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koods
Ribbit



Registered: 05/26/11
Posts: 106,066
Loc: Maryland/DC Burbs
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specialpeopleclub said:
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koods said:
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psi said:
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LogicaL Chaos said: What causes inflation?
Is it simply time?
It's caused by printing more money basically. It's an intentional policy decision. If you can stuff your money under your bed and it will maintain its value indefinitely, there isn't as much incentive to invest it back into the economy.
If you buy gold or something and stuff that under your bed, even if it just maintains its buying power you will have made a "profit" on it when you sell it, and you're supposed to pay income tax on that.
Printing more money has very little to do with inflation. A very small portion of the total amount of wealth valued in US dollars exists as a actual currency. It exists in ledger books and physical property.
People claimed that Obama would tank the dollar because of quantitative easing and firing up the printing press back during the financial crisis. Well, the dollar has been more stable during those eight years than just about any time in us history. People just don't understand economics very well.
I think you mean 'interest', not inflation
Interest rates represent the time cost of money. If interest rates are below inflation rates then inflation can get out of control. Interest rates above inflation rates tends to reduce inflation (high interest makes credit expense and this reduces economic growth, which suppresses inflation). if interest rates track inflation rates perfectly, then essentially lenders don't make any money on a loan. So, interest rates are generally a bit higher than inflation rates. You can think of interest rates as the cost of money over time, while inflation rates are the value of money over time. If cost is the same as value, then there is no profit.
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NotSheekle said “if I believed she was 16 I would become unattracted to her”
Edited by koods (01/12/17 02:42 PM)
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koods
Ribbit



Registered: 05/26/11
Posts: 106,066
Loc: Maryland/DC Burbs
Last seen: 2 hours, 47 minutes
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Re: Eliminate the income tax [Re: koods]
#24004368 - 01/12/17 02:47 PM (7 years, 18 days ago) |
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My point is that inflation is a naturally occurring phenomenon of an economy, while interest rates are a fabricated value - they are based on costs and other real values, but the actual rate is set by someone saying what the rate is.
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NotSheekle said “if I believed she was 16 I would become unattracted to her”
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