Mr Khan said:
No, inflation would be good. Inflation is good for debtors and bad for creditors (although sticky wages for low-end workers means inflation is usually moot unless the government is more responsive on the minimum wage). If i bought a house in 1984 on a 30-year-mortgage for 45,000, that is *much* easier to pay off in the last 5 years than it was in the first, and that benefit is all mine and to the detriment of the bank, as the money they're getting today carries a good deal less weight than money they got in the late 80s, but the bank can't just go "we want that back in "real" dollars." Deflation is what's bad for debtors, when prices drop and wages summarily drop, and dollars become heavier, because suddenly your debt is worth more, not less. Fighting inflation in a down market is a foolish pursuit, like the nutters in European Parliaments and US Congress who keep shouting for austerity thinking that Zimbabwe is just around the corner, when what the market needs most right now is inflationary pressure, more money down in the lower strata of the economy (unlike QE that pumps it at the top, where it just chases the next wall street bubble) stimulating actual economic activity. |
Inflation without a raise in salaries is not a good thing, right now the jobs created in NA are not good jobs. Most of them are part time or they pay less than the jobs lost they replace. In this condition, inflation is a bad thing. You talk about the 80s, do you remember the inflation crisis back then? Interest rates between 15 and 20%? Nobody wants to live that again. Also the problem with your example of someone buying a house is that you have to be rich enough to buy a house at first and second, when you live in your house its value is relative as you cannot make money with it to pay for the day to day needs and once you sell it you still have to buy something to live in and that house you'll buy will also have raised in price... A house is an investment, but if the interest rates are to high, you're not gooing to make that much money out of it and considering that the municipal taxes in lots of places in Canada is calculated according to your house value, an increase in your house value = more taxes to pay and if your revenu is not going up, as it is right now, your are poorer having a higher house value. So praising inflation without taking everything into consideration is really dangerous and may lead to a worst economical state. The problem is that "job creators" are keeping all the money as they don't want to pay their employees good enough salaries. The Wallmart family is one of the richest family in the world, but they and the fast food industry are fighting against a raise of the minimum wages that would be perfect for the economy as they would spend all that money earned in the local economy instead of puting it in the speculative economy like the richest do. The richest of the world are pushing down the salaries, it is a really dangerous way to make business since we need good enough salaies to sustain an economy. Here in Canada (at least for Ontario and Québec) the minimum wage is more than 10$/hour and our economy is still one of the stronguest in the world. I'm all for capitalism, but not the capitalism of the 19th century.
