Simple Solution for Inflation

Inflation is a problem when you are saving money..... relative to the value of the thing you want to spend the money on!

A very good example is property, because it can have a huge variance in value compared to currency.... but in most cases, over the long term, property will increase in value faster than savings in a bank. But that may not necessarily compensate you if you bought property at the peak of a cycle just before a crash!

The scheme you seem to be describing is already in place. When the Fed wants to lower the rate of inflation, they raise interest rates. This is lever that works very well.

Most of us feel the best thing in an economy is balance. If you have too much borrowing and spending you get a high rate of inflation. If you don't have enough borrowing and spending it leads to unemployment.

Both extremes are bad, and we have a pretty good system to balance us somewhere in the middle, with low (but non-zero inflation) and moderate growth.

Most people don't save their money by hiding little green rectangles under their mattress. Most of us either put it into a money market fund, or stocks, or bonds, or something like that where we can grow our money at a rate at least equal to inflation.

Where did i say put money under the mattress? That's a stupid assumption.

Most people save money in the bank - and the interest they pay is so insulting it makes you feel like going on a shooting rampage across the town!
But if you have a mortgage, the best savings will be with an offset account - although banks seem to be thinking up increasing numbers of sneaky ways to screw with those as well.

Investing in shares is becoming increasingly popular with small investors, that's a good thing... so long as people follow the basic rules - number 1 *diversity* and number 2 be prepared that a longer term commitment may be needed to overcome short term losses.

Putting money (in the form of little green rectangles) under the mattress is the entire premise of this thread.

If you are just talking about having an interest rate for money in the bank... that's the system we already have.

Then i dont know why you market that reply to my post?

The topic is 'a simple solution for inflation' - that is what i am responding to, not what is specifically in the op's post.

You don't seem to know what inflation is. There are several examples of different kinds but they all are defined by phony money. Before the Federal Reserve Act was passed in 1913 there was no inflation. None zip zero nada goose egg. After it was passed, prices doubled in only twenty years, resulting in the great depression as Hoover restored honest money to the country. Anybody else who tried to do that got murdered.

The solution is to take all your savings and buy silver coins and ingots and hide them at home, NOT in any bank or anybody's vault. When the economy crashes, as it eventually must when phony money is in circulation, you will have genuine money to finance rebuilding. Remember all the stories about "financial miracles" in Europe after the war? Every country that had a tradition of hoarding gold and silver had a "financial miracle".

Get your education at mises.org and fee.org and get your news at gold-eagle.com

I own 4 rental apartments in two different buildings and I would not be content with never being able to raise rents. I don't know any "small-time" property owners who would be content with that.

It wouldn't drive me out of business, but content is not a word I'd use.

No, I do not want to buy your gold and silver. Stop trying to make me.

I hate internet advertisers. So annoying.

The problem with that is the banks still lend out the saved money, which stimulates inflation. If the money would have to stay still in the same account to appreciate as inflation-adjusted currency, that would prevent it from being lent out, because as soon as it was transferred, it would become a new deposit.


Unemployment is caused when a subset of all job-seekers get jobs. If everyone simply got hired, there would be no unemployment. How to make sure everyone gets hired, though? Easy: by dividing the existing work hours among more people, i.e. cut everyone's hours and pay to create more jobs at lower pay rates.

Call it "income rationing," if you like. People would complain about getting less, but if deflation followed then it would be the same thing as giving everyone a pay raise, which union people love.


I think low-but-non-zero deflation would be a better idea, because that would maintain consistent low fiscal pressure to streamline budgets, which would result in efficiency gains and sustainability benefits.

I definitely do not want to see any deflation. That *would* almost ruin me financially.

Ok, you would not be content with frozen rents...
How about in the context of the cost of living being frozen?

It basically means that the net income you are getting from rent today will be exactly the same tomorrow, and next year, etc etc

That is why i assume most small investors would be content with it.

I know what you meant and I wouldn’t be ok with that either.

