the inflation rate... how exactly is it theft again? Literally there is no scenario where inflation has caused anyone to lose even a penny unless they keep their investments as physical cash in a sock... so everything you said aside, where is the theft, no one is literally losing a penny from inflation.
> Let’s hope it stays that way…
It has been that way for the entire US history for every living person today... so not much hope is needed.
Now if your saying that **hyper**-inflation is bad, or that there is a point where inflation is high enough its harmful, a point we have never crossed in living history, then sure. This is why I made sure to state many times that inflation is expected and good in a **healthy** economy. All the markers of US inflation being of the healthy and beneficial kind are there. But yes there is a point where inflation represents something bad, but that isnt the case now or in living history, it is **good** in its current state.
> People with lower incomes rarely get a chance to save much for retirement. They’re often living on credit, and stuck with high rate interest loans to make payments on time.
Yes those statements are correct, but they are also why inflation **helps** the people you describe, it doesnt hurt them. If you have no investments and no savings then inflation is not devaluing anything you have, so you are not hurt by it. In fact while inflation slowly devalues equity (money), it **improves the value proposition** for people in debt. In much the same way a positive amount of money has less value over time due to inflation a **negative** quantity of money also has less value over time due to inflation. Therefore if you are in debt with 100K of debt, and dont pay it off over 20 years and let it sit there, but inflation occured at 100% (unrealistic numbers but to prove a point), then you effectively owe **half** the debt you owed before (it takes half the value to pay off your debt it did before).
So you're actually arguing in the wrong direction, the poor who tend to have no savings and live in debt are **directly benefiting** from inflation.
Again literally the only people who are harmed by inflation in a healthy economy, and at nominal rates, are people who 1) DO have a decent sized life savings and 2) keep all or most of that savings as physical cash, in a sock, under their bed for a long period of time.
> I agree that less inflation hurts people less. But that doesn’t make it healthy. Just…
So no, inflation doesn't just hurt people less, it actually **helps** people, when at healthy levels. It increases the value proposition for those in debt, and **discourages** rich people from hoarding money without putting it to use, which stimulates the economy and helps increase the wealth of others.
It doesnt hurt people less, it **helps** people **more**.
It is really frustrating how ignorant everyone is about economics and how much people assert a strong opinion on it anyway. Nothing against you personally, you should feel welcome to an opinion and engage in discourse. But it does show you are not educated on the basics of this topic, and that is frustrating as it is so common.
Agreed, and I said as much. While keeping money in a bank will ensure your money grows faster than the inflation rate, it wont do so by very much. So while it is a very safe way to store value, it is also a very poor one. A 401K or IRA is far better and will on average get you true positive returns well above inflation. Even so 401K and IRA are relatively safe investments and wont have huge returns compared to other investment techniques, but such techniques also require more expertise to some degree.
Just look at Greece for examples how this has occured within the last 10 years in a "first world" economy. Capital controls. ATM withdrawal limits of $50 a day. Bail-ins and haircuts for depositors. Aside from that FINCEN makes hundreds of rules that mean if anything even slightly suspicious happens, all of your financial accounts will be frozen. It's not really your money!
Again, some misleading info here but based on some misunderstandings of real things...
> Interest rates are trapped at record lows and even negative in some regions, while inflation continues apace.
The interest rate that is near 0 you are talking about is NOT the long-term savings interest rates. You are talking about the inter-bank loan interest rates, which are in fact at 0 and what you hear about. This is done to encourage banks to give out loans at lower interest rates to customers and is done due to the COVID recession to encourage economy. It is **not** a reflection of savings account interest rates.
Current long-term saving interests rates, according to the national average as of this month, is 0.6% to 1.5% depending on the liquidity of the savings account you choose (how long you keep your money in without touching it). While that does bring us closer to the current inflation rate than usual (as one might expect considering the COVID crisis) it is still above the current inflation rate by several tenths of a percentage.
So no this statement is false.
> Aside from that the issue with banks deposits is that it isn't really YOUR money anymore once it's in the bank.
Again this is a completely false. The money is legally yours, the bank has a legal obligation to give it back to you, and the federal government insures it up to a generous amount should the bank, for any reason, be unwilling to.
You can argue any philosophical points you wish but no one in living history has ever been denied **their** money from a bank when they wish to withdraw it unless the money was no longer legally theirs due to a court ruling.
> It is more properly termed a liability of the bank owed to you, but they could change the rules on you at any time.
Who could change the rules? The banks, no they cant legally just decide they dont owe you money. That would be against the law and they would be forced to give it to you.
Now do you mean the government could change the rules and just say "sorry anyone who had money in a bank, its gone now and your not getting it and FDIC insurance is now void".. in theory, yes, they could, though they never have in living history.
However while technically true, thats a moot argument as the same is true of printed money. The government could (though I doubt they would) just up and say "All printed money is now just paper", and you'd be similarly screwed. As such you are no longer arguing about inflation is a good thing at all, you are arguing about if fiat money should be treated as having value. That is an entirely different topic and so I wont go on that tangent here and just say your argument doesn't apply to the discussion (we can have it in another thread if you wish).
