Anyone who holds a dollar in their hands. Anyone who invests in assets that are taxed on the inflationary "gains" in value. Anyone who has to wait months/years for a raise to catch up with the intervening inflation. Anyone on a fixed income. Anyone who's inflation rise in wages gets taxed at their highest marginal tax bracket, or even pushes them into a higher bracket.

To argue pro inflation based only on the short run view is missing the point.

It's funny, that's exactly what I was going to say about deflation. I hear Mr. Nakamoto is worth a lot these days.

The rest of your argument doesn't make sense to me, as the only effect inflation has on anyone is the price increase in a good between the time you receive the money and the time you spend it. Not the price increase since the money first came into existence. It doesn't matter when I get money, so long (a) I am paid according to the current worth of the currency (i.e., in real terms) and (b) as I spend (or invest) it quickly.

I mentioned in another comment that inflation does have the negative effect of masking wage stagnation, which causes exactly condition (a) above to be violated. This is ultimately a problem with people's understanding of money. It would be great if employers were forced to announce a lack of yearly pay increase as a pay cut in real terms.

Condition (b) on the other hand. That's more a problem for the wealthy. Personally (as an upper-middle class tech worker) I'd love it if I could just shove my savings under a mattress and have it increase in value. It's those living paycheck to paycheck – which, if I recall correctly, is the vast majority of Americans – who don't have to worry about spending their cash before inflation gets to it.

I would rather talk about our apparently opposing perspectives on inflation as I think that's the interesting bit. (I think our perspectives are only different in that one looks at things on a short small tempro/local human scale, and the other is more economy wide/slow moving in view - and one needs both)

> the only effect inflation has on anyone is the price increase in a good between the time you receive the money and the time you spend it. Not the price increase since the money first came into existence. It doesn't matter when I get money, so long (a) I am paid according to the current worth of the currency (i.e., in real terms) and (b) as I spend (or invest) it quickly.

I claim that there is another effect that is only visible when looking at large scales - of both people and time. What you claim is true when looking only at an individual actor, or some small scale. There, sure, an individual can receive and spend money and generally get equal to what one gives for things. This is the short term perspective on inflation. What I claim is true only shows up when looking at the economy more holistically, and over time.

Let's say that I am a government defense contractor. Let's say that The government loans into existence a huge sum of money and promptly disburses it to me to pay for some new defense widget. Meanwhile, the rest of the economy is buying and selling stuff at the old price point, oblivious to this new cash influx. (I am ignoring expectations at the moment - but I do not intend to always ignore them! --spoiler, I will just claim that they don't entirely spoil my defense contracting party)

I can merrily build a widget army, inking large contracts at the present price point, which has not yet increased in response to this influx of cash (since I am holding all of it). The difference in price, between what I pay and what stuff will be worth once the cash is entirely diffused, amounts to a subsidy paid to me, in the amount that inflation will devalue the currency once it has fully circulated. I experience the benefit in that I have more wealth, encapsulated within the stuff I just bought, than someone down the line could purchase with the same amount of cash. So the next contractor down the line benefits a little less than me, so on and so forth until the money trickles down to everyone, and they just see a general rise in prices. The fundamental mechanism is that I get to buy at the old price point, while in fact already experiencing the increase in supply of money. If money distributed equally, I would see a fair price. Instead, I see an artificially low price, given the true supply of money now.

I claim that this subsidy to me really has made "the little people" a tiny bit poorer, and me a little bit richer. (and that this is a machine running day and night for years on end... )

Now expectations - here is where the objections to "my" theory hold their ground. It is claimed that because the various contractors down the line expect general inflation they can price it into their contracts, they can charge me a bit more than the current price level would suggest is right, due to expected changes in the value of money relative to their widget components from now and delivery time.

People make such forecasts all the time. Forecasting is difficult. The economy swings on the actions of the fed.. The fed knows this... and so on. I can't fully answer this. The trail of logic runs cold. Who is winning the expectation battle? Who is getting rich?

My great forecast/bet/wager, (which I cannot prove!) is that even with rational expectations of inflation, people in power have found it useful to continue to inflate to pay their cronies, to continue to enrich themselves year in and out via this mechanism.

