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Thanks to Inflation, Gen Z and Millennials Will Now Need $3M in Retirement Savings To Live Comfortably (ca.style.yahoo.com)

submitted 2 years ago by yogthos@lemmy.ml to c/usa@lemmy.ml

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[+] hexi@hexbear.net 2 points 2 years ago (1 children)

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[–] Melonius@hexbear.net 1 points 2 years ago (1 children)

Since the financial crisis banks have taken deposits and reinvested them at the Fed or other banks. Purchases of stock do not necessarily raise prices either. Prices can fall on heavy volume and rise in light volume.

That's a paycut in purchasing power.

Only if prices rise. Consider that this island only sells widgets in this currency. Will they raise prices because the money supply has increased? They were "maximizing" profit before, but now the money supply is different and the employee on the island still makes 20 coins. Will selling widgets at a new price point get them more money?

[+] hexi@hexbear.net 1 points 2 years ago (1 children)

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[–] Melonius@hexbear.net 1 points 2 years ago (1 children)

A transaction for stock is the same as any other transaction. It terminates once money is exchanged. You do not extrapolate what happens after. When I pay my check at a restaurant does the cook run out the door to spend my money or does it go in the register?

I saw your other posts and wanted to point out a few key points.

fiat money has no intrinsic value. Doubling or tripling the supply doesn't change it's value. Halving it doesn't make it suddenly more valuable.
commodity based currency, like a gold standard, does have intrinsic value. Finding new supplies of gold will reduce the intrinsic value of all gold, so it would see a change from the money supply changing all else equal.
you mention it several times in other posts - it is the circulation of money that can (not necessarily) cause inflation. Imagine I sell $10 of goods at market and go home, vs selling $10 of goods then buying $10 of groceries. Money supply is irrelevant to the inflationary effects, so long as there is sufficient currency to account for all goods that are currently traded.
post housing crisis, the US money supply increased tremendously during QE, yet inflation was low. Monetarists shrug, but the simple reason is money supply doesn't cause inflation.

Have you read Capital? It goes through money and velocity pretty thoroughly early on and I think addresses some pretty big assumptions econ classes tend to present.

[+] hexi@hexbear.net 2 points 2 years ago (1 children)

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[–] Melonius@hexbear.net 1 points 2 years ago (1 children)

and each dollar has the same value

The intrinsic value of fiat currency is 0. Double, halve, quadruple 0 all you want makes no difference. It's function and value is as a medium of exchange.

Imagine a copper based currency. If supplies of copper increase, the intrinsic value of copper falls, so the total value of the currency falls. The extrinsic value is not affected.

If I buy a widget for $1 and my labor is $2, I can be paid in 2 widgets. The money supply doesn't change that my labor is 2 widgets. If prices are increased on widgets by a capitalist, then I would expect an increase in my labor price (in dollars), regardless of the money supply, because money has no intrinsic value.

I'll state again that this difference (capitalists choosing to raise prices vs blaming external factors like "money supply") is not just pedantic. Capital mentions it few times, the fetishization of money and capital accumulation/hoarding cause this belief that money has a function outside of exchange.

To put it mathematically: the rate of accumulation is the independent, not the dependent variable; the rate of wages is the dependent, not the independent variable. Thus, when the industrial cycle is in its phase of crisis, a general fall in the price of commodities is expressed as a rise in the relative value of money, and, in the phase of prosperity, a general rise in the price of commodities is expressed as a fall in the relative value of money. The so-called Currency School* conclude from this that with high prices too much money is in circulation, with low prices too little. Their ignorance and complete misunderstanding of the facts are worthily paralleled by the economists, who interpret the above phenomena of accumulation by saying that in one case there are too few, and in the other, too many wage-labourers in existence.