What I’m looking forward to 10, 20 years from now is my rent going up and my mortgage staying the same.

I didn’t get I got the hassle of being a landlord so that my life could be the same as it is now, that doesn’t sound at all appealing long term.

I don’t mean to speak for all small investors but I think most of them would agree with me. And I can confirm that the 5 or so I do know would not be ok with it as we’ve had these discussions in the context of rent control.

I was not trying to "make" you anything. You asked for advice and I gave you some: specifically to learn a few things.

What i get from that is the zero inflation reality kills incentive for being a landlord.

Probably kills various other incentives across the board.

Does that mean inflation cannot be defeated?

You need deflation in order to have the kind of real growth you want. With inflation, you may be getting more in rent payments, but prices of other goods and services are going up as well so that cancels the value of any additional money you are getting.

With deflation what happens is that people and businesses are pressed to work more cost-efficiently because they are getting squeezed by decreasing revenues. So, take an example like transportation and think of all the people who could save money by switching from driving to transit. Then realize that when people lower their transportation costs, they gain more money for other things, including rent.

Of course, you too could spend less on transportation, or cut other expenses, and then you would effectively be making more money by charging the same or less rent to your tenants. This is efficiency 101, but many people are afraid of it because they don't trust that they can really get as much or more value by spending less money.

The reason it is possible is because of change and innovation. E.g. you can read and enjoy a lot more media today than you could several decades ago with just a single electronic device. With transportation and infrastructure it is the same. Cities are currently reforming to become more pedestrian-, bike-, and transit- friendly so people can enjoy a much higher quality of life without driving at all. That enables people to enjoy a much higher quality of life while spending less money.

Many people are afraid of such efficiency increases because they fear that if good quality of life costs less, then people will spend less and there will be less opportunities to make money. That is an ass-backward way of thinking, though, because if you are repressing the ability to afford better quality of life with less money, you are just making people spend more money to get less quality. That is what inflation does, and why we are all so unhappy despite the fact that we make more money than most other people around the world.

No, the problem is that the incentive to save was killed by inflation. Before the gold standard ended, saving was literally gold. Once people give in to the idea their saved money won't be worth as much the longer they wait to spend it, they start reinvesting it all the time and it creates an inflationary rat race that no one can win because of inflation.

It is better both economically and environmentally to stop inflation or even institute low-positive deflation; but to do so it is necessary to have some form of social-economic safety net that doesn't rely on government spending, which causes inflation. Basically, what is needed is a new, non-fiscal New Deal that can protect people from homelessness and hunger when they run out of money; but which does so without tax-spend governance, or with very little anyway; e.g. by paying the people involved minimum wage or less.

Maybe what is needed is a Gig New Deal where all the social-economic safety net functions are achieved using part-timers coordinated by social-media platforms.

No.

Deflation would halve my rental income but my mortgage would be the same. The bank isn’t going to adjust my loan because my rent is half of what it used to be.

The mortgage on the two properties I own are by far the greatest expense. Those numbers are not changing until paid off.

This is a silly thread... what they are arguing for is.

- Fewer jobs
- Lower wages
- Hampered ability to borrow money for a house or a car.
- Decreasing value of money.
- Lowered inflation with increasing prices (I don't understand how this happens).

These not just the negative consequences of their economic policy.... this is what LivingLava says are the goals of his economic policy.

I kind of like how the economy works now.

There would be the possibility of loan forgiveness in a thriving deflationary economy. Think about it: if economic waste was decreasing across-the-board and costs of living were as well, then there would be economic surpluses and debt forgiveness could be possible within such a scenario.

The rat race of inflation puts everyone in a state of desperation because we have to keep making money just to avoid running out, no matter how frugally we manage money. When prices are deflating and the money you've saved is looking bigger and bigger as the future continues getting better, you gradually feel that you have plenty of money to spare, and so debt-forgiveness is something you can consider as a lender more so than when you're pressed to keep up with inflation.