Comment on Income isn't keeping up with inflation, 76% of Americans say in new CBS News poll
partial_accumen@lemmy.world 1 year agoThe endgame of a massive pool of money on the part of the ruling class effectively will mean that currency is worthless over time.
How do you figure that? The only thing that would make that currency worthless is the people circulating the currency losing faith in it, i.e. revolution. Is that where your comment is going?
Mahonia@lemmy.world 1 year ago
Not specifically. History has repeated a few times here, but “inflation”, either in a normal pace or artificially created, literally means money is worth less over time. 1920s Germany is a specific and extreme example of this that out in a disastrous way, and also coincides with a similar climate of political extremism. An overview of that period of time in Germany
partial_accumen@lemmy.world 1 year ago
The hyperinflation that occurred during the end of the Weimar Republic was because the government was “printing money” artificially devaluing the currency at extreme rates.
That isn’t even close to whats happening in the United States these days. The USA hasn’t “printed money” like that since the middle of 2020 with the end of QE4 (Quantitative Easing, 4th round). Further, in 2023 the USA is currently doing the opposite of “printing money” to control inflation, which is known as Quantitative Tightening..
I know that interest rates seem high right now, but that is just in comparison to the historically low interest rates of the last 20 years. Back in the mid 70s the prime interest rate was about 21%! Even in for most of the 80s it was above10%. Today its a relatively low 8.5%.
So to recap for the situation in the USA:
We are a long LONG way from the triple digit hyperinflation Weimar Republic or in Zimbabwe that lead to the 1 Trillion dollar bill
Mahonia@lemmy.world 1 year ago
All I’m really saying is: “artificially driving inflation is a bad idea and here’s a historical precedent that supports this.” I’m not saying it’s an identical situation. I know that it’s not.
partial_accumen@lemmy.world 1 year ago
I’d even argue that artificially driving up inflation in a controlled way is a good idea in certain situations. If you’re a nation with good domestic production of vital materials (food, fuel, etc), and have a strong export market with a strong currency, your strong currency drives down exports.
Increasing inflation makes your currency worth less, allowing other nations to buy your exports in larger quantity. China has done this for years artificially keeping their currency value low.
Like everything else with monetary policy, each thing is just a tool. Its possible to use it to create as well as destroy.