There’s a lot of talk about inflation and its causes. Is it corporate greed? Supply chain issues? One clear base cause of inflation less talked about is having an inflationary currency supply. Any other inflation caused by supply chain issues, corporate greed, lack of market competition, etc is just added on top of that. Fiat inflationary currency is a rather new invention in terms of the human timeline. In the US, Nixon is the start of it. Central banks aim for 2-3% inflation in “good years”. The money supply expands, the portion of that supply a single dollar represents, and therefore its value, decreases. This isn’t a conspiracy, it’s government policy, and both parties gleefully support it because it benefits their rich donors.

Think of it: in the last 50 years, everything has gotten cheaper to produce thanks to increasing mechanization, outsourcing to cheap labor/low regulation countries, and extremely efficient supply chains. Yet so many things “cost more” than they did 50 years ago. Even basics like bread. What used to be 5c in the US in the 50s now costs $5.00. How is that the case? Shouldn’t it cost less? Where is that “extra efficiency” going if not to lower prices? The answer: bread is the same value it’s always been, the money has gotten less valuable. This is how they keep working class people running on a treadmill, never able to achieve economic mobility.

Inflationary currency devalues the currency you worked hard to earn by increasing the supply. It hits the middle class the worst because they have more of their net wealth in cash, often in the form of emergency funds, savings, and putting together enough money for a down payment on a home. Rich people have their money in assets which aren’t harmed by currency inflation. Actually, even worse, it inflates the value of those assets! If the dollar loses value (all other things being equal), it takes more dollar to buy a share in Amazon, just like it takes more dollars to buy a loaf of bread. Poor people live hand to mouth, so their net wealth is not impacted much, but inflationary currency prevents them from saving and “moving up”. If you want to identify the causes of increasing wealth disparity, the inability of people to save money and theft of value from the middle class via money supply expansion is a major one.

  • @[email protected]
    34•5 months ago

    I think there’s a lot of historical inaccuracies in your post as far as what the intention behind inflation was.

    Keep in mind this was an idea developed at the end of the Great depression to prevent wealth hoarding and economic stagnation.

    Inflation isn’t the issue. And the people I usually find pointing to it as the issue are libertarians who are angling to go back to the gold standard.

    As someone else said wages not going up is the issue. And we could have avoided a lot of inequality in the world today had they tied minimum wage to inflation to begin with during the new deal.

    I think that was an oversight. Because the intention of minimum wage was always that it’d be livable.

    • @[email protected]OPEnglish
      -11•5 months ago

      Keep in mind this was an idea developed at the end of the Great depression to prevent wealth hoarding and economic stagnation.

      Nixon? Just chilling in the oval office, decided to depeg our currency from gold and shock the European markets dependent on our gold peg? And he did it all to help us plebs what a nice guy. He was a sleeper commie playing 4D chess on the world this whole time! The great depression ended in 1939. Nixon took office in 1969.

      Idk why only so many right or libertarian people seem to care about this issue and why people on the left don’t as much. I generally would say I am left leaning. To me, there seems to be a real natural class consciousness that ought to arise out of understanding how inflationary currency works and how the US uses it as a tool of imperialism.