Why do we have inflation ?

[Sim_card]

Changes is constant, and as time changes, so the value of commodities increases. Things are no longer the way they are from the ancient of days, and this is why there must be inflation, because the world population is increasing, and it is only through printing of money that the government can use to solve some financial problems. I am not in support of printing more money, but there is no way that money will not be printed in the long run. Corruption is what cause hyperinflation.

[Gurujebs]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

Funny enough, they wouldn't admit it that they are printing money like this. You can't print unless there is something that back the currency which must be able to preserve that value for long time, this is what they also tell us because they always used reserve as back up but we know these is all lies and what we suffer later is the inflation and it's the common man that fee the impact of these their stupidity, they have money stolen somewhere when they are done with the printing.

When they now see that inflation is getting over their roof, that's when you see them increasing interest rate by many basis points to discourage borrowing and to mopped excess money in supply,  the people involved in monetary and fiscal policy sometimes need to be jail for their policy sometimes.

[0t3p0t]

Inflation is terrible and thank your politicians IMO. Anything the government is involved in is controlled by liars and cheats.

Exactly. That is what the new norm look like nowadays and yet people don't realize that and still keep on supporting these liars. I do hope that one day ordinary people will find ways to fight and survive inflation and not embrace and suffer.

[Peter90]

Times have changed, today we don't have conquests and we don't have a large military force, but to develop our civilizations we need people to work, unless we are colonialists, and guess what, is there enough gold today for every worker as there was yesterday?

Of course
There is always enough gold
If there is not enough gold --> demand > supply --> gold's value increase.

More workers you say.
No problem, each one receives less gold than his father, but more valuable, so no difference.

With physical gold you can't do it because bars aren't divisible at will.
Gold-backed stablecoins are. They allow you to pay a worker 0,0000001 grams of gold
Thanks blockchain!

[trendcoin]

Times have changed, today we don't have conquests and we don't have a large military force, but to develop our civilizations we need people to work, unless we are colonialists, and guess what, is there enough gold today for every worker as there was yesterday?

Of course
There is always enough gold
...

There's not enough gold. The supply of gold is limited. The world population is growing.

Let's imagine that this year you are getting a monthly salary of 1000 dollars, next year you will get a raise according to inflation and your salary will be 1200 dollars. In a gold-indexed system, this year you will receive 13 grams of gold as a monthly salary, but next year the world population will increase, inflation will occur due to demand, and you will receive 11 grams of gold as a monthly salary. Your salary will decrease, not increase. We can determine the increase in salary by inflation, that's easy, but do you know how to determine the decrease in salary?


Also, aggregate welfare is not a constant. Aggregate welfare is a variable. We increase welfare by creating value. By creating value we somehow create inflation. If we fix total welfare, we block development.

I invest in fixed supply investment instruments, I invest in Bitcoin and altcoins and I buy gold, but the history of the world has made progress with monetary expansion policies.

[Altcoin1998$]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

Only when corruption runs rampant in a monopolistic country and foreign debt continues to soar does money printing continue.  The more currency is printed in the country, the more inflation will increase.  Moreover, various political ancillary factors are responsible for the increase in inflation in different countries.  If heinous crimes like money laundering are organized in the political circles and foreign money is smuggled, then only the rate of inflation increases and the country as a whole moves to such a position that it is not possible to control inflation despite hundreds of efforts.

[DrBeer]

Inflation, whether we like it or not, is a normal process. The only clarification is controlled and low inflation.
The causes of inflation are diverse.
There are bad variants - when the economy is weak, when there is corruption in the country, when the authorities do not correspond to their position. Then they are forced to print money primitively to provide the country's economy with "blood" for the financial system - money.
There are bad options, but not dependent on the economy and the government - for example, pandemics, global natural disasters, wars, terrorist attacks, technological disasters....
And there is natural, controlled inflation - the purpose of which is to make people spend and invest their money. This is such an artificial "compulsion" to maintain the economy of the country at the expense of the flow of money. When you buy or invest, you support the economy. If money does not flow into the economy, it will stop. And the concept of "money-blood of the economy" very accurately describes its purpose.

[Peter90]

Times have changed, today we don't have conquests and we don't have a large military force, but to develop our civilizations we need people to work, unless we are colonialists, and guess what, is there enough gold today for every worker as there was yesterday?

