don’t be afraid of inflation

[shinratensei_]

Inflation is not harmful if it's controlled, the truth is inflation always goes out of control.
Compare the purchasing power of decades ago to today, compare the inflation to the salary increase as well. Truth is your purchasing power has been going down.

The loan being worthless in the future is also BS, there's something called floating interests. The only way is bitcoin through its deflationary price to fight against inflation.

[DYOR+BTC]

many hear inflation rates rising and immediately jump to the conclusion that it’s bad but what people don’t understand is that inflation can actually be good for a nation. here’s why:

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

it’s important to note that inflation is only harmful depending on its level and the reason why. if the salaries of the people are not increasing alongside the prices of goods at the same time then it’s bad. on the other hand, deflation is actually worse than inflation. deflation is when there’s too much supply but not much demand here’s why it’s worse:

1. deflation discourages spending
- people wait for prices to fall instead of buying today

2. businesses, employees, etc earn less
- since people won’t buy their goods, they are forced to make things cheaper just to make some kind of profit but still not enough to actually cover capital

so. to understand simply:

inflation: GOOD

hyperinflation: BAD

deflation: WORSE

I guess you don't know the real meaning of inflation assuming you have little idea on what inflation is you won't have for one day speak good of inflation or even wish for your country to experience inflation for any reasons. In as much as the world is concern know country pray for inflation because of its economic effect on citizens, although the set of people contributing to the inflation has bigger advantage but that of the poor masses should be considered. Nigeria is one of the country experiencing high inflation but there's is as a result of corruption and quest for greatness in there political representatives mind which can never be reduced until there is change in power.

[slapper]

The issue with this assumption is that it presupposes rational actors in frictionless markets, where all the arguments of econ 101 break down in the real world of human behavior. Your so-called "inflation encourages spending" does not make people make better decisions when it comes to consumption. They make faster, worse ones. They spend money on things they do not need as the money seems to be slipping away.

The distribution question is absent in your point about assets rising. Who owns stocks and crypto? Not those who are hurt by inflation. You are talking about a mechanism that is benefiting those who already have excess funds to invest in inflation hedges. Meanwhile, a person with a paycheck to paycheck is only seeing their grocery bill rising as their wage remains constant. This is the way we get regressive taxation without even naming it so.

And deflation being worse? All depends on the cause of it. Technological deflation (things get cheaper due to us being better at making them) is marvelous. That is the whole history of computing. The bad deflation is demand collapse, which is a different animal.

[davis196]

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

Low levels of inflation can stimulate the economy, but I'm still not a fan of inflation.

1.Inflation does encourage spending, but nobody wants to buy expensive food and pay more for housing.

2.Stocks, crypto and other assets are rising because fiat money are losing value, so all this asset price growth isn't genuine. You will be able to buy less goods with the fiat money you would get, after selling those assets.

3.Inflation devalues debt, but the banks react to the situation by raising the interest rates for mortgages, consumer debt, etc.
I don't believe that inflation makes debt more affordable in the long run.

[DanWalker]

so. to understand simply:

inflation: GOOD

hyperinflation: BAD

deflation: WORSE

In theory you are absolutely right, deflation is scarier than inflation. But the problem we are facing is that the government has failed to control inflation, and things have gone out of control. In other words, we are in a period of hyperinflation but governments have been hiding this by giving fake numbers and saying that inflation is not high and is well controlled.

Like inflation in the US is announced at 3% which is 1% higher than the standard (2%), but I believe if they dare to announce the actual data the number should be in double digits. Because when comparing the purchasing power of the USD 10 years ago with today, the gap is almost double.

[adaseb]

Inflations is good as long as its managed, which it hasnt been since Covid.

Obviously there will always be inflation because banks need to lend money. When someone wants a house, they borrow money and that pretty much creates inflation because the sellers get that money and they spend it left and right. Its somewhat encourages growth. And small 1-2% yearly inflation is normal.

What is not normal is 5% yearly inflation for the past 3-4 years. Peoples savings are vanishing, people will rent forever, they will never save for a downpayment, they will never buy a new car. Look at how expensive food as gotten. This is not good, inflation cant be as high as it is today. It will lead to a recession or stagflation which is very bad.

