It's all sliding slope when the only way an average citizen can reap the economic growth of their own country is stock market and saving only makes them poorer.
It's all sliding slope when the only way an average citizen can reap the economic growth of their own country is stock market and saving only makes them poorer.
Contrary to what crypto currency enthusiasts believe, having inflation (most of the time) is the only feasible and sane way for an economy.
Why ever do anything at all with your money, ever, otherwise? Except for basic needs.
> Why ever do anything at all with your money, ever, otherwise? Except for basic needs.
Why indeed? If people are only buying stuff because they are afraid of their money being worth less in the future then those are things people don't even want, let alone need. Why is it a good thing for us to endlessly churn out stuff people don't even want?
Yeah, you would have to focus on buying things you actually need. Be able to save for and look forward towards a stable future. Don't get a new pocket computer every year because the software is not updated anymore. Use fewer subscription services? Maybe do away with the disposable vapes with lithium ion batteries in them.
Yes, but simple inflation isn't the problem. In a stable economy, we spend money as we received it, and take on loans for large purchases. In fact the economy was that way before. Now, things are too unsteady for that.
> In a stable economy, we spend money as we received it, and take on loans for large purchases. In fact the economy was that way before.
You used to be able to save for most large purchases without going into debt. Even cars.
But no, these days cars tend to be so goddamn expensive while at the same time being so low-margin products for the dealerships that even if you theoretically can pay in cash, the salespeople do their best to force you into some sort of debt because the kickback from that is the only way they make money. And practically, rents suck up so much of your income you can't save anyway.
Saving is not 'not doing anything at all with your money.' Saving is lending your money to a generally low risk debtor, called bank.
In a deflation based economy as invisioned by crypto currency enthusiasts, there is no incentive to lend your money to anybody. Neither a private person nor banks would have strong incentives to do that, because you have a guaranteed increase of value if you just sit on your money.
No investments would take place because of that.
No one is talking crypto. You seem to be fixated on crypto.
That's not how banks work and hasn't been for decades.
What is a deposit if it's not a loan from you to the bank?
Nothing. It's just a number in an account. It's what we call money basically.
Banks don't profit from keeping your deposits, they profit from running the money supply which empowers them to create new money which they tax or, in other words, loans on which they charge interest.
Go and try to withdraw something tangible with intrinsic value from a bank and you'll see they don't owe you anything at all. The most you'll get from them is paper, but even then you'll find it withdraw all your money in paper.
I just opened an account for you in my own bank, in fact. You have one million credits. You are free to send and receive credits from anybody else with an account (which is nobody, unfortunately). I owe you nothing.
So when you go to the bank teller and hand them $100 in cash, the bank doesn't receive $100 in cash?
When was the last time you went to the bank teller and handed them $100 in cash? I haven't done that in well over 20 years now. Notes and coins represent less than 3% of the money supply in countries like the UK and US. It's not what money is any more.
So when you transfer $100 to your bank from another bank, the bank doesn't receive $100 credited to your bank's bank account?
What does that mean? You think someone is physically wheelbarrowing something around between banks when you make a transfer? The banks settle up at the end of day and the net amount moved between banks is far smaller than the total transferred. What do they settle up in? Another layer of electronic funds you don't have access to.
If even the smart people on HN can't understand this it's little wonder the finance industry has such a stranglehold on society. The banks just run a ledger. That's all they are doing. But it's a ledger they control and they are allowed to create new money in it. In fact 97% of money is created by the banks when they issue loans.
It's a fundamentally different model to the antiquated "banks lend out your deposits" one.
You don't understand what it means for a bank to receive $100 in its bank account? This has nothing to do with lending, except that deposits are loans from you to your bank.