Of course
There is always enough gold
...

There's not enough gold. The supply of gold is limited. The world population is growing.

Hi trend
I think you are making some mistakes but for now just a general observation from me
You are saying that a currency whose supply is limited can’t become the currency of world whose economy/population are increasing, because it reaches the point when there isn't enough currency - this is your argument.

I find it weird that someone is making the point that bitcoin can’t become a world currency, this is a community of crypto people, and nobody says anything

[Peter90]

Times have changed, today we don't have conquests and we don't have a large military force, but to develop our civilizations we need people to work, unless we are colonialists, and guess what, is there enough gold today for every worker as there was yesterday?

Of course
There is always enough gold

Let's imagine that this year you are getting a monthly salary of 1000 dollars, next year you will get a raise according to inflation and your salary will be 1200 dollars. In a gold-indexed system, this year you will receive 13 grams of gold as a monthly salary, but next year the world population will increase, inflation will occur due to demand, and you will receive 11 grams of gold as a monthly salary.
Your salary will decrease, not increase.

No, but you are smart
You didn't quote the part of my previous post that pre-countered your statement 

There you go

If there is not enough gold --> demand > supply --> gold's value increase.

More workers you say.
No problem, each one receives less gold than his father, but more valuable, so no difference.

11 grams of gold can have a bigger purchasing power than 13 grams of gold

You focus on quantity
You should focus on value

[Agbe]

Now the question that also arise from the excess printing of is, what are they doing with this money and where this money is going (spent)? Is it that they are compiling the money in their private houses? Because if they are really using those money inflation will not be much as it is. And in this inflation we are shouting and crying also protesting because high cost of living but these politicians are not even saying anything. Is it that the inflation is not affecting them? According to Karl Marx the only solution to this problem is "REVELATION". And military government is part of the revolution.

[Peter90]

Also, aggregate welfare is not a constant. Aggregate welfare is a variable. We increase welfare by creating value. By creating value we somehow create inflation.

That’s the opposite TC: increasing welfare --> increasing money’s value
Inflation is caused by increasing money supply, not by increasing welfare

Imagine a close economic system
Aggregate welfare (GDP) = 3 apples
Total money supply = 3 $
Everything works fine

GDP increases of 47 apples, so now we have
GDP = 50 apples
TMS = 3 $
Each $ can buy now much more apples than before. That’s the opposite of inflation.
Inflation is caused by increasing money supply, not by increasing welfare.



But let’s go back now to your main point: in a gold standard it comes to a point when there isn't enough money (gold)

So, GDP has increased, now in our closed economic system there are 50 apples vs. 3 $
The system can’t work anymore - you say - there are not enough dollars.

Of course there are enough dollars - I say: imagine each dollar = 100 cents, so
GDP = 50 apples
Total Money supply = 300 cents

Are 300 currency units enough in order to manage 50 apples?
Of course they are (remember: the purchasing power of each cent has increased through welfare's increase)

You say, well how about when GDP reaches 1000 apples?
Imagine living in a digital era, like ours, so minimum currency unit = 0,000001 $
GDP = 1000 apples
TMS = 3 millions currency units
3 millions currency units are more than enough vs. 1000 apples, I say


You are focused on quantity.
Quantity is a problem only where there is no currency divisibility (in our example, where there are only 3 $ banknotes, or 3 gold coins).
In a digital world, quantity is never a problem, because digital allows divisibility.

[trendcoin]

...
I find it weird that someone is making the point that bitcoin can’t become a world currency, this is a community of crypto people, and nobody says anything

I know that what I am saying is risky and I know that I will get reactions from here or elsewhere, but we can only speak the truth if we are realistic. Otherwise, we create populist discourses and by creating populist discourses we can build a happy world inside our shell, but when we come out of our shell the harsh realities of life will upset us.

Bitcoin cannot replace the dollar because they have different fundamentals. The dollar is a reserve currency and there is armed power behind it. Bitcoin is a store of value like gold. Gold has survived throughout history. Bitcoin will also survive throughout history.

However, history shows us with examples that it is not possible to develop civilizations with currencies with limited supply. Currencies with limited supply can best serve as a store of value, but they cannot enable us to build civilizations.