[LastKiss]

~snip~
if the salaries of the people are not increasing alongside the prices of goods at the same time then it’s bad. ~snip~

This is something that happens in many countries, a lot of people don't receive salary increases that keep up with inflation. Their pay may go up, but not enough to match rising prices. If companies were to raise salaries too much, they might feel pressured to cut costs elsewhere, which often leads to layoffs. Right now, the cost of basic necessities is increasing rapidly. In my area, for example, the price of cooking oil has risen by about 50%, and that increase affects the cost of almost all food products.

[AprilioMP]

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

It's going up, but to purchase goods or products, the price remains the same using fiat currency. Hehe.
Bitcoin is a safer way to store money, and I fully acknowledge this, despite minor issues like a few days of internet outages.
Gold is also a good asset for storing money against inflation.
Bitcoin and gold are two assets that will protect people from inflation.
What's not recommended is holding fiat currency itself.

[PrivacyG]

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

Compare wages to inflation and wages barely ever keep up.  If you get a loan because you know inflation will de value it in time, you will pay the same amount of Fiat every month while having less and less purchasing power every month.  This will make it much harder to pay back the debt you owe, which puts you under the risk of losing much more than just the purchasing power.  Inflation makes Fiat worth less but it makes over 90 percent of people earn less at the same time.

[Danica22]

I guess you don't know the real meaning of inflation assuming you have little idea on what inflation is you won't have for one day speak good of inflation or even wish for your country to experience inflation for any reasons. In as much as the world is concern know country pray for inflation because of its economic effect on citizens, although the set of people contributing to the inflation has bigger advantage but that of the poor masses should be considered. Nigeria is one of the country experiencing high inflation but there's is as a result of corruption and quest for greatness in there political representatives mind which can never be reduced until there is change in power.

On the contrary, I think you don't know what the concept and real meaning of inflation and deflation is, not OP. Because basically what OP said is not wrong. Inflation is better than deflation, and it can actually benefit the economy if well controlled and under ideal conditions. Inflation is well controlled and always maintained below 2%, which will stimulate economic growth. But sadly in reality, inflation always gets out of control and is no longer ideal. So now it is becoming the obsession of every country and everyone wants it to disappear.

[348Judah]

As long as am into bitcoin, am not scare of inflation, because this is not going to affect my holding in crypto, as the inflation looms in and currency value are being depreciated over time in fiat, mine in gaining more strength and value over time in bitcoin, so its all about what we are holding unto, inflation only have effect on the centralized markets price and the currencies in them, while under a decentralized one, we are not involved in sharing the effect of inflation.

[Accardo]

As long as am into bitcoin, am not scare of inflation, because this is not going to affect my holding in crypto, as the inflation looms in and currency value are being depreciated over time in fiat, mine in gaining more strength and value over time in bitcoin, so its all about what we are holding unto, inflation only have effect on the centralized markets price and the currencies in them, while under a decentralized one, we are not involved in sharing the effect of inflation.

Inflation is not all that bad, what's painful is hyperflation, products price increase shouldn't be getting too much, if it changes quite a little due to a pricy raw material buyers could adapt, when it gets terrible is meeting back a product you bought at say $5 now $15. The changes in price is too much and the government atimes can't help it what they can do is reduce the rate.

[bhadz]

As long as am into bitcoin, am not scare of inflation, because this is not going to affect my holding in crypto, as the inflation looms in and currency value are being depreciated over time in fiat, mine in gaining more strength and value over time in bitcoin, so its all about what we are holding unto, inflation only have effect on the centralized markets price and the currencies in them, while under a decentralized one, we are not involved in sharing the effect of inflation.

That's a strong statement there but I can't blame you with that because it only gives you the proof that you're a strong holder and, you understand the power of Bitcoin by holding it. Bitcoin is decentralized and it's a deflationary asset that's why you are not going to be affected by what's happening through inflation. But me, I'm still concerned about inflation because things are getting more expensive now especially the food prices. I manage the budget and money and so, I know how impactful the inflation rate increase that's happening in our countries.

[Ruttoshi]

Inflation is inevitable in a country economy because it's a norm. Government are majorly the cause of inflation/hyperinflation due to mismanagement of public funds that will lead to printing more money.

Hyperinflation is the case in most countries where the price of goods and services keeps skyrocketing weekly. My country is a good example. Your salary is stagnant while the cost of commodity increases.

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

It's the opposite because people will be scared to get loans because interest rate will be high and expensive for them to payback.

