Inflation
11-20-2009, 07:35 AM
#1
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Inflation
John Maynard Keynes, Father of modern economics. 1886 - 1946
Keynes, in warning about the menaces of inflation, said:
"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some"
Some believe that the federal government can run up the national debt to as much as they want only then to use inflation as a tool to minimize the impact of the debt over time. Most every governemnt economist knows of Keynes concepts and some have been accused of using this approach in the past.
It is possible that governments are using inflation as a secret tax. The implications of inflation are especially grave to those who save instead of invest and are stuck on a long term contracts with their employers.
Skyhigh
Keynes, in warning about the menaces of inflation, said:
"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some"
Some believe that the federal government can run up the national debt to as much as they want only then to use inflation as a tool to minimize the impact of the debt over time. Most every governemnt economist knows of Keynes concepts and some have been accused of using this approach in the past.
It is possible that governments are using inflation as a secret tax. The implications of inflation are especially grave to those who save instead of invest and are stuck on a long term contracts with their employers.
Skyhigh
11-20-2009, 08:41 AM
#2
Libertarian Resistance
Joined APC: Feb 2007
Position: 757 FO
Posts: 1,057
John Maynard Keynes, Father of modern economics. 1886 - 1946
Keynes, in warning about the menaces of inflation, said:
"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some"
Some believe that the federal government can run up the national debt to as much as they want only then to use inflation as a tool to minimize the impact of the debt over time. Most every governemnt economist knows of Keynes concepts and some have been accused of using this approach in the past.
It is possible that governments are using inflation as a secret tax. The implications of inflation are especially grave to those who save instead of invest and are stuck on a long term contracts with their employers.
Skyhigh
Keynes, in warning about the menaces of inflation, said:
"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some"
Some believe that the federal government can run up the national debt to as much as they want only then to use inflation as a tool to minimize the impact of the debt over time. Most every governemnt economist knows of Keynes concepts and some have been accused of using this approach in the past.
It is possible that governments are using inflation as a secret tax. The implications of inflation are especially grave to those who save instead of invest and are stuck on a long term contracts with their employers.
Skyhigh
Look at the AMT. They didn't index it for inflation and it imposes punitive taxes on more middle class americans each year.
You get a COLA bump in your pay to keep up with inflation? If that happens often enough you are in higher tax bracket even though that pay increase wasn't even keeping up with inflation.
Those new medical programs that are being discussed in congress--they do not index the cost thresholds for inflation and they will tax/fee more people every year.
The government depends on your ignorance of his issue.
Here is the point to remember: If it is a tax on the rich, and it is not indexed for inflation, eventually you will be paying it too.
And that is just income tax policy, I'll let someone else talk about the hidden tax of a devalued currency.
WW
11-20-2009, 09:34 AM
#3
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Joined APC: May 2005
Position: Corporate Pilot
Posts: 7,119
Inflatulent
It is not possible, it is certain. And it is not accidental, it is purposeful.
Look at the AMT. They didn't index it for inflation and it imposes punitive taxes on more middle class americans each year.
You get a COLA bump in your pay to keep up with inflation? If that happens often enough you are in higher tax bracket even though that pay increase wasn't even keeping up with inflation.
Those new medical programs that are being discussed in congress--they do not index the cost thresholds for inflation and they will tax/fee more people every year.
The government depends on your ignorance of his issue.
Here is the point to remember: If it is a tax on the rich, and it is not indexed for inflation, eventually you will be paying it too.
And that is just income tax policy, I'll let someone else talk about the hidden tax of a devalued currency.
WW
Look at the AMT. They didn't index it for inflation and it imposes punitive taxes on more middle class americans each year.
You get a COLA bump in your pay to keep up with inflation? If that happens often enough you are in higher tax bracket even though that pay increase wasn't even keeping up with inflation.
Those new medical programs that are being discussed in congress--they do not index the cost thresholds for inflation and they will tax/fee more people every year.
The government depends on your ignorance of his issue.
