The Economy of The West - Inflation

[Daniel Balan]

27 minutes ago, Twentyfirst said:

People with ambition don't struggle with food in the fridge but they struggle with plenty of other things. Choose your struggle I guess. I'm not saying you should change and become money hungry I'm just saying thats probably the reason why you find yourself worried about inflation 

Thanks!@Twentyfirst I bookmarked your response. It is something I truly needed to read. The thing with me is that I am not lazy, but as soon as I can get the most basic survival stuff, my incentive to work extra is at 0. And the problem with me is that I need so little to be happy. All my clothes are from second hand stores, I always wear construction work clothes and boots. I focus all my free time on nerdy stuff such as contemplating various political subjects or reading. I get more happines by learning why inflation happens than if I earn 100€ extra. I don't care about material stuff. Only basic necessities 

[Daniel Balan]

7 minutes ago, Hayato said:

You can start a business, or join a self sufficient community. There are always options.

 

Thanks for the advice!

[Twentyfirst]

13 minutes ago, Daniel Balan said:

Thanks!@Twentyfirst I bookmarked your response. It is something I truly needed to read. The thing with me is that I am not lazy, but as soon as I can get the most basic survival stuff, my incentive to work extra is at 0. And the problem with me is that I need so little to be happy. All my clothes are from second hand stores, I always wear construction work clothes and boots. I focus all my free time on nerdy stuff such as contemplating various political subjects or reading. I get more happines by learning why inflation happens than if I earn 100€ extra. I don't care about material stuff. Only basic necessities 

Money is a store of value so if you earn 12x more than what you "need" that will be your basic necessities budget for a year. Inflation basically doubled the price of necessities so if you earn 2x what you "used to need" that will cover what it used to cover before inflation. First double your earning for one single month by 2x and then after save 12x of those for the entire year. Since you live simply you don't need any more math than this.

Edited yesterday at 08:37 AM by Twentyfirst

[ted73104]

Inflation the last few years was due to the US printing 40% of the current US dollar supply out of thin air during 2020 ~ 2021 to handle the covid damages to the economy. This also caused other countries to print a lot money because most of those countries (China, Japan, etc.) relied on exports, so they didn't want their money to be stronger than the dollar (dollar weakens when you print more based on nothing). Another factor was the ramping up of the trade war between China and the US, however this factor is not as significant as the money printing.

[Daniel Balan]

24 minutes ago, ted73104 said:

Inflation the last few years was due to the US printing 40% of the current US dollar supply out of thin air during 2020 ~ 2021 to handle the covid damages to the economy. This also caused other countries to print a lot money because most of those countries (China, Japan, etc.) relied on exports, so they didn't want their money to be stronger than the dollar (dollar weakens when you print more based on nothing). Another factor was the ramping up of the trade war between China and the US, however this factor is not as significant as the money printing.

I believe the reason for inflation is the massive deficit spending and the massive public debt that the governments of the west have cultivated since the end of WW2. 

And because of the enormous public debt, it is in government's interest to artificially devalue the currency via overprinting, so that people have to produce more economic output to have the same lifestyle as few years ago, thus people pay more money in taxes, that money now going to repay little by little the public debt. That's my pre existing belief. 

Edited yesterday at 09:22 AM by Daniel Balan

[ted73104]

21 hours ago, Daniel Balan said:

I believe the reason for inflation is the massive deficit spending and the massive public debt that the governments of the west have cultivated since the end of WW2. 

And because of the enormous public debt, it is in government's interest to artificially devalue the currency via overprinting, so that people have to produce more economic output to have the same lifestyle as few years ago, thus people pay more money in taxes, that money now going to repay little by little the public debt. That's my pre existing belief. 

Just want to say you're doing good trying to figure out this by yourself, it will be a process and you shouldn't care what others think about your belief at the end of the day.

However, let me provide you more of my own opinion and say that since WW2, the US has been increasing its currency value most of the time. The US does this because it can technically pay less for goods manufactured outside the US and allow its citizens to maintain a relatively rich lifestyle (compared to citizens of other countries). However this will eventually lead to manufacturing jobs going to countries like China, Vietnam, India, and so forth, leaving more and more middle class citizens behind economically. This is why Trump is now devaluing the currency so that he can bring manufacturing jobs back. The tariffs are in place for the same reason, there are also other reasons why the US needs to rebuild its manufacturing strength but Trump's method is not going to work.

Normally, the government would never devalue its currency. The economic output of people will not increase due to policy changes, you can't really force that. Policies like tariffs would bankrupt businesses instead. Trump is probably the only guy who can devalue the currency, raise tariffs, and get his MAGA base cheering for him while the MAGA base won't be able to produce those imported goods while paying for most of the tariff cost!

The debt, will never be repaid, or at least that is what I think. Even with the amount of money from the tariffs, the debt is still increasing at a faster rate with all the military expenses. Taxing the rich won't work either, the rich have too many ways to evade taxes. If you cut too much spending, the GDP might shrink too much that there will be a recession if not a depression. And no politician wants that on their plate.

[Daniel Balan]

@ted73104 thanks a lot for your answer! 

[ted73104]

3 hours ago, ted73104 said:

Just want to say you're doing good trying to figure out this by yourself, it will be a process and you shouldn't care what others think about your belief at the end of the day.

However, let me provide you more of my own opinion and say that since WW2, the US has been increasing its currency value most of the time. The US does this because it can technically pay less for goods manufactured outside the US and allow its citizens to maintain a relatively rich lifestyle (compared to citizens of other countries). However this will eventually lead to manufacturing jobs going to countries like China, Vietnam, India, and so forth, leaving more and more middle class citizens behind economically. This is why Trump is now devaluing the currency so that he can bring manufacturing jobs back. The tariffs are in place for the same reason, there are also other reasons why the US needs to rebuild its manufacturing strength but Trump's method is not going to work.

Normally, the government would never devalue its currency. The economic output of people will not increase due to policy changes, you can't really force that. Policies like tariffs would bankrupt businesses instead. Trump is probably the only guy who can devalue the currency, raise tariffs, and get his MAGA base cheering for him while the MAGA base won't be able to produce those imported goods while paying for most of the tariff cost!

The debt, will never be repaid, or at least that is what I think. Even with the amount of money from the tariffs, the debt is still increasing at a faster rate with all the military expenses. Taxing the rich won't work either, the rich have too many ways to evade taxes. If you cut too much spending, the GDP might shrink too much that there will be a recession if not a depression. And no politician wants that on their plate.

I wrote so much and forgot to write the conclusion. 

The reason why there will be more inflation to come, is because of the debt. The US can't pay its debt without printing out more money from thin air. The other reason there will be inflation is because I believe Trump wants inflation. Inflation will increase asset prices skyhigh so that Trump can somehow sell those assets for a higher price onto the rich folks so he can repay the debt. So basically, there will be MORE FUCKING INFLATION for everyone!!!!!!! The entire world, not only the US, will feel its effects!!!

Edited 4 hours ago by ted73104

[Daniel Balan]

@ted73104 but every country has debt! And the debt isn't supposed to be fully paid. Debt is a financial instrument for progress. We buy things with debt today to have them today, not to have them after 100 years when we finally have saved enough money to buy them. Gigantic debt is problematic, but more problematic is to have 0 debt because then your economy is like a car that has no fuel. Debt is what is fueling the economy. The catch is to not have the fuel tank overfilled, and if a war or crisis ignites the fuel that overspilled on the car's body, the entire car could burn down. That's my understanding of debt thus far.

Edited 3 hours ago by Daniel Balan