[uche6215]

i live in a country where the announced inflation rate is 48.7 but the real inflation is around 100%  . And believe me, inflation is a really shitty thing.
Everything has become so expensive that almost all the people are poor now. Only a very small minority is extremely rich. Also our government keeps the foreign currency artificially low. because of this country has become very expensive in terms of dollars as well.

Inflation is only good for few goods and not good in any service, that means inflation is bad. Before government approved inflation from the top businessmen, they have to check the number of unemployed and the vulnerable in the society. But because of corruption the government approved inflation from the Business decision makers which are the top business men. And why I said government approved inflation. Every important goods in a country is taxed and regulated by the government so when the government taxed the company heavily, they have to increase the prices of their goods to meet up the taxation.

And that just the caused of inflation. Government taxation causes inflation. And that affect consumers.

[tsaroz]

3. easier to payback debts
- people are more likely to get loans because they know this will be worth less in the future

That is not actually accurate, though.
Nobody would give a loan in order to lose their wealth to inflation, in reality people and banks which give loans, adjust their interest, so it will be always higher than inflation. That is specially true in economies which experiment high depreciation of their FiAT currency, here in Venezuela people and institutions don't even give loans in our local FiAT anymore, but in dollars and with an interest, so that point about debt needs more context and clarification.

If it was true that debts are better when living in inflationary economies, when the demand for money would be very high on those countries, which is not the case.

I calculated it and yes, its true that almost always the interest rate is slightly higher than the increase in your salary but what we also should consider is the profit you are making with the borrowed money. If you have spent the money in a depreciating asset, you are a lost cause but if its on an appreciating asset or a business, the profit of it and the inflation would almost always be greater than the interest rate.
As an example, I took a fixed interest loan for 7 years at 8% for buying a land in 2018. I have just completed the term. The increase in my salary was 6.7% yearly which is smaller than the interest rate but the land I bought appreciated in value by almost 200% in those 7 years. I would not have been able to save and buy that land 7 years ago and at this time I can't even imagine buying a similar land with my current salary.

[Hyphen(-)]

many hear inflation rates rising and immediately jump to the conclusion that it’s bad but what people don’t understand is that inflation can actually be good for a nation. here’s why:

I don’t see any good reason among what you have mentioned in the OP as benefits of inflation because all what you mentioned are not benefits in my opinion, in fact it is a huge pressure in the citizens to spend more money rather than spend less and save for future.

In my own understanding of inflation, is when we have high increment of the price of goods and services, it will increase our spending because our currency value at that moment has dropped due to inflation, then what benefit did it have to us? Even if we have high money income as we sell our goods, we will spend high when buying back raw materials to produce more goods; therefore, it is still the same.

To avoid this inflation, you can buy and hold Bitcoin. It will store its value and will give you more money even with inflation rate.

[9ja Amaka]

I agree with you, when money is just in the account it feels safe but it’s actually losing value slowly. A little inflation reminds you and it makes you realize that keeping all your cash sitting still isn’t smart. But when there’s inflation it pushes people towards investing, it makes you want to grow your money.
It pushes you towards Things like saving plans , little business ideas or side investments because you’re simply looking for returns that beats inflation .
You don’t need to be very rich to start investing, you can start little and before you know it your money starts producing more money.

[ImGenius]

many hear inflation rates rising and immediately jump to the conclusion that it’s bad but what people don’t understand is that inflation can actually be good for a nation. here’s why:

1. inflation encourages spending
- people would want to buy products now because they know it will be more expensive in the future
- they know there is no point in holding their money because the purchasing power will only decrease

2. stocks, crypto, other assets will be rising
- since fiat is falling, people will seek other safer ways to hold their money

Inflation will do more harm than good because when they hear that the price of goods will increase, unscrupulous syndicates will buy all the goods and stock them, reducing the supply in the market and increasing the price of goods. The situation of consumers will be critical because their income is no longer increasing, but their expenses are increasing. Now people save money in banks to earn annual profits, if there is massive inflation, they will start relying on decentralized systems like Bitcoin. This will reduce people's trust in fiat.

[Findingnemo]

Anyone who knows economics will agree that inflation is kind of necessary to keep the money in circulation because deflation or even stagflation can bring economic growth to a negative rate. But as an individual who are getting paid in salary won't get much benefits from the inflation, their salary will not be on the same level as the inflation rate so over the period of time their budget will become tigher and the possibility of savings will become impossible unless they work another job.