European Tribune - Comments - Spiegel's Euro Delirium Tremens

Spiegel's Euro Delirium Tremens | 184 comments (184 topical, 0 editorial, 0 hidden)

Re: Inflation is a tax on the rich and powerful (none / 0)

Inflation is not a tax on wealth, as capital assets automatically appreciate to compensate for inflation. Wages and pensions don't. Hence, inflation is a tax on the poor and middle class.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Tue May 18th, 2010 at 08:08:42 PM EST
[ Parent ]

Re: Inflation is a tax on the rich and powerful (none / 1)

Inflation is a tax on net assets, and debt assets don't appreciate with inflation. Not only inflation reduces the real value of the notional but the higher interest rates associated with inflation discount the payments to a smaller present value.

Which is why inflation indexing of debt (as in Iceland and some parts of Latin America) is asinine.

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

by Migeru (migeru at eurotrib dot com) on Wed May 19th, 2010 at 02:19:41 AM EST
[ Parent ]

Re: Inflation is a tax on the rich and powerful (none / 0)

That's true: inflation promotes people who put themselves heavily in debt at the expense of people who are more prudent. Another good reason to fight inflation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Wed May 19th, 2010 at 08:17:32 AM EST
[ Parent ]

Re: Inflation is a tax on the rich and powerful (none / 0)

Well, it prevents debt from being so much of a problem in the first place.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 19th, 2010 at 08:55:30 AM EST
[ Parent ]

Re: Inflation is a tax on the rich and powerful (none / 0)

I much prefer default to inflation.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Wed May 19th, 2010 at 08:58:04 AM EST
[ Parent ]

Re: Inflation is a tax on the rich and powerful (none / 0)

As law and custom are currently configured, default requires deliberate political action. Inflation is an automatic stabiliser.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed May 19th, 2010 at 09:03:23 AM EST
[ Parent ]

Spiegel's Euro Delirium Tremens | 184 comments (184 topical, 0 editorial, 0 hidden)

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