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0 pointsmotohagiography2y ago0 comments

The vice angle is that when inflation increases faster than wage work, people switch from a longer term wage, to selling what they can negotiate spot prices for to keep up with inflation - like the value of a bet in gambling, or client prices in prostitution. Wiemar was the complete destruction of a social fabric under reparations and inflation, and the vice businesses that sprung up as people switched from regular wages to survive caused the social reaction that produced the second world war. Unmitigated inflation reduces people to animals.

Inflation destroys stability in the labour market and incentivises piece work to stay afloat.

Fixing the price of goods does not create stable money, it just creates huge black markets in foreign and alternative currency. Ask Argentina, Cuba, and the former USSR.

If you are interested in the history of money and banking, I highly recommend the book The Ascent of Money by Niall Ferguson as a basis for what most interested people outside of finance understand about how money works.

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mo_422y ago

> The vice angle is that when inflation increases faster than wage work, people switch from a longer term wage, to selling what they can negotiate spot prices for to keep up with inflation

This sounds a bit confusing. Does an increase of inflation mean the rate of price changes goes from 2% to 4% p.a. or is it an increase of prices? Then, what does it mean that inflation increases faster than wage work? I can only imagine that it means that prices increase faster than productivity. But even this doesn't necessarily imply inflation. For economists, inflation has a specific meaning that's slightly different than what people usually think (e.g. [0]).

> Wiemar was the complete destruction of a social fabric under reparations and inflation, and the vice businesses that sprung up as people switched from regular wages to survive caused the social reaction that produced the second world war.

Hyperinflation of the Weimar Repulic did not directly cause WWII. Hyperinflation was in the early 1920ies. The final rise of the NSDAP and the election of Hitler as chancellor is attributed more to the misery of the Great Depression beginning at the end of the end of the 1920ies. Although, one can also argue that the overall instability of the Weimar Republic helped this party in gaining votes.

[0] https://www.clevelandfed.org/publications/economic-commentar...

motohagiographyOP2y ago

I suspect the confusion is indeed yours. From the fed link:

> Strictly speaking, inflation refers only to a drop in the purchasing power of money that results when a central bank creates more money than its public wants to hold. Inflation manifests itself as a rise in all prices and wages—not just some subset of prices.

When you debase the purchasing power of the currency, you get demand bubbles for goods as people get out of depleted/inflated cash. This causes the staple goods price increases that cause desperation. Fuel taxes to pay down the debt the state accrues also causes a similar desperation via price inflation today. What kind of chaff argument is trying to confuse the issue with the rate of change and the net change? If you want to lie to people and tell them that inflation and MMT will be good for them so they do nothing while their society is demolished, this makes sense, but otherwise, it's dishonest. The Wiemar era humiliated a generation of Germans who became cruel and gravitated to NSDAP (and its precursors) as the result. A decade is a short time in culture. People in 2023 remember 2013 very clearly, as those in 1933 did of 1923.

taliesinb2y ago

I've been reading up on MMT recently, and I haven't seen adherents (e.g. Mosler) claim that inflation is good. They do provide a heterodox account of how government spending leads to inflation, a sectoral one that focuses on demand from the public sector outbidding the private sector in areas were the economy is already at or near productive capacity. And they claim the traditional examples of hyperinflation e.g. Weimar are adequately explained by supply-side constraints. They also explain why austerity has been such an abject failure over the last 13 years in the UK.

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