There is this inherent contradiction that people are angry that the money supply grows because they save, while themselves demanding high interest rates like 5% to let their money compound over time.
If you limit the money supply and demand high interest, that interest must circulate from lender back to the borrower. The money supply is $100. I lend out $100 and demand $105 back. The borrower pays me the full $100 back. Where does he get the $5 to pay interest? The easy answer is that I spend $5 of the money he paid to me. He then has $5 and pays off the entire loan.
What if I lend out the $5 to him instead? The money supply rose by $5. Letting money compound over time by reinvesting/lending the interest will let the money supply grow exponentially and in principle there is nothing wrong with that, if I, the lender, eventually spend off all the interest income I earned because then the whole thing settles and all debt including interest is gone.
Now, there is a problem here. Why doesn't that spending phase set in? Why does the money supply keep growing until the system collapses? Because of an artificial interest rate floor of 0% on cash. The saver has the option of refusing to lend out his money or spend it and wait until an inevitable recession sets.
During deflation, the value of money goes up. This is terrible for debt contracts. If you rented a Prius 2010 knowing you have to return Prius in the same condition but instead you return a 2020 Prius you would expect the rental company to compensate you for returning the car in an even better condition.
With debt it doesn't work that way, since you can just hold cash with 0% interest. Imagine if the car dealer had a <current_year> Prius that automatically upgrades to the latest year. You are expected to pay interest on top and bring a 2022 Prius because the dealership could just let the Prius sit in a garage and go up in value.
This is because of the inherent contradiction of being able to own a store of value. A store of value can only ever be a contract between two parties. The mythical self upgrading Prius doesn't exist in the real world. Someone has to promise to manufacture the 2020 Prius in exchange for you giving him the 2010 Prius. Deflation on a fixed debt contract is the equivalent of demanding a 2022 Prius when a 2020 Prius was agreed upon. The borrower never promised a 2022 Prius so it is only natural that he ends up defaulting through no fault of his own.
When the money supply increases in that way, while it does not immediately create inflation, as the new money will be stored in investments and those investments rising in value are not considered inflation, as soon as the down-turn occurs, that money, being liquid, becomes inflation.
So when you create money through artificially low interest rates that goes to rent-seeking, you are creating inevitable inflation in the future.
Because that is what happens with other countries. The only reason US gets a free pass is because the dollar is a global currency which is sought by everyone.
When's the last time a high yield savings account made 5%? Or even matched inflation?
People are angry that they are punished by thr fed for trying to save money for a rainy day.
Rainy day funds should approximately track inflation. There are plenty of assets that have been good havens over the past decade. It’s odd to expect real gains on a rainy day fund.
Though generally I don’t think it’s for a private entity such as the Federal Reserve to be given taxpayer money and have the power to increase the money supply, it makes a private bank a de facto 4th branch of government with powers to coin money reserved by the Constitution to the Government by the people for the people.