Re:Why inflation is not a threat
by matheusmoreira on Sunday March 14, 2021 @10:53AM
(#26455894)
It's not just money printing either. Fractional reserve banking and money lending creates just as much inflation.
People deposit real money into the bank. It keeps a fraction and loans out the rest. That loaned money eventually gets used to pay debts and it gets once again deposited into the bank. It keeps a fraction and loans out the rest...
The exact same money gets loaned many times. The situation keeps looping and looping and with every iteration new money that doesn't actually exist is created by the bank. It will only start existing once real value is created or extracted from the planet, thereby making possible to repay the loan.
Inflation is like a tax. When government and banking institutions inflate the currency, they systematically and worst of all invisibly rob people of their purchasing power.
People deposit real money into the bank. It keeps a fraction and loans out the rest. That loaned money eventually gets used to pay debts and it gets once again deposited into the bank. It keeps a fraction and loans out the rest...
The exact same money gets loaned many times. The situation keeps looping and looping and with every iteration new money that doesn't actually exist is created by the bank. It will only start existing once real value is created or extracted from the planet, thereby making possible to repay the loan.
Inflation is like a tax. When government and banking institutions inflate the currency, they systematically and worst of all invisibly rob people of their purchasing power.