Here is the point to remember: If it is a tax on the rich, and it is not indexed for inflation, eventually you will be paying it too.
And that is just income tax policy, I'll let someone else talk about the hidden tax of a devalued currency.
WW
If we can assume that this is our future then what kind of financial defenses can we install? It seems natural to invest in precious metals, stocks, real estate and other hard assets over cash. However what can an employee do who is stuck with contract frozen wages?
The American employee is under threat. It seems to me that the best places to be in the future are as a government employee or self employed.
Skyhigh
11-20-2009, 12:12 PM
#4
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Joined APC: Feb 2007
Posts: 105
The government seems to have a significant motive to ignite runaway inflation.
If we can assume that this is our future then what kind of financial defenses can we install? It seems natural to invest in precious metals, stocks, real estate and other hard assets over cash. However what can an employee do who is stuck with contract frozen wages?
The American employee is under threat. It seems to me that the best places to be in the future are as a government employee or self employed.
Skyhigh
If we can assume that this is our future then what kind of financial defenses can we install? It seems natural to invest in precious metals, stocks, real estate and other hard assets over cash. However what can an employee do who is stuck with contract frozen wages?
The American employee is under threat. It seems to me that the best places to be in the future are as a government employee or self employed.
Skyhigh
I would think real estate is one of the worst investments in an inflationary environment. If interest rates increase, wouldn't real estate prices plummet?
I have a hard time thinking about the impact to the stock market. You would think prices would rise with inflation, but would such an environment not give rise to a shift to non dollar-denominated assets?
11-20-2009, 01:10 PM
#5
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Joined APC: Jul 2008
Position: 747 Captain (Ret,)
Posts: 806
Also foreign currencies and commodities.
I would think real estate is one of the worst investments in an inflationary environment. If interest rates increase, wouldn't real estate prices plummet?
I have a hard time thinking about the impact to the stock market. You would think prices would rise with inflation, but would such an environment not give rise to a shift to non dollar-denominated assets?
I would think real estate is one of the worst investments in an inflationary environment. If interest rates increase, wouldn't real estate prices plummet?
I have a hard time thinking about the impact to the stock market. You would think prices would rise with inflation, but would such an environment not give rise to a shift to non dollar-denominated assets?
Joe
11-20-2009, 01:24 PM
#6
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Joined APC: Feb 2007
Posts: 105
What if you can't get rent increases? How will your tenants be able to afford increased rent if it costs $300 to fill up their car?
This could be very different from 1970s-style inflation, which was associated with rising wages. If there is a dollar-devaluation led inflationary environment, there could be inflation only in foreign-produced products (which is nearly everything consumed in the U.S., including a significant portion of the componenents of the few remaining products that are manufactured domestically) but not in anything else (e.g. the services that make up the largest part of our economy).
This could be very different from 1970s-style inflation, which was associated with rising wages. If there is a dollar-devaluation led inflationary environment, there could be inflation only in foreign-produced products (which is nearly everything consumed in the U.S., including a significant portion of the componenents of the few remaining products that are manufactured domestically) but not in anything else (e.g. the services that make up the largest part of our economy).
11-20-2009, 02:22 PM
#7
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Joined APC: May 2005
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Posts: 7,119
Rent
What if you can't get rent increases? How will your tenants be able to afford increased rent if it costs $300 to fill up their car?
This could be very different from 1970s-style inflation, which was associated with rising wages. If there is a dollar-devaluation led inflationary environment, there could be inflation only in foreign-produced products (which is nearly everything consumed in the U.S., including a significant portion of the componenents of the few remaining products that are manufactured domestically) but not in anything else (e.g. the services that make up the largest part of our economy).
This could be very different from 1970s-style inflation, which was associated with rising wages. If there is a dollar-devaluation led inflationary environment, there could be inflation only in foreign-produced products (which is nearly everything consumed in the U.S., including a significant portion of the componenents of the few remaining products that are manufactured domestically) but not in anything else (e.g. the services that make up the largest part of our economy).
