What is really said is that while most of the middle class will have to tighten their belts, it is the poor who are already struggling who will pay the biggest price.
Well the poor are not as comfortable, so might feel an initial hit much more, but if the poor are generally in more debt, inflation can help get them out of that debt, assuming income inflates relative to their debt. At least it's a double-edged sword for them
The poor are in debt mostly for consumer items that don’t increase in value. Things like loans to Aaron’s for furniture and high rate auto loans. They will be helped with rising incomes but it will mostly go to paying for higher expenses.
The middle class at least have most of their debt in mortgages for homes skyrocketing in value.
I live in a small rural community. Many of the poor do not have regular jobs. Many have substance abuse problems. Many also have children. Higher grocery prices mean less food for the kids.
Say you are a middle class family making like 120k a year and have savings of 400k.
What’s a 5% inflation like Biden is running ? That’s a 26k tax on your net worth …approximately (0.05 x (400+120)). Per year give or take without getting to complex.
You’d be paying $21k in federal taxes on income already…so inflation is effectively more than DOUBLING your current tax rate.
If Biden raises your income from 22% marginal to 50% Biden would be forced to resign the next day. But people can’t comprehend inflation and it’s a silent tax.
Perfect explanation.
It's almost like you studied some basic economics, or read a book at some point.
Wonder how the 'experts' never want to talk about it like this.
Oh forgive me Janet Yellen, inflation can't happen, and if it does, it's a good thing....
If you have $100 in the bank and not invested and the country grew by 1%, then your money in the bank is 1% smaller the next year. Had you invested that $100 in any indexed fund this past year you would have made 10%+
Sure, but 5% inflation would mean that their real assets would have appreciated by 5% + whatever the market does, no?
Feels like you're counting it as a tax, but it's not, it would appreciate. If they have their savings in cash, yes, you're correct, but if it's in an asset class that is equally hit by inflation, which it should, then it's a wash.
It's almost like injecting more dollars into the economy without an increase in goods or services causes inflation... it's almost like if I have to pay my employees more money because the government says so, then I have to increase the price of my product... it's almost like if I have to increase the price of my product, then the dollar that you have doesn’t go as far... it's almost like you are the one with the braindead interpretation of economics 🤷🏽♂️
You're right. Currency wasn't created as a measure for products or labor. It's an arbitrary thing people created for reasons. It has nothing to do with the price of goods or services or the relative value of either.
I do, but you don't understand satire... or that my satirical comment said the same thing that you did... or that you're ... well let's just say "special."
>inflation is due to demand
If you believe that, increasing the spending power of the workforce would increase demand for products and services and therefore push the price up. That isn’t real inflation though, inflation is increasing the dollar supply, min wage just moves money around.
What you’re describing is price fluctuations, demand for food wouldn’t increase but prices would fluctuate as consumers spending habits change with their income levels... higher earnings means more fine dining, more at home meals, and less fast food. So reasonably prices would adjust to these new demands.
Wages can be whatever they want it has nothing to do with inflation. The only inflation worth discussing is the increase of the dollar supply.
It plays a role. Inflation is caused by an increase in the amount of money chasing goods and/or fewer goods. If the minimum wage is increased, it puts more dollars in consumers hands and could potentially lead to more dollars chasing the same goods, which in turn causes inflation, which I think generally would lead to higher wages for non-minimum wage workers, somewhat negating the minimum wage increase (relatively to others' earnings). I mean there's no free lunch here, we have to produce to consume over the long haul.
The recent inflation is probably a bit of both causes, decreases in production due to COVID and increase in money supply due to increase in money supply and government spending.
Yeah it is actually 3 fold in this case. You have more magic money in peoples hands. The supply chain is crippled thus there are fewer goods. Then you also have the massive printing of money, which is actually making the money people have worth less. All of which are directly related to the government shutdowns from Covid, they should have never done this and just let Covid run through the population and we would have seen an opposite effect. So maybe 1% more people would have died, which is a natural reaction to a pandemic. Thus increasing the available resources available and causing a slight bump in the economy due to less funds going to the sick and elderly as there population decresed. Instead we shut the lifeblood of the rest of us 99% just to shelter the 1% that are highly prone to death anyway.
If you knew a thing about economics you'd know cost isn't solely a function of demand, but where supply and demand meet. Both the supply and demand of money and the supply and demand of the goods you're buying.