> Just look at Greece for examples how this has occurred within the last 10 years in a "first world" economy. Capital controls. ATM withdrawal limits of $50 a day. Bail-ins and haircuts for depositors. Aside from that FINCEN makes hundreds of rules that mean if anything even slightly suspicious happens, all of your financial accounts will be frozen. It's not really your money!
All of this, again, per my last statement is not an argument regarding inflation being good or bad. It is a tangent and unrelated to the topic being discussed. So I wont address it here and just point out it is moot tot he discussion. Please start a new thread though if you want to discuss this as a separate topic.
It has been that way for the entire US history for every living person today… so not much hope is needed.
Well, then I guess your plan to have everyone not suffer from inflation by having a bank account doesn’t work. Didn’t help US farmers in the 1920s, or anyone in the 30s. Inflation helps people who have extra money to invest. Their investments appreciate faster than prices rise. Everyone else, it just makes us poorer than them. And that’s to say nothing of when the inflationary bubble pops.
So you’re actually arguing in the wrong direction, the poor who tend to have no savings and live in debt are directly benefiting from inflation.
The price of goods goes up, their salaries do not, and their debt grows. Even if they fight their salaries up, it always lags behind price increases, leaving them a little poorer than before. And that’s a tiny amount of loss usually, but what happens when these poor reach retirement age? Where is their 401K? They never had any money to invest!
@cy I never said a bank account will guarantee you are safe in an economic crash.. you seem to be mincing points. I said that inflation at the correct levels ina healthy economy is a good thing... They didnt have a healthy economy in the 1920s, our economy may very well become unhealthy again in the future... None of that is being true has anthing to dow tih the fact that healthy levels of inflation are good not bad.
@cy I wonder if you see the irony in the fact that the one example you could think of where banks became insolvant was also from back when our money was backed by physical gold and thus inflation was actually garunteed to be 0 (it had fixed value)...
You literally jsut discredited your point by showing that back when we fixed inflation rate to 0 was when banks failed and farmers lost everything...
@freemo ? Fractional reserve banking goes back long before the founding of the USA. The inflation is how small of a fraction their reserve has become. The USA Federal Reserve was founded under very questionable circumstances in 1913, so that’s a much more promising source of the economic instabilities of the USA in the early 20th century, than gold backed currency.
Anyway I’m not trying to say that gold backed currency is better. I just think that inflation is (technically) theft. Only a very small amount, that adds up over time, and might not be worth worrying about. But anyone proposing to somehow cause inflation even in small amounts, they’re effectively saying they’re going to steal some pennies from everyone. Only a minor inconvenience for the good of the economy (and for their private penny jars), but…
@cy We are talking about inflation of the dollar not fraction reserve banking, that is another topic.
The point is at the point in time the crash happened inflation was fixed and the value of the dollar was set. There was no inflation of the dollar it always had an exact value in gold.
If you have other criticisms about other aspects of the monetary system and not in regards to inflation, thats fine, but dont mince topics.
@freemo I don’t really want to pretend that inflation didn’t exist, and the value of the dollar was fixed, when the bank could say “Actually our dollars are only worth 0.1 ounces of gold, not 0.2 anymore.” I do agree that fiat currency is a form of credit money, albeit an extremely broken one, and it shouldn’t be possible to accumulate or save it, so is that why you’re saying inflation is a good thing?
I’m not even saying inflation is a bad thing. It’s just unfair, coercive theft of value. I don’t want to pay more for bread, and my employer doesn’t want to pay me more for work, but… we have to, and the banks and investors directly benefit from our loss. Maybe they should benefit? Maybe we’re all investors? I dunno.
@cy No that isnt true during the whole of the great depression the amount of gold you can exchange for a dollar remained fixed. This was in fact codified into law guaranteeing that exactly 35 US dollars equal one ounce of gold.
Why do you insist on an opinion you are clearly not educated on in the first place? I really dont mind the discussion or the difference of opinion but your asserting "facts" that arent true and 15 seconds of research could have set you straight, yet remain fixed on your opinion.
Can you not see that is an unhealthy pattern not just in debate but in forming your own personal opinons?
@freemo Well I’ve never wasted a penny, and I don’t get a 401K or an IRA. There are people with fixed incomes, who tend to be older or less able. Ideally yeah it wouldn’t be so bad.
inb4: no need for them to know how to invest either,
well now that you brought it up, most people with investment plans for retirement don’t get to choose what they invest in. The people who do choose tend to be very… eager to fund organized crime. So it is still a problem, but not so much for well off old people.
the average national interest rate from long-term savings accounts (CDs) has consistently been higher than the inflation rate.
Let’s hope it stays that way…
Really the only way the normal and expected inflation rate in a healthy economy could actually harm you, old granny or otherwise, is if you keep all your saffings in a sock under your bed for 20 years and never touch it.
People with lower incomes rarely get a chance to save much for retirement. They’re often living on credit, and stuck with high rate interest loans to make payments on time. And even people with pensions have been y’know… cheated before on massive scales.Yes, assuming you have a stable and profitable career all your life, and you always spend frugally and responsibly and multi-billion dollar advertising campaigns have no effect on you, and nothing goes terribly wrong, and nobody manages to cheat you out of it, and you don’t have huge medical bills, and you don’t have too many student loans, then inflation isn’t a problem.
I agree that less inflation hurts people less. But that doesn’t make it healthy. Just… low enough not to worry about… except for some people.