A thought experiment: Inflation's volatility down through two currencys (pegged)

[slapper]

Well, now, that's a 2023-worthy idea! You're attempting to shield the vulnerable from inflation's wrath, and good on you for the novelty! But there's room for doubt. Firstly, this 'duo-currency' scheme might be an admin horror show. Think of auditing every wallet yearly for their cash class. And what about mid-year money windfalls? Secondly, the no-trade rule for currencies? That's akin to economic shackles. It reads, "Poor or rich, don't move." Doesn't that keep inequality alive? Seting cost via (A+B)/2 may seem neat, but it could cause a price whirlwind, considering the vast inflation gap between Currency A and B.

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[stompix]

Thought experiment #1:
- Currency A - 30 % increasing money supply/year
- Currency B - 5 % increasing money supply/year

You're starting with the same thing that people chant like a mantra and think it's true.
Money printing doesn't always trigger inflation and inflation can happen without money printing:
https://www.aier.org/article/three-common-myths-about-money-and-inflation/

Dumping 5000 quadrillions dollars n the street has no effect on inflation if everyone picks them up and buries them in the garden!

The rules are:
- We have an average income per capita. Everybody with an income higer than 0.7 of the average income per capita is just allowed to use currency A.
- We have an average income per capita. Everybody with an income lower than 0.7 of the average income per capita is just allowed to use currency B.

This is no longer socialism is pure economic genocidal madness. Oh wait, that's the definition of socialism.

- It is forbidden to exchange both currencies with each other.

What happens when B buys from A or the other way around?

All goods and services are pegged on the value (A+B)/2 ----- (Currency A plus Currency B divided by two)

Oh yeah, state-controlled prices with untradeable currencies, that worked wonders!

- Every year every person is rated on which currency the person can use.

Why not just shot the kulaks like in the last century? With no rich people around all your problems will be gone, right?

Well, now, that's a 2023-worthy idea!

Is this 2023 AD or BC?
Your enthusiasm reminds me of what went wrong in all those socialist countries, thinking of the poor so much they ended up making everyone dirt poor.
 

[Mario Yamasaki]

Inflation is common and difficult to avoid, many countries try their best to reduce inflation, but on the contrary there are countries that want to improve inflation because several years the country has experienced deflation, of course experiments reducing volatility are new ideas in the economic field and worth trying.

[DrBeer]

By the way, a follow-up question:
And what is better - controlled insignificant inflation or the same deflation?
Interested in your opinion on the positive and negative effects of these two financial models, and their "importance" for the population and the economy of the country?

PS uncontrolled wild inflation is an evil and a problem, it is not even discussed

[el kaka22]

Why hasn't just straight up said "we would decline to use this" and moved on? I mean its simple that we would see Elon Musk type of people trying to prove to the world that they are currency B type of people and have no money at all. Look at him even right now, he literally sold his house and bought a tiny house just to "prove" that he doesn't care about being rich, then spent 40+ billion on twitter just to prove a point, which he failed to be honest but that's how being rich works.

In the end, we should be looking into this situation a bit more carefully, it wouldn't work, we would reject it as society, people at currency B will want to look like they are rich and act as if they are currency A, and people at Currency A will make it look like they are poor and use B, that's not going to work.

[panganib999]

Overprinting of money which leads to the devaluation of a currency is just an aftereffect. There's countless reasons why inflation happens. For one, we have the piggy-back spenders which still account for a hefty percentage of people. One must know that money that doesn't circulate is still money and is not devoid of value, but there has to be enough currency going around in order to facilitate the economy of the whole nation so printing money happens.

With the premise you have made I don't think it's going to stop inflation, What it's going to do is profile which of the two groups spend the most and save the most, which test group withholds their money supply, leading to more money being printed all because they wanna be rich in this new economy you just proposed and realized, and which of these test group's spending the most of their money. I think you already know the answer and right from the get-go one would think it's the rich that's causing inflation to happen cause they save up all their money in hopes of becoming rich with it someday, which is severely true in our current society if you'll ask me.

[panganib999]

Why hasn't just straight up said "we would decline to use this" and moved on?

It's literally a thought experiment how else is it going to work. Currency A people are given Currency A to use whether they like it or not and Currency B people can only use Currency B. Differing inflation rates across different social class to find out who the real culprit for inflation is. It can't be any simpler than that.

I mean its simple that we would see Elon Musk type of people trying to prove to the world that they are currency B type of people and have no money at all. Look at him even right now, he literally sold his house and bought a tiny house just to "prove" that he doesn't care about being rich, then spent 40+ billion on twitter just to prove a point, which he failed to be honest but that's how being rich works.

In the end, we should be looking into this situation a bit more carefully, it wouldn't work, we would reject it as society, people at currency B will want to look like they are rich and act as if they are currency A, and people at Currency A will make it look like they are poor and use B, that's not going to work.

Can we maybe stop using Elon Musk as the standard for everything? The guy's a total dumbass and he clearly has no idea of how to handle himself and his company. It's so obnoxious at this point.

Plus it was literally said that people can't interchange currencies what part of the thought experiment telling you that currency A people could only use currency A and nothing else do you not understand? It's literally painted in all colors in front of you so as to not cause any confusion and you still managed to mess your whole notion.

[Yamane_Keto]

You say, we impose higher taxes on people with high incomes by 30% annually because the increase in the money supply is similar to taxes, and a tax of 5% annually for individuals with medium and poor incomes, which is applied in many countries. However, stagnation is a problem, or at least everyone complains about it.

Inflation is a description of an economic problem, sometimes internal due to mismanagement of monetary i.e. money printing, high energy prices, government policies, and may be external such as supply chain problems, economic blockade or boycott, global financial crisis, economic war.

Since inflation includes multiple areas, knowing the cause of inflation will be the key to the solution, and sometimes it is unavoidable, and here comes the role of the government in mitigating the effects of that inflation.

Inflation is not bad in all cases. If it is within reasonable limits, which is 2% for most economies, it is healthy and causes increased circulation, competitiveness and employment opportunities.