Yesterday in Harare.

Man carrying a plastic bag full of banknotes. Price for bread doubled in one month. One leaf is 800 ZWL.
History seems to repeat itself.

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Highest denomination of a banknote was 100 trillion in 2009. Each banknote had an expiry date!

@anita
Weakened states sometimes have runaway inflation on their currency. If you include data on all the times when state-backed currencies don't have runaway inflation, it's clear this is the exception not the rule. That's because the value of a country's currency is determined by its relationship with its economy, not the number of units that exist or can exist.

@strypey @anita So, nations with 'just not yet running away inflation' are better?

I don't think so ..... fiat money is a crime..

@strypey @anita

It's all good and well calling it an "exception" until it happens to you. Then it's a catastrophe.

It's economics 101 that if supply of something increases without a similar increase in demand, then the price will decrease.

This also applies to currency (as priced in other currencies or in goods or services).

Also, even lower, non-hyper levels of inflation impoverishes the poor and lower middle class and acts as a tax that was never voted for or agreed upon.

@jcbrand

"Fun fact: Weimar hyperinflation can be blamed on an accident of history. During the negotiations for the Treaty of Versailles, US President Woodrow Wilson was sidelined by the 1918 flu pandemic. Wilson had been adamant that Germany’s reparations should be balanced against its ability to recover and remain politically stable, lest it slide into military belligerence again."

#CoryDoctorow

(1/2)

@anita

@jcbrand

"With Wilson in his sickbed and out of the picture, other world leaders were free to impose unattainable payments on Germany, which led, inevitably, to its political collapse and the rise of fascism."

2/2

@anita

@strypey @anita

"otherwise money becomes deflationary, with the same dollar buying more over time, which means that people hoard their money rather than spending it, and economic growth is halted"

I'm so tired of this fallacious argument being trotted out by inflation apologists.

If you're pro-inflation to force people to spend their money, you are shortening their time-horizon and creating artificial demand and therefore churn.

Not good for sustainability or the environment!

@strypey @anita

Also, so many loaded terms used by Doctorow, it's irritating to read his rants.

It's not "hoarding" , it's saving. People who save have a longer time horizon, something which is actually important when it comes to things like thinking about your environment, your community and your family.

A savings based economy is better than a debt based economy, which is what we currently have.

@strypey @anita

"shelter and transport are not luxury goods whose prices are spiking because we gave ordinary people more money than they deserved"

Again a loaded term, "deserved".

People are talking about supply and demand, not about "deserved".

Sophists like him choose such loaded words to trigger an emotional response of righteous indignation which makes certain people more prone to agree with the argument being laid out.

@strypey @anita

Almost every other sentence is contentious and can be disputed.

The part about Weimar Germany is an example of "insight porn". Providing some apparently little known fact that somehow shows the author has insight into problems that others can't see.

@strypey @anita

It seems to me that people who call "saving" "hoarding" are the types that actually don't want people to be empowered to have a savings they can fall back to in hard times.

Instead, they need to be dependent on the government in the form of welfare, UBI and other debt-funded handouts.

Better to keep the populace disenfranchised and dependent.
I'ts much easier to control them that way.

(BTW I'm not support for the poor, but focus should be on empowerment, not dependence)

@strypey @anita

A nation that incentivizes saving and has more savers rather than debtors is more resilient.

Our debt-based fiat system is actively hostile to saving.

Instead you have to "invest" (i.e. speculate) in increasingly risky financialized instruments because money doesn't hold value over time.

But really, you have to make debt. That's what's expected of a good consooomer.

Being in debt makes you and the people dependent on you fragile and weak.

@strypey @anita

Another thing he doesn't mention... if money supply needs to grow with the economy, who gets this newly created money?

It's the banks and financial institutions close to the central bank.

If there is (as he desires) some inflation, then the people who get first access to newly created money get to spend it (or loan it out at a higher rate) before inflation reduces its value.

It's free money for them

This is called the Cantillon effect and it contributes to wealth inequality

@jcbrand
> the economy, who gets this newly created money?

That depends on monetary policy. In the neoliberal era, the standard policy is to give trading banks the power to issue new money as loans. But money can just as easily be spent into existence by the government, which means (in theory at least), there's a democratic process that decides how it's portioned out (eg spent on public infrastructure, paid out as welfare/ UBI, used to fund the employment of journalists, etc, etc).

@anita

@jcbrand
The point about Weimar Germany - like my point in my original trying to
@anita - is that hyperinflation is rare and had specific historical causes. Making general arguments about inflation as if *all* inflation = hyperinflation is both fallacious and irresponsible.

@jcbrand
> People are talking about supply and demand, not about "deserved".

Exactly. Doctorow's point is that rising prices are caused by contraction of supply of basic goods, not a rise in demand caused by "printing money". So we bring prices back under control by increasing *capacity*, through (hopefully) wise spending by governments, eg making sure working people can afford basics. Yes, that drives inflation in the short term, but that mainly impacts those with lots of money

@anita

@strypey @anita

Contraction of supply does play a role, but it's only one component. He conveniently ignores the rest.

> So we bring prices back under control by increasing *capacity*,

The FED is doing the exact opposite. They are raising rates and doing QT in order to reduce the money supply, make the cost of borrowing more expensive and to increase unemployment. Their goal is demand destruction in order to bring down prices. Why? Because you can print fiat, but you can't print energy!

@jcbrand
> The FED is doing the exact opposite. They are raising rates and doing QT in order to reduce the money supply

This is the standard neoliberal response to inflation, with the goal of shoring up the value of financial assets. The NZ Reserve Bank is doing the same. But at the same time, the govt is spending on various programs that shore up the buying power of those at the bottom. Since the pandemic began they have increased the minimum wage, raised welfare payments, etc.

@strypey

> with the goal of shoring up the value of financial assets

I don't know if you've noticed, but financial assets are getting absolutely hammered because of interest rate hikes.

So I don't think that's correct.

The goal is to destroy demand.

Low interest rates and money printing support elevated asset prices, high interest rates do the opposite.

@strypey

The absolutely massive increase in money supply, which he pretends has no effect.

@jcbrand
Being anti-inflation doesn't make you pro-deflation, and vice-versa. It's more like temperature, extremes at either end of the scale become dangerous, and there's a safe range we want our countries' monetary policy to keep the needle inside of. If a currency gets too deflated, the economy gets tilted towards the benefit of those who have the luxury of banking the largest chunk of their income, ie the wealthy.

@anita

@anita

Damn and I thought I was a player with my billion dollar note.
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