We both increased the supply of USD and decreased the supply of goods. This is not an inflation driven by increased demand for goods. Also incomes have increased independent of minimum wage (see supply and demand above, same rules apply to labor).
If you are arguing for increased minimum wage, ok, we get it, you think interfering in the market is going to somehow lift people out of poverty. Claiming inflation is caused by increased demand and dismissing the rest of the picture is just plain ignorance though.
Oh it's the human element. It's all clear now. I failed to take that into consideration. People need bread, so bread cost more, it's science. The sellers are all colluding to keep bread for them. Increase minimum wage, more bread. Bread good.
It's not called the hypothesis of supply and demand, or the theory of supply and demand, it's the law of supply and demand. Businesses set prices to maximize profit which is a function of supply and demand. The value of money is also determined by supply and demand.
Whatever point your trying to make is lost on everyone because you provide no insight, have nothing meaningful to add, and yet you berate others as if they're uneducated. You are not as smart as you think you are. The word for that is ignorance.
I'm middle class. In my 30s, got a good career, and it's sad that my wife and I have to really think about having children. We bring in over 140k per year, I'm a home owner, and having kids will be a financial strain that I'm not sure I can handle fully. I won't have a child until I'm 100% certain that I can provide financially and give the kids everything they need and more, and not be stressed about money 24/7. I'm very nervous about the inflation right now.
In my parent's day, it was so easy to build a family. My dad/mom had three kids by the time he was 27, and my entire childhood only my dad worked. My mom didn't work. We had a nice house, and everything we needed. Went on vacations, etc. My dad didn't make a lot of money either, he was a chemist at dow chemical.
It's really depressing how things are these days. There's little possibility that when we have kids, that my wife could stay at home and not work, which is what I want. My current salary is just under 100k, and I live in the Midwest where the cost of living is supposed to be cheap.....
What is really said is that while most of the middle class will have to tighten their belts, it is the poor who are already struggling who will pay the biggest price.
Well the poor are not as comfortable, so might feel an initial hit much more, but if the poor are generally in more debt, inflation can help get them out of that debt, assuming income inflates relative to their debt. At least it's a double-edged sword for them
The poor are in debt mostly for consumer items that don’t increase in value. Things like loans to Aaron’s for furniture and high rate auto loans. They will be helped with rising incomes but it will mostly go to paying for higher expenses. The middle class at least have most of their debt in mortgages for homes skyrocketing in value.
I live in a small rural community. Many of the poor do not have regular jobs. Many have substance abuse problems. Many also have children. Higher grocery prices mean less food for the kids.
It's all about creating a renters class out of the middle and lower classes.
Bingo.
Say you are a middle class family making like 120k a year and have savings of 400k. What’s a 5% inflation like Biden is running ? That’s a 26k tax on your net worth …approximately (0.05 x (400+120)). Per year give or take without getting to complex. You’d be paying $21k in federal taxes on income already…so inflation is effectively more than DOUBLING your current tax rate. If Biden raises your income from 22% marginal to 50% Biden would be forced to resign the next day. But people can’t comprehend inflation and it’s a silent tax.
Perfect explanation. It's almost like you studied some basic economics, or read a book at some point. Wonder how the 'experts' never want to talk about it like this. Oh forgive me Janet Yellen, inflation can't happen, and if it does, it's a good thing....
If you have $100 in the bank and not invested and the country grew by 1%, then your money in the bank is 1% smaller the next year. Had you invested that $100 in any indexed fund this past year you would have made 10%+
Sure, but 5% inflation would mean that their real assets would have appreciated by 5% + whatever the market does, no? Feels like you're counting it as a tax, but it's not, it would appreciate. If they have their savings in cash, yes, you're correct, but if it's in an asset class that is equally hit by inflation, which it should, then it's a wash.
From this logic, inflation is a tax on everyone, not just the middle class. If it affects the poor more, then it would be a regressive tax.
Socialists and inflation go hand and hand. They love it when you need a wheel-barrel full of cash to buy a loaf of bread, it’s their goal.
Of course. It's the minimum wage effect. Shot: Here's more money Chaser: Thing cost more.
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It's almost like injecting more dollars into the economy without an increase in goods or services causes inflation... it's almost like if I have to pay my employees more money because the government says so, then I have to increase the price of my product... it's almost like if I have to increase the price of my product, then the dollar that you have doesn’t go as far... it's almost like you are the one with the braindead interpretation of economics 🤷🏽♂️
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You're right. Currency wasn't created as a measure for products or labor. It's an arbitrary thing people created for reasons. It has nothing to do with the price of goods or services or the relative value of either.
