Obama admin has done a good job managing the economic crisis of Bush

#501
#501
Vol8188 said:
Agreed. But salaries almost always rise with inflation as well. They may stay behind for awhile, but they always catch up. If they didn't, no one could purchase anything and we'd actually end up with deflation (07-09 is a nice example of deflation due to a lack of consumer confidence/buying power).
Click to expand...

While this may be typically true......,at this point in time it's not the case.
 
#502
#502
Vol8188 said:
Agreed. But salaries almost always rise with inflation as well. They may stay behind for awhile, but they always catch up. If they didn't, no one could purchase anything and we'd actually end up with deflation (07-09 is a nice example of deflation due to a lack of consumer confidence/buying power).
Click to expand...

Salaries almost always lag behind inflation. Why do you think the wealth gap keeps expanding? The wealthy do well in an inflationary environment because the value of their assets goes up. While more of a workers wage goes to living expenses.
 
#503
#503
82_VOL_83 said:
No, he is right. The value decreases. However, he stated in a previous thread the the amount decreased. The thread was deleted I think because one of us got ugly
Click to expand...

I never once stated that. I think your confusion comes the example I gave.

I said 5% inflation with a 100 dollar loan would be similiar to only owing 95 dollars in yesterday's money.
 
#504
#504
red butler said:
Salaries almost always lag behind inflation. Why do you think the wealth gap keeps expanding? The wealthy do well in an inflationary environment because the value of their assets goes up. While more of a workers wage goes to living expenses.
Click to expand...

No. The wealthy would do the best during deflation because they have all the capital. And their capital would increase in value. The wealth gap is not due to inflation at all.
 
#506
#506
Vol8188 said:
No. The wealthy would do the best during deflation because they have all the capital. And their capital would increase in value. The wealth gap is not due to inflation at all.
Click to expand...

Inflation is absolutely a contributor to the wealth gap. Since I am now spending more on living expenses than I was 5 years ago, I'm unable to buy more assets or save as much money. Especially since the costs of assets continue to rise.
 
#507
#507
govols/cc said:
How many grading "curves" have you given because bad grades directly affect your performance?
Click to expand...

Those were very random words on your part...but I'll bite because I like to keep you talking. Mainly so I can see what kind of crazy **** will come out.

Grades don't affect my "performance". Nor my salary or anything else.
 
  • Like
Reactions: 2 people
#508
#508
Vol8188 said:
I never once stated that. I think your confusion comes the example I gave.

I said 5% inflation with a 100 dollar loan would be similiar to only owing 95 dollars in yesterday's money.
Click to expand...

No, you didn't. But in the interest of the season, you get a pass.
 
#509
#509
red butler said:
Inflation is absolutely a contributor to the wealth gap. Since I am now spending more on living expenses than I was 5 years ago, I'm unable to buy more assets. Especially since the costs of assets continue to rise.
Click to expand...

Where do you work?

And no it's still not. Like I said, people with money do best during deflation because they don't have to invest or take any risk at all and their money increases in value.
 
#510
#510
Vol8188 said:
Those were very random words on your part...but I'll bite because I like to keep you talking. Mainly so I can see what kind of crazy **** will come out.

Grades don't affect my "performance". Nor my salary or anything else.
Click to expand...


Well no wonder you're the way you are. A "job" with no accountability. It's not like that in the real world.
 
  • Like
Reactions: 1 person
#511
#511
govols/cc said:
Well no wonder you're the way you are. A "job" with no accountability. It's not like that in the real world.
Click to expand...

There's accountability, but I'm not certain why you think grades are what that accountability should be based on. Grades are arbitrary and archaic and should be removed all together.
 
  • Like
Reactions: 1 person
#515
#515
Vol8188 said:
Where do you work?

And no it's still not. Like I said, people with money do best during deflation because they don't have to invest or take any risk at all and their money increases in value.
Click to expand...

