Charming_man55 karma2012-05-01 20:43:45 UTC
A frequent contention of mine is that inflation, not laissez faire, is responsible for the rich getting richer and the poor getting poorer. Expansions of the money supply, as Hayek and others have shown, enter the economy at specific points. Prices do not rise evenly. The first prices to rise are often titles to capital (equities) and higher order goods far removed from consumption (commodities, real estate to a degree).
The rich, as we know, own a disproportionate amount of stocks, and receive a disproportionate share of income from this investing. Wages are often the last thing to increase. The poor, as we know, receive most of their income from wages. It is this process that surreptitiously transfers wealth from the poor to the rich.
Higher order goods feel the first effects, with lower order goods lagging. The rich own more of the former, the poor the latter.
The rich also receive first access to this newly created money, before it has had time to percolate through the economy, causing prices to rise.
If my assumptions are correct, so called inflation "doves" are tragically advocating policies that transfer wealth from the poor and middle class to the richest of the rich. Do you see in issue in this model?
Addendum: in response to a comment that inflation helps the poor, who often have debts.
Wage inflation lags, and the poor receive a disproportionate share of income from wages (100%). Titles to capital and higher order goods far removed from consumption are the first to rise in price. In essence, as the rich have more stocks, they grow wealthier. The structure of production is what gears inflation towards benefiting the rich. Your suggestion is right in but a limited circumstances, and is dishonest in not showing the whole picture. It may be right assuming the poor person in question is loaded with debt, but if they are not, as someone below pointed out, it harms them. Additionally, their wages grow less valuable, hurting their ability to pay debt. Even if it were a good recommendation for this one poor person, it is akin to giving someone in withdrawal more heroin. Maybe it is "good" in a short term narrow sense, but it is most definitely not a good decision. Now here's your dirty secret. The rich have vast amounts more debt than the poor. They lever up all of their activities through the banking system. Go read some 10Ks and see for yourself just how much debt finances large corporations. The richest of the rich finance everything. This, not laissez faire, is why the rich get richer and the poor get poorer. The inequality in America can be ascribed to precisely these policies for which so many clamor. When deleterious effects are felt, these same people work to cover them up with policy band-aids such as transfer payments.
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Charming_man28 karma2014-01-08 08:46:34 UTC
What does it takes to succeed as a DJ in a small Chinese city? I know how to use the SYNC button and spend time on /r/DJsCirclejerk.
Charming_man17 karma2014-01-08 08:44:09 UTC
I'll chime in, managing a shitty factory making steel hardware about two hours away from /u/zakbroman. US company sent me here to keep an eye on our 200 employees.
Charming_man13 karma2014-01-08 09:23:36 UTC
Do your guys take a midday siesta? Everyday, our's lay out cardboard boxes on the concrete and pass out from 12-1. They also drink hot water from metal bowls with spoons.
Also, any tips on getting these guys to wear PPE? It's like pulling teeth getting them to wear any sort of safety equipment. They will literally put their safety glasses up while grinding, and that's if they even have them with them.
Charming_man2 karma2014-01-08 23:35:48 UTC
Currency will soar, all the jobs will leave, then crash? He's part right, but don't over interpret what he's saying. It's hyperbolic. All the jobs aren't necessarily leaving, but labor costs will be doubling over the next ten years.
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