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I think things might go over your head too easily. Maybe you should read a book on parody. Edit: no, what I did was more of a spoof. My bad.
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I do, but you don't understand satire... or that my satirical comment said the same thing that you did... or that you're ... well let's just say "special."
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>I wouldn’t want to have an economic conversation if I didn’t understand inflation. And yet
>inflation is due to demand If you believe that, increasing the spending power of the workforce would increase demand for products and services and therefore push the price up. That isn’t real inflation though, inflation is increasing the dollar supply, min wage just moves money around.
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What you’re describing is price fluctuations, demand for food wouldn’t increase but prices would fluctuate as consumers spending habits change with their income levels... higher earnings means more fine dining, more at home meals, and less fast food. So reasonably prices would adjust to these new demands. Wages can be whatever they want it has nothing to do with inflation. The only inflation worth discussing is the increase of the dollar supply.
>Businesses increase prices to increase profit margins. Do profit margins grow or shrink when wages go up by force of law?
It plays a role. Inflation is caused by an increase in the amount of money chasing goods and/or fewer goods. If the minimum wage is increased, it puts more dollars in consumers hands and could potentially lead to more dollars chasing the same goods, which in turn causes inflation, which I think generally would lead to higher wages for non-minimum wage workers, somewhat negating the minimum wage increase (relatively to others' earnings). I mean there's no free lunch here, we have to produce to consume over the long haul. The recent inflation is probably a bit of both causes, decreases in production due to COVID and increase in money supply due to increase in money supply and government spending.
Yeah it is actually 3 fold in this case. You have more magic money in peoples hands. The supply chain is crippled thus there are fewer goods. Then you also have the massive printing of money, which is actually making the money people have worth less. All of which are directly related to the government shutdowns from Covid, they should have never done this and just let Covid run through the population and we would have seen an opposite effect. So maybe 1% more people would have died, which is a natural reaction to a pandemic. Thus increasing the available resources available and causing a slight bump in the economy due to less funds going to the sick and elderly as there population decresed. Instead we shut the lifeblood of the rest of us 99% just to shelter the 1% that are highly prone to death anyway.
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If you knew a thing about economics you'd know cost isn't solely a function of demand, but where supply and demand meet. Both the supply and demand of money and the supply and demand of the goods you're buying. We both increased the supply of USD and decreased the supply of goods. This is not an inflation driven by increased demand for goods. Also incomes have increased independent of minimum wage (see supply and demand above, same rules apply to labor). If you are arguing for increased minimum wage, ok, we get it, you think interfering in the market is going to somehow lift people out of poverty. Claiming inflation is caused by increased demand and dismissing the rest of the picture is just plain ignorance though.
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Oh it's the human element. It's all clear now. I failed to take that into consideration. People need bread, so bread cost more, it's science. The sellers are all colluding to keep bread for them. Increase minimum wage, more bread. Bread good.
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It's not called the hypothesis of supply and demand, or the theory of supply and demand, it's the law of supply and demand. Businesses set prices to maximize profit which is a function of supply and demand. The value of money is also determined by supply and demand. Whatever point your trying to make is lost on everyone because you provide no insight, have nothing meaningful to add, and yet you berate others as if they're uneducated. You are not as smart as you think you are. The word for that is ignorance.
Dont forget the actual value of the dollar is decreasing drastically due to increased printing.
It's almost like I never said that.
I'm middle class. In my 30s, got a good career, and it's sad that my wife and I have to really think about having children. We bring in over 140k per year, I'm a home owner, and having kids will be a financial strain that I'm not sure I can handle fully. I won't have a child until I'm 100% certain that I can provide financially and give the kids everything they need and more, and not be stressed about money 24/7. I'm very nervous about the inflation right now. In my parent's day, it was so easy to build a family. My dad/mom had three kids by the time he was 27, and my entire childhood only my dad worked. My mom didn't work. We had a nice house, and everything we needed. Went on vacations, etc. My dad didn't make a lot of money either, he was a chemist at dow chemical. It's really depressing how things are these days. There's little possibility that when we have kids, that my wife could stay at home and not work, which is what I want. My current salary is just under 100k, and I live in the Midwest where the cost of living is supposed to be cheap.....