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0 pointsekianjo12y ago0 comments

I'm not sure where you get the illusion that we do not have a galloping inflation. See the gold price vs USD :

http://goldprice.org/charts/history/gold_all_data_o_usd.png

And no, there has not been a "run for Gold" or things like that, Gold is not used as a currency anywhere a demand is still relatively low and stable.

So that gives you a sense of how much inflation you have been getting over the years. It's certainly faster than the official numbers. And anyone who has lived through the past 30 years should know very well that you could buy more commodities with a single dollar in the 80s than you can buy nowadays with the same amount.

Regarding savings -> you know most people do not get paid directly in cash, right? Most if not not all employers require de facto a bank account in order to pay salaries (we are not in the 60s anymore) and most of the savings go and stay there when you work. These savings become funds that the bank can use to emit loans and different financial services to private companies.

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4 comments · 2 top-level

gnaritas12y ago· 2 in thread

The price of gold is not a measure of inflation.

Banks don't get most of the money they loan from deposits, they create it from fractional reserve banking via the money multiplier.

Continual low inflation is good for the economy, it encourages spending and investment and discourages hoarding cash. The purpose of money is not as a store of value, but as an enabler of economic exchange. If you want to store value, invest in assets of some sort. Money is not meant for saving, people with money know this, it's why they don't keep their fortunes liquid.

ekianjoOP12y ago

> they create it from fractional reserve banking via the money multiplier.

Yes, but they need cash in the first place in order to use the "multiplier" defined by regulators. They cannot create money ad vitam eternam without cash deposits. When there is a crisis, a bank low on real cash value will go bankrupt very easily. Have you already forgotten?

gnaritas12y ago

Was there a point in stating the obvious?

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dllthomas12y ago

I looked at this in some depth a few months back and my conclusion was that the commodities which are up are up substantially over reported inflation primarily because of changes in supply and demand. I don't recall the details and do not have time right now to redo the analysis, but since my results match official results I think it's incumbent on you to make an actual case rather than relying on assertion.

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