Rent prices will increase. Tenants will take on roommates. People who rented three bedroom houses will move into a cheaper 3 bed room apartments. In any case it is a good hedge against inflation. If you buy an apartment complex now while rates and prices are cheap you will not regret it later once inflation takes off.
Skyhigh
11-20-2009, 03:03 PM
#8
Gets Weekends Off
Joined APC: May 2008
Position: Hotel
Posts: 714
It is not possible, it is certain. And it is not accidental, it is purposeful.
Look at the AMT. They didn't index it for inflation and it imposes punitive taxes on more middle class americans each year.
You get a COLA bump in your pay to keep up with inflation? If that happens often enough you are in higher tax bracket even though that pay increase wasn't even keeping up with inflation.
Those new medical programs that are being discussed in congress--they do not index the cost thresholds for inflation and they will tax/fee more people every year.
The government depends on your ignorance of his issue.
Here is the point to remember: If it is a tax on the rich, and it is not indexed for inflation, eventually you will be paying it too.
And that is just income tax policy, I'll let someone else talk about the hidden tax of a devalued currency.
WW
Look at the AMT. They didn't index it for inflation and it imposes punitive taxes on more middle class americans each year.
You get a COLA bump in your pay to keep up with inflation? If that happens often enough you are in higher tax bracket even though that pay increase wasn't even keeping up with inflation.
Those new medical programs that are being discussed in congress--they do not index the cost thresholds for inflation and they will tax/fee more people every year.
The government depends on your ignorance of his issue.
Here is the point to remember: If it is a tax on the rich, and it is not indexed for inflation, eventually you will be paying it too.
And that is just income tax policy, I'll let someone else talk about the hidden tax of a devalued currency.
WW
The regular tax brackets are indexed for inflation. How close they are to actual inflation, who knows? I wasn't aware that AMT isn't inflation adjusted. I need to investigate that. I love learning new things.
Last edited by bryris; 11-20-2009 at 03:19 PM.
11-20-2009, 03:11 PM
#9
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Joined APC: May 2008
Position: Hotel
Posts: 714
What if you can't get rent increases? How will your tenants be able to afford increased rent if it costs $300 to fill up their car?
This could be very different from 1970s-style inflation, which was associated with rising wages. If there is a dollar-devaluation led inflationary environment, there could be inflation only in foreign-produced products (which is nearly everything consumed in the U.S., including a significant portion of the componenents of the few remaining products that are manufactured domestically) but not in anything else (e.g. the services that make up the largest part of our economy).
This could be very different from 1970s-style inflation, which was associated with rising wages. If there is a dollar-devaluation led inflationary environment, there could be inflation only in foreign-produced products (which is nearly everything consumed in the U.S., including a significant portion of the componenents of the few remaining products that are manufactured domestically) but not in anything else (e.g. the services that make up the largest part of our economy).
11-20-2009, 03:18 PM
#10
Gets Weekends Off
Joined APC: May 2008
Position: Hotel
Posts: 714
I would think real estate is one of the worst investments in an inflationary environment. If interest rates increase, wouldn't real estate prices plummet?
I have a hard time thinking about the impact to the stock market. You would think prices would rise with inflation, but would such an environment not give rise to a shift to non dollar-denominated assets?
I have a hard time thinking about the impact to the stock market. You would think prices would rise with inflation, but would such an environment not give rise to a shift to non dollar-denominated assets?
A lot of people are getting rid of as much liquidity as possible right now. Gold seems to be the big thing. I am not sure gold is a great place to put value as much if its projected value increase is due to the hyped up demand out there right now by the gold dealers. If the gold dealers are salivating over selling me gold to "invest", why are they getting rid of it? They obviously value the cash more than the gold, while I supposedly value the gold more than the cash. Who is right and who is wrong?
I'm still sort of trying to figure out what to do with my money long term. There are pros and cons to everything it seems. The ultimate Vegas gamble.
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