I suspect this comes back around to your condition (a) violation above - people's understanding of money, sometimes predicated on faith in things like rational expectations, sometimes predicated on flat out not "getting" that pay stagnation is pay decrease, is the final underlying driver that causes rational expectations to loose out, and "my" defense contracting pseudo self to "win" out.

I hope I didn't come off rude. If I did I sincerely apologize. I probably did. I probably came off like a long winded ass. Again I am sorry. Lots of things going on at the moment. The short of it is that it might take me a while to get back to you tonight should you read this monstrous wall of text but I will do my best.

Cheers

(Personally I invest in productive assets and bettering my standard of living, but to each their own.)

"..forbade the hoarding 'of gold or silver coin or bullion or currency', under penalty of $10,000 and/or up to five to ten years imprisonment. The main rationale behind the order was actually to remove the constraint on the Federal Reserve which prevented it from increasing the money supply during the depression"

https://en.wikipedia.org/wiki/The_Gold_(Control)_Act,_1968

"Desai finally introduced the Gold Control Act, on 24 August 1968, which prohibited citizens from owning gold in the form of bars and coins. All existing holding of gold coins and bars had to be converted to jewellery and declared to the authorities. Goldsmiths were not allowed to own more than 100 gms of gold."

(If they do, it's in a 401k, which is a productive asset and not tied to the whims of fiat currency.)

Poor people have debt. (Actually, I think most people in the US have net debt. (EDIT: Actually it's 20%; 30% if you're a minority [1].)) Inflation is good if you have net debt. It means the principal of your debt decreases in real terms each year.

I keep bringing up gold because this whole thread is about metal-backed currencies. Poor people can – and do – buy gold just as easily as rich people can. Pawn shops are rife with the stuff. The problem isn't that they must "watch their savings wither". It's that they don't have savings; they have debt.

[1] https://www.marketwatch.com/story/one-in-five-american-house...

Contrast that with the impacts of deflation: If you know you’ll be able to buy more tomorrow with the same money, you’ll often choose to wait.

Because companies see fewer revenue for the same goods/services they have to cut costs - unemployment balloons.

Fewer people employed decreases demand overall. Leading to still more layoffs.

The deflationary forces spiral the economy lower and lower.

Any debt a person holds becomes dramatically more difficult to pay as their income decreases.

And all because the money supply remained constant or decreased in circulation.

With free banking, there won't be net deflation either, as the market forces on the creation/destruction of money prevent it.

As pretty strong evidence, there was no net deflation or inflation in the US dollar from 1800 to 1914, while the economy grew from subsistence farming to superpower.

To argue that this cannot work, one must explain that.

The one thing that changed in the 20th century is the absence of severe deflationary crises. Inflation in the 20th century is actually way less volatile than in the 19th century, but absent deflational periods those low levels of inflation compound over the decades.

source: http://liberalarts.oregonstate.edu/sites/liberalarts.oregons...

What sort of nonsense is that? A lot of people don't have savings, sure, but there's also a lot of working class individuals who are financially responsible enough to save.

> If they do, it's in a 401k

Exactly my point -- the only way to save money is to risk handing it over to a corporation and crossing your fingers. Never mind that the general advice is not to invest money you plan on needing within the next 6 years.

> Inflation is good if you have net debt.

Not when the interest rate on your debt is higher than the rate of inflation.

You've done a sad job making any case at all for inflation.

Yes, it's still good. It still decreases the real value of your principal. Deflation does the opposite.

There were many government employees in Brazil who'd bought real estate in Brasília (the country's new-ish capital) with significant mortgages at reasonable fixed or quasi-fixed interest rates before the inflationary 1980's. After many years of 100% or 600% inflation in the 1980's, were left paying the equivalent of US$50 per month mortgage for awesome apartments.

I.e. people who loan money are not stupid, and you're not getting any bargain because of inflation.

My mortgages are all using a fixed repayment plan, where the interest rate, payments, and repayment duration are fixed on day one. If the inflation rate doubled or halved next year, my loan terms won't change and I'd end up repaying less or more money, relatively.

Many other loan rate, such as margin interest, are "prime rate plus X". The prime rate is inflation plus a constant.

Again, the people loaning out the money are not fools about inflation.