I work for a pharmaceutical manufacturer, so I'm doing fine. But anyone on an hourly wage is hurting right now. I see it with all my employees.

No, the wealthy would not benefit from a deflationary environment because the value of their assets would also be decreasing. Banks would also get destroyed by deflation.

But do you really believe there is zero correlation between inflation and the wealth gap?
 
  • Like
Reactions: 1 person
#516
#516
red butler said:
I work for a pharmaceutical manufacturer, so I'm doing fine. But anyone on an hourly wage is hurting right now. I see it with all my employees.

No, the wealthy would not benefit from a deflationary environment because the value of their assets would also be decreasing. Banks would also get destroyed by deflation.

But do you really believe there is zero correlation between inflation and the wealth gap?
Click to expand...

Yes I do. and banks would do great with deflation
 
#518
#518
red butler said:
Please explain.
Click to expand...

banks make small margins on most loans over long periods of time (up to 30 years). Inflation eats away at their profit. If they charge 2% interest and inflation is 2% then they actually made nothing.
 
#519
#519
Vol8188 said:
banks make small margins on most loans over long periods of time (up to 30 years). Inflation eats away at their profit. If they charge 2% interest and inflation is 2% then they actually made nothing.
Click to expand...

That's not exactly how banks make money. I suggest you read the Bank of England's quarterly bulletin titled "Money Creation in the Modern Economy". You'll learn that when banks make loans they extend credit. They don't have 100% of the money to back up the loan, they typically only have 10%.

Essentially, they're charging you interest on money that didn't exist at the time of the loan. Therefore, banks can make money during inflation or deflation. It's only an exercise in managing risk. Of course banks prefer inflationary environments because the more loans they make, the more money they make.

Also, technically if they don't create enough new money through loans to pay off the old loans plus the interest... well they're in for a world of hurt. They'd have to come up with something like quantitative easing to recapitalize themselves.
 
  • Like
Reactions: 1 person
#520
#520
Vol8188 said:
Agreed. But salaries almost always rise with inflation as well. They may stay behind for awhile, but they always catch up. If they didn't, no one could purchase anything and we'd actually end up with deflation (07-09 is a nice example of deflation due to a lack of consumer confidence/buying power).
Click to expand...

You do realize we have suffered a pretty high inflation rate over the last 6 years, right? I mean real inflation not what the government publishes. Things like energy and food costs, the stuff we absolutely have to have but are not calculated in the numbers.
 
  • Like
Reactions: 1 person
#521
#521
Vol8188 said:
No. The wealthy would do the best during deflation because they have all the capital. And their capital would increase in value. The wealth gap is not due to inflation at all.
Click to expand...

Good god you are .... Bless your heart.
 
  • Like
Reactions: 1 person
#522
#522
hog88 said:
You do realize we have suffered a pretty high inflation rate over the last 6 years, right? I mean real inflation not what the government publishes. Things like energy and food costs, the stuff we absolutely have to have but are not calculated in the numbers.
Click to expand...

Like gas prices?
 
#524
#524
red butler said:
That's not exactly how banks make money. I suggest you read the Bank of England's quarterly bulletin titled "Money Creation in the Modern Economy". You'll learn that when banks make loans they extend credit. They don't have 100% of the money to back up the loan, they typically only have 10%.

Essentially, they're charging you interest on money that didn't exist at the time of the loan. Therefore, banks can make money during inflation or deflation. It's only an exercise in managing risk. Of course banks prefer inflationary environments because the more loans they make, the more money they make.

Also, technically if they don't create enough new money through loans to pay off the old loans plus the interest... well they're in for a world of hurt. They'd have to come up with something like quantitative easing to recapitalize themselves.
Click to expand...

I do understand that the capital they have deposited at the federal reserve and the amount they lend are different. But I'm not seeing their benefit under inflation. I assumed it would still erode their earnings.

What is the benefit that I am overlooking?
 
New posts
You must log in or register to reply here.
Advertisement





Back
Top