I am a Bitcoin, altcoin and gold holder, but this does not distract me from other realities.

...
11 grams of gold can have a bigger purchasing power than 13 grams of gold

You focus on quantity
You should focus on value

I have no objection to this, the purchasing power of 11 grams of gold may be higher than 13 grams of gold depending on the conditions, but in the absence of inflation, how do you plan to adjust the salary decrease? What parameters will you use?

I am a believer in free market economics because free market economics has proven itself empirically. Socialist and communist thought collapsed in Russia, collapsed in East Germany, is dead in Cuba and moribund in North Korea.

I wish you a good day, Peter90.

...
According to Karl Marx the only solution to this problem is "REVELATION". And military government is part of the revolution.

Karl Marx said that the proletarian revolution would start in England, but Socialist revolutions have happened in underdeveloped eastern countries. Karl Marx is a person who made many erroneous predictions.

[Emmanuel1]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

Actually, they are several factors that can generate inflation in a society, and they are decrease in productivity, increasing in raw material prices an increase in taxes etc. And when this factors listed and more are not taking into consideration in a society, inflation is inevitable in that society.

[EluguHcman]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

You're to say that, the governments and it's associates are unquestionable and they operates beyond the lawsuit of civil rights all just for self interest.

But if we can tak this inflation stuff in all way rounds which we know that inflations are experienced in all angles of monetary such as centralized and decentralized financial institutes, the basic concepts and necessities of inflations is to  enhance investments to an advancing peaks, also to encourage financial expenditures which is to insight that the numbers of products and funds are not more than enough so if economical expenditures is being underated then we can go on extinction of facing insufficiencies.
In a centralized institutes it could help to enumerate financial regulations.

[Peter90]

Inflation has always seemed to me to be a good way to take as much money as possible from people that they have saved for years, and when the prices of goods and services go up sharply and wages remain the same, people have to use their savings in order to survive. In this way, ordinary people become poorer and even more dependent on the system, and such people are always easier to control than those who are financially independent.

All true Lucius
on the other hand you crypto people should be thankful for inflation because without inflation there wouldn't be no bitcoin.
Unlike today, originally bitcoin wasn't considered as a way to make money.
It was seen primarily as the solution to currency devaluation.
In other words, without inflation you wouldn't be here


DEBASEMENT IN THE MODERN ERA

The dissolution of the Bretton Woods system in the 1970s marked a pivotal moment in global economic history. Established in the mid-20th century, the Bretton Woods system had loosely tethered major world currencies to the U.S. dollar, which itself was backed by gold, ensuring a degree of economic stability and predictability.

However, its dissolution effectively untethered money from its golden roots. This shift granted central bankers and politicians greater flexibility and discretion in monetary policy, allowing for more aggressive interventions in economies. While this newfound freedom offered tools to address short-term economic challenges, it also opened the door to misuse and a gradual weakening of the economy.


HOW BITCOIN AVOIDS DEBASEMENT

Bitcoin offers a permanent solution to this issue. Its supply is capped at 21 million, a number that is hard-coded and safeguarded by proof-of-work mining and a decentralized network of nodes. Thanks to its decentralized nature, no single entity or government can control Bitcoin’s issuance or governance. Furthermore, its inherent scarcity makes it resilient to the inflationary pressures that are typically seen with traditional fiat currencies.

As a distributed system, Bitcoin users can ensure that the supply never deviates from the predetermined supply cap by running the software that downloads and validates the entire transactional ledger. By verifying every transaction in Bitcoin’s history, where every coin came from and where it went, users can be absolutely sure that the supply has not been debased and no coins were created that should not have been.

Full node software like this for Bitcoin is essentially a counterfeiting detection machine that anyone can run. It guarantees the supply is intact, that coins being spent were properly authorized, and no funny business is happening. Any Bitcoin wallet software can also ensure that no one can restrict your access to your own money.

In times of economic uncertainty, or when central banks engage in extensive money printing, investors often turn to assets like gold and bitcoin for their store-of-value properties. As time progresses, there’s potential for people to recognize Bitcoin not just as a store of value, but as the next evolution of money.

zerohedge.com


I disagree with the last sentence, but that's for another day