As overall inflation eats away at spending power, you have to make more per day, trading than before to maintain your lifestyle. I don't like that.
I lived through one ocurrance of hyperinflation, another close call and several periods of very high inflation and can answer this with confidence. Aside from the technical problems described by members earlier the worst consequence brought about by very high inflation happens when it becomes ingrained in people's mind. Then, it creates chaos and it becomes immoral as all agents involved set their own prices whenever they feel like it and look to maximize just one-time-gains without giving any consideration to building a business for the future. All become scavengers. The direct impact for the consumer is a continous deterioration in service, quality and sizes of products, etc. People feel robbed and stop believing. And... good luck with changing people's expectations back.
Of course. But the TS said that if somebody flashed forwared from 1930 to 2008, applying 1000% inflation, he'd not be depressed because now he could buy a nice car and nice cell phone. So the point is of course, if inflation is (way) higher than the interest rates, you're going to get screwed.
Savings represents a store of past work; currency devaluation represents a destruction of that stored work. More specifically, currency devaluation is a theft of that work by politicians overspending in the short term for their own benefit, and is a net disincentive for society to save. A society without net savings cannot advance in the long term, despite what the keynesians and cheneyites would have you believe.
Inflation is the way the Man sticks it to the little guy. Wages never go up the same rate as inflation. If inflation is 5% and your paycheck only goes up 2% (or nothing at all for a lot of people) you got screwed 3%. Multiply that by 30 years and all of a sudden you have a middle class that is being wiped out and a lower class that has very little chance of suceeding. The rich like inflation. Yes their cost of living goes up, but they are hedged through stocks, real estate, commodities, etc. Who cares if your energy bills go up 25% in a year, youâll make 25% on a million dollar portfolio. Donât forget that not only is inflation a tax, but you have to pay taxes on the tax. If you put $100 in the bank to hedge against, you will earn interest. But the interest went to pay for the inflation. Now, on top of that, you have to pay taxes on the interest that you earned hedging against the inflation. And people wonder why we are a nation of debt. Sleep in your car or hit up the credit card to pay for rent? Want a better job? They say you have to go to school to get that. That will cost you 25k a year for the next 4 years. How are you gonna pay for it? Thatâs ok, take out a loan.
only people who are afraid of inflation of people holding cash paying 3% or 1% returns. any asset can give 5% on the long term even real estate in the long term or 10 year gives 7%. inflation destroys wealth if you are in cash. as fro the bubble, real estate is still expensive if incomes levels don't rise. the $500,000 house or condo is cheap if annual average income for individuals in the country is $100,00/year. or household income is $300,000 problem with real estate bubble was excessive leveraging and lending and specualtion and no downpayments .
nobody like real inflation including the rich but inflation is a reality in the long term if yo uare in cash. majority of people don't hold cash. most of peoples wealth is in their house. and don't forget most people are in debt. inflation also destroys the the long term debt.
An interesting thread with good posts. Learnt a lot. As seen above, it seems to be both good and bad, maybe like "friction", which is said to be "a necessary evil", as seen from the following links: http://en.wikipedia.org/wiki/Inflation http://www.answers.com/inflation http://www.investopedia.com/university/inflation/inflation1.asp http://www.investopedia.com/university/inflation/inflation5.asp http://www.fool.com/personal-finance/general/2006/12/13/the-misunderstood-inflation-monster.aspx http://hongkongmacro.blogspot.com/2008/02/chinas-inflation-good-news-or-bad.html http://answers.yahoo.com/question/index?qid=20081207155011AAJLRQe http://www.bestcashcow.com/the_economy/all/sam_cass/is-inflation-good-or-bad-for-you http://www.nber.org/papers/w13010 http://www.ncsu.edu/project/calscommblogs/economic/archives/2006/07/why_is_inflatio.html http://www.financialsense.com/Market/puplava/2003/1117.html http://www.slideshare.net/arpit105/inflation-good-or-bad/ http://en.wikipedia.org/wiki/Monetary_inflation http://en.wikipedia.org/wiki/Money_supply
QUOTE]Quote from tradersboredom: nobody like real inflation including the rich but inflation is a reality in the long term if yo uare in cash. majority of people don't hold cash. most of peoples wealth is in their house. and don't forget most people are in debt. inflation also destroys the the long term debt. [/QUOTE] Why donât oil companies, farmers, most employers, stock holders, etc not like inflation? All of these benefit from it. They are the ones being hurt during this slight deflationary period. The little guy is doing ok right now, assuming he hasnât lost his job.
Well, hyperinflation is terrible Look at Zimbabwe :eek: How inflation has gone up! What a number!!! :eek: Wonder whether even the computer can handle it! http://news.sky.com/skynews/Home/Sky-News-Archive/Article/20080641313077 http://www.thetimes.co.za/News/Article.aspx?id=904878 http://edition.cnn.com/2008/BUSINESS/08/19/zimbabwe.inflation/index.html http://edition.cnn.com/2008/WORLD/africa/11/03/zimbabwe.money/index.html http://news.google.com/news?hl=en&c...=UTF-8&sa=X&oi=news_result&resnum=11&ct=title http://www.cato.org/zimbabwe (table here shows the growth of the inflation, My god!!) http://www.zimeye.org/?p=844 An interesting link for US inflation http://www.forbes.com/finance/2008/...ion-pf-ii-in_jt_1217currencycurrents_inl.html